General Science investing €110m in China tire expansion

Shanghai. China – Jiangsu General Science Technology Co. has unveiled plans to upgrade its tire manufacturing plant in Wuxi, China to include production of passenger car tires.

Operational since 1995, the Wuxi facility currently has the capacity to produce 10 million units per year of truck & bus tires.

In an 11 Nov stock exchange filing, General Science said it was investing Yuan881 million (€112 million) to add capacity to produce 6 million units/year of car tires at the site.

According to General Science, the upgrade project is in line with growing demand for the company’s passenger car tires, as the product’s competitiveness ‘continuous to improve’.

In its filing, General Science also noted that a boom in the Chinese truck & bus tire market had halted with demand now “in a weak recovery stage.”

Citing official industry statistics, the company said the current capacity utilisation rate of domestic all-steel TBR tire companies stands at just over 65%.

“Under the circumstances of weak demand and rising costs, the competition in the domestic all-steel tire market has become increasingly fierce,” General Science commented.

The “intense” situation, it added, has impacted gross profit margin of the product.

The upgrade project will “optimise the industrial structure layout” of General Science and help it meet domestic and foreign market demands.

The tire maker expects the project, to be constructed in 18 months, to deliver an additional average annual operating income of Yuan 1.0 billion and net profit of Yuan94.5 million.

The project follows a recent decision by the Chinese manufacturer to invest Yuan1.9 billion to double production at its facility in Rayong, Thailand. (ERJ report)