Sumitomo Rubber mulls US plans following tire plant closure

Kobe, Japan – Sumitomo Rubber Industries (SRI) is reviewing how it supplies tire makers in North America, following its decision to close manufacturing operations in Tonowanda, New York.

The Japanese group announced the decision to close its Tonawanda plant on 7 Nov, along with plans to transfer production from the facility to its plant in Amati City, Thailand.

The restructuring move is expected to deliver annual savings of around Yen45 billion (€284 million) by 2026, SRI officials explained during a recent earnings call.

To address potential logistics issues, SRI has concluded a strategic partnership agreement with an unnamed shipping company, particularly to mitigate major fluctuations in freight rates.

“We believe that the negative effects of the ups & downs of the freight rate problem can be avoided this way,” said Hidekazu Nishiguchi, director and managing executive officer.

Regarding import tariffs, the official said SRI had been able to reduce the impact “to almost zero” through its efforts over the past three years.

Tariffs proposed by US president-elect Donald Trump, which include a 10% taxation on all global imports and a 25% duty on products from Mexico, have also been considered.

“Even if they impose this, we will be able to absorb this to some extent by [pricing measures], improving the mix through internal efforts, and reducing expenses,” said Nishiguchi.

Nishiguchi went on to highlight SRI’s ‘ultimate local-for-local’ strategy, which he said could potentially bring the group closer to North America.

As it stands, SRI will maintain its R&D operations in North America and the structure of Sumitomo Rubber North America and its sales subsidiary will remain unchanged.

“I believe that local production for local consumption is the best for the tire business,” said the SRI executive, adding “we will have factories in the vicinity of North America again.”

Any future factory, he added, would be carbon-neutral plant and incorporate “smart automated processes… that will enable us to produce higher value-added products.”

However, concluded Nishiguchi, SRI assumes that the environment will have changed “considerably” by the time it builds its next plant in the region.