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Michelin partners with Chinese tire makers

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Groupe Michelin signed a "Memorandum of Understanding" with Double Coin Holdings Ltd. and Shanghai Huayi (Group) Co. on April 18, 2011, to create a joint venture to produce and market Warrior-brand passenger car and light truck tires for the Chinese market.

The transaction, subject to signature of the final agreements and approval by Chinese authorities, is "fully in line with Michelin’s strategy to grow in fast-developing markets," according to the company.

The joint venture would be owned 40% by Michelin and 60% by the Chinese partners. It will operate a plant now being built in Wuwei County, Anhui province, around 400 km west of Shanghai.

Present in China since 1988, Michelin employs more than 6,000 people in the country, with four industrial sites (three in Shanghai and one in Shenyang) producing passenger and/or truck tires. Its retail network comprises more than 4,000 sales outlets, including 611 TyrePlus franchise outlets.

The joint venture is not the only way Michelin is adding capacity in China. Late in 2010, it announced a $1.35 million capital expenditure program designed to relocate part of its Shenyang, China, plant. In addition, the money will be used to expand and upgrade the facility.

The new Shenyang plant eventually will have twice the production capacity as the former plant. It will mainly produce Michelin-brand fuel-efficient tires, with annual capacity eventually reaching 10 million passenger car and small truck tires; 1.8 million truck and bus tires; and 300,000 retreads for trucks and buses.

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