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Pirelli to Invest $200 Million in New Plant and Expansion in Mexico

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Pirelli to Invest $200 Million in New Plant and Expansion in Mexico

Pirelli Tire North America Inc. plans to build a second tire plant in Mexico at its existing production site in Silao.

Company officials made the announcement during the Italian Prime Minister Matteo Renzi's visit to Mexico's President Enrique Pena Nieto during Palacio Nacional festivities in Mexico City.

The new $200 million investment will begin in 2016 and will be in addition to the $360 million already invested to date, and the $50 million already earmarked for 2016-2017. At the end of 2018, Pirelli’s total investment in the two plants in Silao will exceed $600 million.

Production at the new plant is scheduled to begin in 2017, and Pirelli says it will utilize "the group's most advanced technologies and processes."

A Pirelli spokesperson told Modern Tire Dealer, "It's expected that the factory will produce various lines of high performance car tires."

The Silao plant, built in 2012, has been focused on the premium tire segment, with production centered on high performance and ultra-high performance tires for cars and SUVs, for the Mexican and all North American Free Trade Agreement (NAFTA) area markets.

Pirelli’s production hub in Silao covers 140,000 square meters with an annual output of around three million tires as of the end of 2015. The expansion will boost annual production capacity to five million tires at the conclusion of the initial phases of investment.

The new $200 million dollar investment will permit the production of about 2.5 million tires, and will increase Silao’s total production capacity to 7.5 million pieces by the end of 2018.

Further, with this additional investment the workforce, which today stands at 1,400 employees, is forecast to grow by another 400 workers.

Pirelli says its hub in Silao "is distinguished by its high standards in terms of processes and products, as well as its environmental sustainability and technical training, destined also for the other automotive facilities present in the Guanajuato area thanks to the support provided by the Instituto Piero Pirelli."

The company says this investment "confirms the importance of Mexico among Pirelli’s international operations," and also confirms its "strategic position which has made it in recent years the ideal base to significantly develop Pirelli’s presence in the NAFTA area, a market which has been confirmed as one of the most promising for the success of the premium strategy."

In 2015, premium sales in the region grew by 24.3% and accounted for 90% of the total at the local level, the company says.

Overall, last year the region registered sales of 861 million euro, an increase of 21.7% (+4.1% net of forex effects) and representing 13.7% of total group sales, up from 11.8% the prior year — levels above the forecasts contained in Pirelli 2013-2017 industrial plan.

Pirelli says the Mexican plant supports the NAFTA production hub Pirelli has had since 2002 in the U.S. in Rome, Ga.

"Pirelli aims to strengthen its collaboration with its main original equipment partners, to support the launch of new lines especially developed for clients in the area – like the Cinturato P7 All Season Plus, the Scorpion Verde All Season Plus and the Pzero All Season Plus – and to increase the weight of sales in the replacement channel also thanks to the expansion of the FasTrack network, the growth of retail and geomarketing, capable of optimizing the management of customer inventories."

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