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Cooper Tire Secures TBR Production in China

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For $93 million, Cooper Tire & Rubber Co. once again has guaranteed Chinese radial truck tire production earmarked for the U.S.

Cooper has entered into an agreement to purchase 65% of China-based Qingdao Ge Rui Da Rubber Co. Ltd. and its one million-square-foot production facility. The company will be renamed Cooper Qingdao Tire Co., Ltd.

The transaction is expected to close during the first half of 2016 pending certain permits and approvals by the Chinese government.

Cooper Qingdao's plant is expected to serve as a global source of truck and bus radial tire production for Cooper; that includes its Roadmaster brand for the North American market as well as TBR tires for Asia and other markets. Passenger car radial tires also may be manufactured at the facility in the future.

When Cooper sold its interest in the Cooper Chengshan (Shangdong) Tire Co. Ltd. joint venture plant to Chengshan Group Co. Ltd. in 2014, it lost its ability to produce Roadmaster TBR tires long-term. Cooper had offtake rights with the plant to produce Cooper-brand products for a minimum of three years.

The company estimates that at full capacity, the plant will be capable of producing approximately 2.5 million to 3 million TBR tires annually, and nearly the same number of passenger tires. There is further room for expansion at the location.

Qingdao Ge Rui Da Rubber Co. is located north of Qingdao in northeast China and currently employs approximately 600 workers. It was established in 2014 after Qingdao Yiyuan Investment Co. Ltd. (QYI) purchased the assets of the then idle facility. QYI’s founder, Executive Director and General Manager is long-time tire industry veteran Li Zhihua, who is also a professor at Qingdao University of Science and Technology. QYI has established production at GRT with an initial focus on TBR tires and has put in place an experienced management team backed by a skilled workforce with extensive tire industry expertise.

“After a comprehensive review of options, we are pleased to have reached this agreement, which meets our goal of finding a new source of high quality, cost competitive TBR tires for North America and Asia,” says Brad Hughes, Cooper’s chief operating officer. "As we have previously stated, achieving our goals for growth will likely require a series of actions, and today’s announcement is certainly a significant one.”

Roy Armes, Cooper's chairman, CEO and president, says the Cooper is gaining "a strong workforce, facilities that we can continue to expand with further capital, and a management team that is focused on the current opportunity in TBR tires as well as our wider growth plans for Asia. This is a great strategic fit within our existing and highly productive worldwide manufacturing network and will allow us to further optimize our global footprint."

Upon closing, Cooper Qingdao Tire will join seven other tire manufacturing facilities in the Cooper family of companies. The three U.S. plants are located in Findlay, Ohio; Texarkana, Ark.; and Tupelo, Miss. There are also facilities in Kunshan, China; Melksham, England; and Krusevac, Serbia. Cooper also has a joint venture plant near Guadalajara, Mexico.

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