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Pirelli to build plant in Mexico

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According to Pirelli & C. S.p.A.’s “Industrial Plan 2011-2013 and Vision to 2015,” the company will launch a new plant in Mexico to serve the North American Free Trade Agreement (NAFTA) area, with an initial investment of $210 million.

 “In 2015, around 60% of Pirelli’s production capacity will consist of plant and machinery launched in 2005 or after, and therefore less than 10 years old,” the plan states.

The plan was approved by the company’s board of directors and offered to the financial community by Pirelli & C. Chairman Marco Tronchetti Provera and Chief Operating Officer Francesco Gori, Maurizio Boiocchi, the head of Research and Development, and Ugo Forner, Guglielmo Fiocchi, Andrea Pirondini and Alberto Pirelli, respectively the heads of the company’s Car, Moto, Truck and Agro business units.

The company will have facilities that are highly specialized in the premium segment and located in high-growth countries with favorable industrial costs, the plan states. “The geographic distribution of production facilities will ensure a balanced presence between mature markets and rapidly growing economies (RDE), which together with Latin America will account for two thirds of the group’s profits.

“The reinforcement of its position in these regions will reduce the company’s exposure to possible economic downturns which could affect mature areas such as Europe and the USA, where, however, Pirelli will be able to take advantage of new opportunities stemming from the broadening of the premium segment, as noted earlier.”

The plan also states that the company will focus on premium tires; will invest 1.9 billion euros in the five-year period; expects strong growth in the Asia-Pacific area; will increase its “local-for-local” production; and will have an average annual revenue growth over three years of 8%.

It notes its Italian Settimo Torinese plant will be the group’s most advanced, will cost 155 million euros and will be fully operational in 2011. The company also will have continued focus on research and development and continue its green initiatives in water and energy consumption.

““Pirelli has concluded its transformation into a pure tire company and reached its targets ahead of schedule. In a world that is changing fast and in which new areas of growth are emerging, we have developed a plan which puts the company in the best possible position to compete,” says Provera.

“With a brand value estimated by Interbrand of approximately 1.8 billion euros, the Pirelli brand represents a potential to be leveraged and will become even stronger through its involvement with Formula One,” the plan states.

“In the tire sector, Pirelli is among the companies that invest most in research and development (approximately 3% of sales annually) with the aim of continual product and process innovation, and to take advantage of business opportunities linked to new technologies.”

Looking to 2015, “Pirelli will continue to offer a complete range of premium tires, which are always being renewed and are capable of satisfying the specific needs of different customer types.

"Thanks to these actions, Pirelli will be transformed, as demonstrated by the expected evolution of the composition of sales by segment, region, channel and plant age. In 2015, Pirelli expects that 73% sales will come from the premium car and light truck segment (66% in 2010) and 76% from the aftermarket (75% in 2010).

“Changing perspective, 57% will come from fast growing economies (RDE, Latam, Apac, Russia, Emea, equal to 52% in 2010) and over 60% from new sites or new machinery (30% in 2010),” the plan states.

“Pirelli’s transformation and growth will be supported by a total investment of 1.9 billion euros between 2011 and 2015, an increase from the 1.5 billion euros invested between 2006 and 2010. Almost all this investment (99%) will go to the tire sector, to meet growing demand in the market, in particular in the premium segment, in a market in which production over-capacity is not foreseen.”

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