Pirelli targets Chinese market with its first local Tyre facility

Pirelli Targets Chinese Market With Its First Local Tyre Facility

  • The Radial Truck Tyre Factory In Shandong Will Employ 750 And Produce Approximately 1.2 Million Tyres Per Year When Fully Operational
  • Production Will Be Aimed At China And Markets In South-East Asia And Australia

  • The Goal Is To Capture 3% Of The Market In One Year And Grow At Double The Market Rate

  • A Car Tyre Plant, Which Will Serve The Growing Chinese High-Performance Market, Will Be Also Built

  • Total Forecast Investment In China Approximately 180 Million Dollars In Next Two Years

Yanzhou, 12 October 2005 - The Pirelli Group has launched the production of tyres in China , inaugurating today a new radial truck tyre plant in Yanzhou , in the Shandong Province . The Chairman of Pirelli & C. SpA , Marco Tronchetti Provera , and the General Manager of the Tyre Sector , Francesco Gori , were present, as were Pirelli's Chinese partner Niu Yishun , chairman of Yinhe Group, and representatives of the Chinese Authorities and of the Italian Embassy in Beijing .

The factory covers an area of 500,000 square metres, will employ approximately 750 people and has an initial annual production capacity of approximately 540,000 tyres . At full capacity, the plant will be able to produce more than 1.2 million tyres a year. The output of the Yanzhou plant is destined for the Chinese , South-East Asian and Australian markets.

The Pirelli Group believes that China will become a key market for tyre producers in the coming years. Its tyre market is today the fastest growing in the world and represents 9% of the world market, with a value of approximately 8 billion dollars, with radials accounting for more than 60%. In 2004, the production of radial tyres grew 33% compared with 2003, exceeding 100 million units and equal to 50% of China 's total tyre production.

Pirelli, a leader in radial technology for cars and trucks, is a well known and respected brand in China and aims to take leading role in this growth.

Pirelli's goal is to capture 3% of the Chinese radial truck tyre market by the end of 2006 , with the aim of then growing at twice the speed of the market.

Pirelli will develop its presence in China with an investment of approximately 90 million dollars in 2005, which will grow to approximately 180 million in a couple of years , allowing the company to establish itself quickly as one of main producers of tyres in China . These investments will also allow Pirelli to start the realization of a car tyre plant, which will serve the Chinese market's growing demand for high-performance tyres. This is the most important expansion plan ever undertaken by the Pirelli Group in the Far-East.

Pirelli will operate through a 60%-controlled company , the result of a joint-venture agreement signed on 16 June 2005 with Roadone Tyre, which is a part of China 's Yinhe group.

The Yanzhou plant has the best machinery available on the market and will use the Pirelli Group's most modern production technology, constituting a natural evolution of Pirelli's "zero gradi" technology, already known and used in China for almost 20 years. In the 1980s and 1990s, Pirelli Tyre had a key role in the transition of Chinese manufacturers to radial technology, through know-how licence contracts and the supply of machinery. It is estimated that over half of China 's radial tyre production for industrial vehicles is based on Pirelli's "zero gradi" technology.

The entire workforce and almost all of the staff at the Yanzhou factory are local, including the workers involved in the construction of its infrastructures. Pirelli is the first international tyre maker to open a plant in the Shandong Province , where over 35% of the market's production capacity is located.

The training of new personnel is a priority in Yanzhou: the company will establish a wide-ranging professional, technical and linguistic training programme. The workforce will receive ad hoc training on all machinery and production processes used in the plant, while staff will attend English and Italian language courses.

The launch of production in China consolidates the international presence of Pirelli Tyre, which already counts 24 plants in 12 countries , as well as a widespread commercial and distribution structure across five continents. The new Chinese plant will stand alongside Pirelli truck radial facilities in Italy , Turkey , Egypt and Brazil.

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