TOKYO -- Japan's largest tire maker, Bridgestone Corp., said on Friday it will build a third tyre factory in China at a cost of $99 million, continuing its aggressive expansion since bouncing back from a recall scandal.
The radial tire plant for cars, to be built in the city of Wuxi in Jiangsu Province, would go on line in September 2004 with production capacity of 8,000 tires a day, it said.
The plant would produce tires for export as well as for sale in China, complementing a Bridgestone car tyre plant already operating in Tianjin, as well as a truck and bus tire plant in Shenyang.
"Demand for radial tires for passenger cars is burgeoning in China as vehicle ownership surges," Bridgestone said in a statement.
"The growth in Chinese demand is part of an ongoing expansion in the global market ... Bridgestone's decision to build (another) plant in China is thus a move to keep up with that expansion."
The plan underscores Bridgestone's aggressive stance since it bounced back from a huge recall scandal at its U.S. Firestone unit, and as it battles Michelin and Goodyear Tire & Rubber Co. for global supremacy.
The move also marks another step in efforts by Japanese tire makers to build facilities in China after initially trailing European and U.S. rivals in making inroads there.
"Japan's tire exports have traditionally centered on the U.S., but they could focus on China in a few years," Deutsche Securities analyst Kunihiro Matsumoto said in a note to clients on Friday.
"Given the substantial expectations surrounding the growing China market, we view this news as good, and look for a positive impact on the share price," he wrote.
ALL EYES ON CHINA
Bridgestone has made a convincing rebound from the dark days of 2001, when U.S. unit Firestone was inundated with lawsuits after U.S. regulators linked Firestone tires -- mostly installed on Ford Motor Co. Explorers -- to 271 deaths and more than 800 injuries from rollover accidents.
Millions of tires were recalled and Firestone's century-long relationship with Ford came undone as the U.S. unit was stung with a $1.68 billion loss.
But a massive restructuring of its U.S. operations and strong exports to North America and Asia helped Bridgestone last week to post a 161 percent surge in group net profit for 2002.
With the U.S. operation back on its feet, Bridgestone has turned its attention to restructuring its European operations and boosting global output due as demand increases for larger tires in the United States and Europe and commodity-grade tires in Asia.
The third plant in China will bring its number of plants worldwide to 47, including a new plant currently being built in Thailand.
Hastening the expansion into China of Bridgestone and other Japanese tyre makers like Yokohama Rubber Co. Ltd. and Sumitomo Rubber Industries Ltd. has been a sluggish domestic market, as well as recent ambitious China expansions by Toyota Motor Corp. and Nissan Motor Co. Ltd.