Thailand’s importance in the tire world has been growing over the past decade.
Today Traction News takes a close look at how Thailand is becoming a new center of the global tire industry.
Thai government making major investments in tire industry
Thailand — a country found on the same Asian peninsula as Vietnam and Cambodia — is the source of 37 percent of the world’s new raw rubber supply. But its influence is set to rapidly grow as the Thai government makes high-level investments and more tire companies move production there.
The country can already produce every category of tire, except flat tires. The Thai government has plans to increase tire production from 530,000 tons per year to more than a million tons in the next couple of years. Major tire factories are currently under construction and it has plans to build six tire testing tracks.
In short, the Thai government is doing everything it can to make the country more attractive for business expansion and foreign investment. Director of the Thai Industrial Standards Institute, Suthon Nikomkate, said the Research and Development unit for tires is one of the Thai government’s top priorities because the government wants to “increase rubber prices by upgrading the country’s rubber industry.”
U.S. tariffs on Chinese tires a boon for Thailand
The U.S. is playing a role in helping that happen. The long-running battle against Chinese-made tires being dumped into the U.S. at below market value has seen tariffs introduced and raised on various classes of imported tires. Tires made in Thailand aren’t subject to these anti-dumping and countervailing duties so some companies are now fleeing China in favour of its Asian-region neighbour.
The world’s tenth largest tire maker (and China’s largest) Hagzhou Zhongce Rubber has built a new facility in Thailand, as have Linglong Tire and Double Coin. There have also been a number of takeovers, restructurings, and mergers in the tire industry causing plant closures in China and openings in Thailand.
But it’s not just tariffs. Michael Mathis, president of Atturo Tires, says Thailand is also an attractive place for American tire companies to do business. His company makes about 60 percent of their tires in Thailand. He told Traction News the country is experiencing phenomenal growth in its tire industry because Thai natural rubber is high quality and the country has a large base of skilled and knowledgeable tire and rubber workers to draw from.
Investment in Thailand’s tire industry
In a move meant to bolster the country’s car tire industry, Thailand’s government-operated Board of Investment recently announced it will be investing US$100 million to build a major automotive tire testing facility. The facility will be built near Bangkok, in the Sanam Chat Khet District.
The Board of Investment also announced last year that Bridgestone Corporation, Shandong Linglong Tire Company, and Goodyear Thailand will be investing more than US$312 million to turn the country into a hub for aircraft tire manufacturing for the Association of South East Asian Nations (ASEAN).
Bridgestone’s investment will be in the area of US$150 million for the construction of two new aircraft tire plants. One of these plants will be making retread aircraft tires and one will be making new aircraft tires. Goodyear’s investment will total US$162 million, which will go into building a plant for radial aircraft tires. The company will also expand production at its current plant north of Bangkok at Phathumthani.
What’s the future for Thailand in the tire industry?
Car sales across the globe are up over the past few years and sales of cars by Asian carmakers are also up sharply. Projections are that sales of Asian-made cars will only increase — and Thailand is in a prime location to leverage their proximity to that industry to their advantage.
But what about the U.S.? What affect will this have on our tire industry?
While new President Donald Trump has promised to “even the playing field” when it comes to foreign-produced goods sold by companies based in the U.S, in circumstances where it is felt those imports are hurting U.S. industry. While the President has China firmly in his sights, this does not yet appear to include Thailand.
Perhaps that’s about to change? If it does, the fact Thailand is the world’s largest rubber producer could well make those trade negotiations an interesting time for the tire industry.