Sumitomo Rubber Plans to Build Tire Plant in Turkey, with Turkey's AKO

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Researched by Industrial Info Resources (Sugar Land, Texas)--Sumitomo Rubber Industries Limited (TYO:5110) (SRI) (Kobe, Japan) announced that it will build an automotive tire manufacturing plant in Cankiri, Turkey. The $516 million projected plant will be made in a joint venture with Turkish counterpart Abdulkadir Ozcan AS (AKO) (Ankara, Turkey).

The plant will become operational in two years and will employ 2,000 workers in Cankiri. The plant will manufacture tires for Dunlop, Falken and Sumitomo brands, which plan to export 80% of production.

"We're also planning to sell automotive tires to Japanese car manufacturing firms like Toyota and Honda," said Ikuji Ikeda, CEO of Sumitomo, in a press conference in Ankara. "In near future, we want to build new plants, new ventures in Turkey. With a production of 30,000 tires, we aim to manufacture 10 million tires annualy in the Cankiri plant. We expect serious growth, primarily in Russia and the Middle East markets." Ikeda said that the venture is planning to grab a 10% stake in Turkish automotive tire market by 2023.

Meanwhile, AKO Chairman Mustafa Ozcan said that the production of the Cankiri plant will be separated from the other tire-making operations of AKO, which already owns Petlas (Ankara, Turkey), the leading tire manufacturing firm in Turkey. "We plan to export the production of this plant to Russia, CIS [commonwealth of Independent States], Turkic countries as well as European markets," Ozcan said.

The venture will benefit from the Turkish government incentives, such as tax benefits and reduced social security payments for employers. For additional information, see April 9, 2012, article - Turkey Unveils Investment Incentives to Reduce Current Account Deficit.

Turkish Economy Minister Zafer Caglayan said that the Japanese firms interest to invest in Turkey is surging since the incentive programme become operational in July. In the same press conference, Caglayan said that Japan Mitsui is planning to invest in energy, petrochemicals, mining and auto parts-making business sector in Turkey. "Mitsui will announce the investment plans in the near future," he said. "Also, Japanese steelmaker Toyo Tohan is in negotiations with Turkish counterparts to form a joint-venture."

Last month, Bank of Tokyo-Mitsubishi UFJ (TYO:8306) (Tokyo, Japan) executives announced that they'll apply for a banking licence to operate in Turkey. For additional information on foreign direct investment, see September 17, 2012, article - Turkey Attracts $8.9 Billion FDI in January - July Period.

SRI began in 1909, when Sumitomo Corporation (TYO:8053) (Kobe,Japan) invested in the newly founded Japanese branch of Dunlop Rubber Company Limited (Birmingham, England). Sumitomo acquired Dunlop Japan in 1963 and renamed it Sumitomo Rubber Industries Limited. SRI has now manufactures tires under the brand names Dunlop, Falken and Goodyear.

Many Japanese companies have been moving industrial bases overseas in recent years, more specifically to China and Southeast Asia. This hollowing-out effect is due primarily to the 2008 economic crisis and was accelerated by the Great East Japan Earthquake Disaster last year. Sumitomo Chemical Company Limited (TYO:4005) (Tokyo,Japan) also has recently moved its manufacturing of styrene-butadiene rubber, the base for automotive tires, from Japan to Singapore.

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