Sumitomo Rubber shuts down North American plant
Sumitomo Rubber Industries, Inc. (SRI) halted production at its 102-year-old plant in Tonawanda, New York, its only plant in North America, on November 7.
The tire maker immediately halted all production at the Tonawanda plant, citing the inability to produce profitable tires there, and the shutdown is expected to be completed within the next 12 to 24 months. The government shutdown affects about 1,500 employees.
SRI is keeping its North American research and development division active, but it is unclear where it will be conducted. The company plans to dissolve Sumitomo Rubber America LLC, the SRI subsidiary responsible for the plant.
“The closure follows a lengthy review of the facility’s viability following a comprehensive analysis of various business complexities, including increasing material and logistics costs, outdated infrastructure, intermittent financial performance and changing market conditions,” SRI said in a press release.
“The evaluation was conducted as part of a broader strategy to ensure the long-term sustainability of the Sumitomo Rubber Group in the competitive international tire market.”
The decision to close the plant comes three years after SRI pledged to invest $130 million to upgrade and expand the plant to produce more value-added tires. The project aims to nearly double passenger car and light truck tire capacity to 12,000 per day and increase truck/bus tire capacity from 1,600 per day to 2,300 per day.
SRI is moving most, if not all, of its capacity from the New York plant to its 18-year-old facility in the city of Amati, Thailand. It will almost exclusively supply the U.S. market from that plant.
Hopes for a future SRI plant in North America aren’t completely dead: SRI’s executive director, Hidekazu Nishiguchi, told Japan’s financial community during the company’s third-quarter financial conference call that he believes “local production for local consumption is best for the tire industry.”
“Eventually, we will build a plant near North America again… We think the environment will have changed a lot by the time we build our next plant.”
