Year in Review: Doublestar, Kumho complete merger after failed attempt in 2017

At the end of 2017, two strong global tire manufacturers almost linked up to form a major player in the industry.

Qingdao Doublestar Industrial Co. Ltd. didn't give up, and in July finalized a deal to acquire Kumho Tire Co. Ltd. in a $607 million deal, giving it a 45 percent stake and control of South Korea's second-largest tire maker.

The pair form a strong combination, as Kumho's prominence in the passenger car radial segment combined with Doublestar's strong truck/bus presence will strengthen both respective global brands.

The combined company would generate about $3.56 billion in sales, making it No. 11 globally based on 2017 figures and within $60 million of the top 10, according to Rubber & Plastics News2018 Global Tire Report.

Intense competition has forced Chinese tire companies to instead attempt to acquire established tire companies and Doublestar's deal is the second major example of such a strategy. 

In 2015, China National Chemical Corp. acquired Pirelli & C. S.p.A. for about $7.7 billion. Based in Milan, Italy, Pirelli's 2016 sales of $6.38 billion made it the fifth-largest tire company in the world based on Rubber & Plastics News' 2017 Global Tire Report. However, it fell to No. 6 in the latest edition.

Still coming to America

The influx of tire plants to the U.S. market spilled into 2018 with two more players getting ready to set up shop.

Triangle Group Co. Ltd. chose a 1,449-acre tract of land in Rocky Mount, N.C., to build its first two North American tire manufacturing plants. The nearly $580 million project will be conducted in two phases, the first a passenger and light truck plant with an expected capacity of 5 million that has begun construction.The second site will sit alongside the first plant and produce 1 million truck/bus tires per year. The firm projects both phases to be complete by 2023 and employ 800 when fully operational.

And most recently, Balkrishna Industries Ltd. disclosed plans to invest $100 million to establish its fifth tire manufacturing plant, and first outside of India, at an undisclosed U.S. site.

One foreign-based tire maker, however, had a change of heart as China's Guangzhou Vanlead Group Co. Ltd., the company that controls Wanli Tire Group, put on hold its plans for a $1 billion plant in South Carolina.

Becoming whole(sale)

Four of the five largest tire makers in the world paired off to form two, separate, wholesale joint ventures.

Michelin North America Inc.'s wholesale distribution activities merged with Sumitomo's TBC Corp.'s wholesale assets in a 50-50 joint venture—National Tire Wholesale. At the time, the two parties said it would become the second largest player on the U.S. wholesale tire market. The businesses will distribute nearly 15 million tires, with an estimated value of more than $2 billion.

Then in April, Bridgestone Americas Inc. and Goodyear formed a similar 50-50 joint venture called TireHub L.L.C., which combined their respective wholesale tire distribution assets. The company will provide their range of passenger and light truck tires through as many as 83 distribution centers in the U.S. The tire makers said their existing wholesale volume was 10 million units annually, translating to about $1 billion or more in revenue for TireHub. Peter Gibbons was named CEO of the operation.

America Tire Distributors Inc. got caught in the crosshairs, as both Bridgestone and Goodyear ended their direct supply relationships with the firm, a major reason why the firm filed for Chapter 11 bankruptcy protection in October.

Moving south

The firm disclosed plans to pack up and leave Colchester, Vt., relocating its North American headquarters to a city about 150 miles west of Dayton, Tenn., where it is building its first U.S. manufacturing plant.

The company did not say how many of the 65 employees in Vermont would be making the move. The firm will remain in Colchester until April 2019.

Upping the ante

Japanese conglomerate Mitsubishi Corp. established a wide-ranging strategic partnership with Toyo Tire & Rubber Co. Ltd., which raised its stake in the tire maker to 20 percent from 3.05 percent with a $452.5 million investment.

Toyo said the move was necessary because of intense competition within the tire industry and drastic environmental changes globally, adding that it plans to use the capital raised by investing in its global operations.

It already earmarked $62 million to expand truck and bus tire capacities in China and Malaysia, and will use $53 million and $89 million to support ongoing expansions at plants in White, Ga., and Perak, Malaysia, respectively.

It also plans to spend $293 million for new production facilities at sites yet to be disclosed.