Kenda Rubber weighs NT$10bn tire plant project

Taiwanese tire manufacturer Kenda Rubber Industrial Co Ltd said that it plans to invest NT$10 billion (US$345.3 million) to build a new car tire plant in Taiwan, which will be a key part of its efforts to boost its revenue to NT$50 billion within next five years through diversifying manufacturing sites.

The investment plan can only be achieved out if the government helps the company find a 29.1 hectare plot of land, otherwise it will have to divert the investment to another destination, Kenda chairman Yang Ying-ming (???÷) said in a press conference during a visit by the Council for Economic Planning and Development to Kenda’s car tire factory in Yunlin County on Friday.

The chairman said Kenda, a tire supplier to Giant Manufacturing Co Ltd (?Y°2ì?), General Motors Co and Toyota Motor Corp, is seeking to expand its ability to grow annual revenue by 66.67 percent by 2018, from NT$30.19 billion last year.

Taiwan is its first choice for such investment, the company said.

As Kenda’s research and development center and mold development division are all located in Taiwan, the company hopes to build a new car tire factory to facilitate development of its car tire products, Yang said.

“As the costs involved in building a plant in China are still lower than those in Taiwan, we do not want to put all our eggs in one basket,” Yang said.

According to Yang, the US government has imposed a tariff of 25 percent to 35 percent on tires shipped from China starting in 2009, causing losses for the company.

Currently, Kenda has invested NT$1.6 billion in a car tire factory in Yunlin, which can produce 4,000 tires a day.

The manufacturing capacity of the factory will double to 8,000 tires a day after a production line is expanded by June.

However, that is still far lower than the company’s target of boosting local car tire production to 25,000 tires a day.

The proposed NT$10 billion investment could create 2,000 jobs, Yang said.

As the company is suffering from labor shortages at its existing production lines in Taiwan, Kenda urged the government to extend the preferential treatment of allowing a 40 percent foreign labor ratio to the rest of its its factories.

Local firms can usually only hire 25 foreign laborers out of every 100 workers.

Huang Shi-chin (???), assistant vice president of Kenda, said the company is facing difficulty in hiring local workers because of the harsh smell of burning rubber and plastics, and said it is even more difficult to hire people to work night shifts.

Kenda’s Taiwanese operations recorded NT$6.46 billion in revenue for last year, up 4.63 percent from the NT$6.18 billion it posted in 2011, according to the company’s filing to the Taiwan Stock Exchange.

Kenda’s share price rose 0.82 percent to NT$37.1 on Friday in Taipei trading. Over the last 12 months, Kenda’s share price has soared 16.67 percent, while the TAIEX gained 6.9 percent.