Giti planting its flag in U.S.

Giti Tire Group, the predominantly Chinese tire maker based in Singapore, will soon be calling rural Chester County home after selecting a site there for its first U.S. tire plant, a $560 million project that will create 1,700 jobs over 10 years.

Giti Executive Chairman Enki Tan disclosed the company's plans June 16 at a ceremony in Richburg, S.C., accompanied by South Carolina Gov. Nikki Haley, Secretary of Commerce Bobby Hitt, Singapore Ambassador Ashok Kumar Mipuir and dozens of state, county and local officials and Giti executives.

Dr. Tan called this a “key milestone for Giti Tire and an important part of our growth strategy worldwide. Existing business and strong demand for Giti Tire's passenger and light truck tires in North America has made this significant investment in South Carolina possible.” The 1.8 million-sq.-ft. plant and distribution center will be designed with a first-phase annual capacity of 5 million tires, Dr. Tan said, for both replacement and OE customers.

“This significant investment represents our strong commitment to customers in North America.” Giti generated nearly 17 percent of its $3.8 billion in fiscal 2013 sales—or $640 million—from business in North America, where it goes to market under the GT Radial, Primewell, Dextero, and Runway brands.

The factory will be engineered to allow for additional capacity “in response to future market demand and conditions,” said Tom McNamara, executive vice president of sales and marketing, Giti Tire (USA) Ltd., Giti Group's Rancho Cucamonga, Calif.-based sales and marketing subsidiary. Dr. Tan and Mr. McNamara declined to say when construction might start, owing to the uncertainty of the permitting processes. Construction should take about 22 months, they said.

To manage the project from planning through to commissioning, Giti Tire lured Clyde Fish, who previously oversaw the construction of Bridgestone Americas' plant in Aiken, S.C., out of retirement to be director of projects and manufacturing.

The factory announcement comes just months after Giti disclosed plans for technical centers in the U.S. and Germany as part of a strategy to enhance the firm's research and development capabilities. Giti hired Hamid Aboutorabi—a 23-year veteran of the tire industry, including 17 years as manager of research and engineering services with Kumho America Technical Center—to manage the U.S. center.

Chester County is largely rural with about 33,000 residents in South Carolina's Piedmont area about 50 miles southwest of Charlotte, N.C. The county, once home to a number of textile plants, has one of the state's highest unemployment rates. The Giti plant will be built on an 1,100-acre site alongside Interstate 77 just south of State Highway 9.

Lei Huai Chin, managing director of Giti Tire Group, called Chester County an “excellent location for Giti Tire, offering an extensive and efficient infrastructure network including interstate highways, rail, close proximity to airports and a major metropolitan area to support the company's needs and growth for many years to come.” Mr. McNamara stressed the plant will be built with a “focus on maintaining a healthy balance with the environment and following Giti Tire's green initiative.”

Giti's project is the fourth greenfield tire plant to be located in South Carolina in the past four years, representing more than $3 billion in investment, according to Tire Business research. In addition, Bridgestone Corp. and Michelin North America Inc. have announced several hundred million dollars more in expansions of existing factories in the state.

“This is another huge win for our state and Team South Carolina,” Gov. Haley said. “...Giti's decision to come to our state is another great sign that our economic development efforts are paying off for the hard-working people of South Carolina.” Mr. Hitt said the project “further bolsters our state's reputation as a manufacturing powerhouse and the nation's tire capital. “We look forward to a long and successful partnership with Giti Tire in our state.”

South Carolina is offering Giti Tire $40 million or more in economic benefits from state, county and local government entities toward the construction of the plant.

The state's Coordinating Council on Economic Development approved a $37.8 million grant to help purchase and improve the site, according to a spokesman for the South Carolina Department of Commerce. Giti also will receive “job development credits” once the plant reaches the target of 1,700 jobs, the spokesman said, although the value of these credits will depend on the number of jobs and the salary level.

These credits, which are designed to help companies offset the cost of locating a facility, buying equipment and training employees, reportedly will last for 10 years. In addition, the Rural Infrastructure Authority approved a $2 million grant earlier this year to assist with extending water and sewer services to the site, and local media reported that the Chester County Council approved a “fee-in-lieu ordinance” that will reduce the company's property taxes.

Further details were not available. Giti also will benefit from assistance from readySC—a division of the South Carolina Technical College System—with recruiting and training the firm's initial workforce.

Brian Singleton, chairman of the Chester Development Association, said in a statement: “We...are anxious to work with them building this new world class tire manufacturing operation.” Based on its stated sales of $3.8 billion—which includes about $1 billion in revenue from Giti's P.T. Gajah Tunggal Tbk. affiliate in Indonesia—Giti Tire Group would be the 11th largest tire maker worldwide, according to Tire Business' annual analysis of the global industry.

It has eight plants in China—five tire production and three materials support plants—and access to production from Gajah Tunggal's tire manufacturing complex near Jakarta.