Pirelli follows Michelin and Continental's suit

After Continental and Michelin, the domestic market will attract another major international player interested to begin production of tyres in Romania. Italy’s Pirelli Group, the world’s fifth-largest player on the tyre market will begin construction of a tyre factory close to Slatina. 

The investment will amount to several tens of millions of dollars. The Italian company has already started operations to buy the necessary plot of land for the factory, as Mediafax news agency says, which will take up 50 hectares.

This move is part of the strategy announced by the company’s chairman, Marco Tronchetti Provera, who stated the company was interested in expanding operations to China and Eastern Europe and had 870 million euros set aside for investments over the next three years.

The same announcement had been made by Germany’s Continental four years ago that realised the opportunity arising from the low-cost highly-skilled labour available in Eastern Europe and started to build a factory in Timisoara, which has required over 120 million-euro investments in the meantime.

A year later, it was French Michelin Group’s turn to start production operations in Romania, albeit it did not choose a greenfield investment but bought two tyre factories from Tofan Group, Silvania Zalau and Victoria Floresti, along with the group’s recap business, Tofan Recap, and other assets. How much the deal was worth, that has never been publicly announced. Most speculations revolved around $80 million, which money was collected by Nomura International investment fund and by businessman Gelu Tofan, the group’s founder. Both Michelin and Continental have developed the range of products they are manufacturing in Romania. The German group began production of electrical parts in Sibiu through its Continental Automotive Systems unit and of fan belts for air conditioning systems through its Contitech division. The French have also started construction of a factory that makes metallic cord, a basic component for tyre manufacturing process.

Even Italy’s Pirelli has at some point contemplated metallic cord production in Romania. The Romanian Association for Foreign Investments (ARIS) data shows Pirelli was looking to buy Cord Buzau, held by Bulgarian EP Commerce Ood, and invest approximately ten million euros in it.

The Italian producer is running only commercial operations in Romania at the moment, with the help of a number of importers, as is the case with its Japanese competitor Bridgestone. Things are roughly similar as far as US’ Goodyear is concerned, which is running commercial operations in Romania through Goodyear Romania, a company it established to import and distribute its products on this market.