Biz Buzz Blog: New tire plant raises concerns – and what company could it be?

By Dennis Seid/NEMS Daily Journal

Friday’s special session of the Legislature to vote on incentives for a major tire manufacturer in Clay County has raised some Tires imagesconcerns about the project.

Steve Holland, D-Plantersville, said that while he’ll likely support the project, “I have a lot of questions about it.”

His chief concern is the impact another tire maker will have on Cooper Tire, which has a manufacturing plant in Tupelo. The company employs about 1,200 workers there.

Various reports have said a foreign tire maker could bring as many as 800 jobs to Clay County. Incentives could reach $150 million to bring the tire maker, who has not been identified.

Details will emerge Friday morning when the Legislature convenes and votes on the incentives package.

Tire Review, an industry publication, reported last week that South Korean tiremaker Hankook was eyeing North American production. Company President and Chief Marketing Officer Hyun Bum Cho, said the chance of a U.S. plant being built “is over 80 percent.”

Denise Koeth, the managing editor of the publication said she was unaware of any other tire maker looking to build a new plant in the U.S.

However, there also is speculation that it’s not Hankook. Rather, it’s a Japanese tire maker, most likely Yokohama Tire Corp.

YTC is the North American manufacturing and marketing arm of Tokyo, Japan-based Yokohama Rubber Co.

It has a manufacturing plant in Salem, Va. Up until two years ago, it was in a joint venture with fellow Japanese tire makers Toyo and Continental with GTY Tire Co. in Mount Vernon, Ill. That plant made truck and bus radial tires.

Cooper Tire manufacturers mainly passenger tires for the replacement market.

“I’m concerned a little that we have Cooper Tire in Tupelo, which has done a world of good for Northeast Mississippi,” Holland said. “I’ve heard they’re suffering a bit, and now we’re bringing another tire plant with 700 to 800 employees?”

A Cooper Tire spokeswoman said the company was unable to comment on the matter.

“We are focused on operating our plant and building a quality product,” she said.

Yokohama and Hankook officials could not be reached.

Cooper Tire & Rubber Co., based in Findlay, Ohio, has been an anchor in Lee County for nearly 30 years. It’s Tupelo plant, which opened in 1984, is its largest U.S. manufacturing facility.

In late 2008, the facility was facing potential closure, as Cooper conducted a capacity study to determine which one of its four U.S. plants to close. Ultimately, it shuttered its plant in Albany, Ga., laying off 1,400 employees.

Cooper Tire received $30 million in state and local growth-and-retention incentives – spread over 10 years – to keep the Tupelo plant open. Georgia had offered $32 million.

In recent weeks, Cooper Tire has cut production at its plants, including Tupelo. The company in an SEC filing said it had anticipated production down time to implement new software at its plants. Reports also said higher inventories and decreased demand also led to the slowdowns. Company officials also said expiration of tariffs on Chinese tires last fall also contributed to higher inventory.

Holland admitted he isn’t fully aware of the state of the tire industry, which is why he wants to ask questions about the new tire maker.

“If we’re going to spend that kind of money, why don’t we spend it on somebody that’s already here?” he said.

The Mississippi Development Authority, which has put together the incentives for this new project, said it couldn’t comment about the project until Friday.

Click here for more Business news at the Biz Buzz Blog.

Click video to hear audio