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Bridgestone Delays Start of Production at New Thai Plant

Bridgestone Corp. (5108), the world’s largest tiremaker, will postpone the start of production at a new tire plant in Thailand as demand ebbs, adding to companies postponing expansion in the Southeast Asian country.

The company is delaying output at the factory for specialty tires because global demand for coal-mining vehicles is less than it had expected, Chief Executive Officer Masaaki Tsuya said in an interview yesterday. The company will announce a new output start date “when demand comes back,” he said.

Bridgestone has been adding capacity for construction and mining vehicle tires because they have a higher profit margin, Tsuya said. Honda Motor Co. in April said it would delay building its third Thai plant by six months because of political unrest in the country.

“It will take some time before mining-vehicle tire demand heats up,” Tsuya said. The coup and political turmoil in Thailand hasn’t affected the planned timing of production and the company’s three existing factories in the country are running as usual, he said.

The company still expects net income to surge 41 percent this fiscal year to a record 285 billion yen ($2.8 billion) as rubber prices near a five-year low hold down costs.

Photographer: Junko Kimura/Bloomberg

Masaaki Tsuya, chief executive officer of Bridgestone Corp. Close

Masaaki Tsuya, chief executive officer of Bridgestone Corp.

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Photographer: Junko Kimura/Bloomberg

Masaaki Tsuya, chief executive officer of Bridgestone Corp.

Coal Glut

Appetite for mining and construction vehicles is slumping as a coal glut drags prices to almost five-year lows. Glencore Xstrata Plc said it would stop production from its Ravensworth mine in Australia. Walter Energy Inc. said the company would immediately idle output at its Wolverine mine and suspend its Brule project by July.

Bridgestone’s new plant for mining-vehicle tires was scheduled to begin production in the first half of 2015, with a planned capacity of 85 tons per day by the first half of 2019.

Coal prices dropped to the lowest since October 2009 as of June 13, based on the GlobalCOAL NEWC Index, the Asia-Pacific benchmark.

The new Thai plant is mainly for exports and is Bridgestone’s first for off-road tires outside Japan and the U.S. The tiremaker will probably begin producing anti-vibration rubber parts, which make up about 50 percent of sales in Japan, outside the country to boost sales in overseas markets, Tsuya said.

Bridgestone forecast its global production of tires to rise 7.1 percent to 1.95 million tons this year.

The company on June 13 announced an agreement with the International Olympic Committee to become one of the organization’s top sponsors for the 2020 Tokyo Olympics and other Games through 2024.

To contact the reporters on this story: Ma Jie in Tokyo at jma124@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Subramaniam Sharma

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