Pirelli and PT Astra Otoparts Tbk establish a joint venture (60% Pirelli, 40% PT Astra Otoparts) to build new moto tyre factory in Indonesia
JV’S ESTIMATED 2012-2014 TOTAL INVESTMENT 120 MILLION DOLLARS
EXPECTED 2014 CONVENTIONAL MOTO TYRE PRODUCTION 2 MILLION PIECES, GROWING TO 7 MILLION IN 2016
AT FULL OPERATION THE FACTORY WILL ACCOUNT FOR AROUND 25% OF PIRELLI’S TOTAL WORLDWIDE MOTO PRODUCTION
Pirelli has signed an agreement with Astra Otoparts, the leading Indonesian automotive components maker, for the construction of a new factory in Indonesia, Pirelli’s first in the country, for the production of conventional motorcycle tyres.
The agreement was signed – on the occasion of a mission to Asia by the Italian Foreign Affairs Minister Giulio Terzi di Sant’Agata – by the Senior Vice President of Pirelli’s Moto Business Unit Uberto Thun and the CEO of Astra Otoparts, Siswanto Prawiroatmodjo. The signing was presided over by Terzi di Sant’Agata, the Indonesian Industry Minister M. S. Hidayat, the Minister for Trade and Investment Gita Wirjawan and the Italian ambassador in Jakarta Federico Failla.
The accord entails the creation of a joint venture in which Pirelli will hold the majority position with 60% of the capital and Astra will hold the remaining 40%. The joint venture will invest a total of 120 million dollars between 2012 and 2014 for the construction of a new factory.
Construction of the new factory, located a short distance from Jakarta, is expected to begin in the fourth quarter of 2012. The site will cover 25 hectares and when fully operated, in 2016, will employ 750 people.
The new factory is expected to become operational from the second half of 2013, with an estimated production of around 2 million conventional moto tyres in 2014 which when fully operational, in 2016, could reach 7 million pieces total. Of these, 3 million will be sold as Astra brands, while the remaining 4 million – equal to about 25% of all Pirelli’s moto production in the world – will carry Pirelli brands (Pirelli or Metzeler). In the context of the group’s ‘local for local’ strategy, 20-25% of the Pirelli brand production made in the Indonesian plant will serve the original equipment and replacement markets of the Asia Pacific area, where the moto market is forecast to grow at an average annual rate of 3.5% from 2011 to 2014. The remaining output will serve all the markets in which Pirelli operates with the exception of South America.
The new facility will allow Pirelli to not only strengthen its moto production capacity – which according to the forecasts of the industrial plan will grow to 16 million pieces in 2015 from 13 million pieces in 2011 – but also to have a direct presence in the Asean area’s biggest economy, which with a circulating pool of 250 million motorcycles is the biggest motorcycle market in the world. Of this total, 68 million are in Indonesia whose moto market is growing by more than 10% a year. The in-country production capacity will also be free of export duties to Asean markets and reduce the cost of raw material supply thanks to the strong local presence of natural rubber producers.
Founded in 1872, Pirelli is the fifth tyre maker in the world by sales. Present in over 160 countries, at the end of 2011 it counted 21 production facilities on four continents and employed around 34,000 people. Pirelli is a leading producer in the high and ultra-high segments, thanks to its commitment to research and development, an area in which it invests about 3% of total revenues (5.6 billion euro in 2011) or 7% of Premium segment revenues, one of the highest levels in the tyre segment, with the goal of a constant improvement of products in terms of performance, safety and containment of environmental impact. Active in automotive sports since 1907, Pirelli is the exclusive supplier of the Superbike world championship and prestigious mono-brand championships, but above all it is the sole supplier for the Formula 1 championship for the 3-year period 2011-2013.
PT Astra Otoparts Tbk
PT Astra Otoparts Tbk (Astra Otoparts) is Indonesia’s foremost automotive component Company producing components both for Original Equipment (OEM) and Replacement Market (REM). The company counts most major car and motorcycle makers of the world among its clients and has become synonymous with high-quality automotive spare parts. These both satisfy growing local demand and are exported to 49 countries in the Middle East, Asia Oceania, Africa, Europe, and the Americas. The company has established three representative offices in Singapore, Dubai, and Australia. It employs circa 33,000 people and has been listed on the Indonesia Stock Exchange since 1998. Its consolidated revenues in 2011 were 7.36 trillion rupiah (626 million euro).