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Pirelli develops in Romania new high-technology industrial pole for the automotive sector

PIRELLI DEVELOPS IN ROMANIA NEW HIGH-TECHNOLOGY INDUSTRIAL POLE FOR THE AUTOMOTIVE SECTOR

TOTAL INVESTMENT OF APPROXIMATELY 235 MILLION EUROS FOR THREE PLANTS: TYRES, STEELCORD, AND PARTICULATE FILTERS

FACTORIES ARE ENDOWED WITH INNOVATIVE TECHNOLOGY. ADVANCED RESEARCH UNDERWAY FOR “RADIO” MONITORING OF TYRE PRODUCTION

ONE MILLIONTH HIGH-PERFORMANCE TYRE MANUFACTURED AT NEW PLANT IN SLATINA

THE TARGET IN THE TYRE BUSINESS IS TO REACH ANNUAL GROWTH OF MORE THAN 10% IN EASTERN EUROPE

NEW FACTORY FOR ORIGINAL EQUIPMENT FILTERS UNDER CONSTRUCTION

INNOVATIVE MANUFACTURING PROCESSES TO BE USED FOR MASS PRODUCTION OF SILICON CARBIDE FILTERS

RESEARCH AGREEMENT SIGNED WITH THE UNIVERSITY OF CRAIOVA

AMONG SOCIAL ACTIVITIES, TWO NEW PROJECTS: COLLABORATION WITH FC INTERNAZIONALE FOR REALIZATION OF AN INTER CAMPUS AND PARTNERSHIP BETWEEN THE SLATINA HOSPITAL AND THE NIGUARDA HOSPITAL IN MILAN

Slatina (Romania), 19 July 2007 - Pirelli presented today in Slatina (Olt province) its development plans and the activities of the new industrial and technology pole of the Group in Romania.
The presentation took place on the occasion of the ceremony for manufacturing of the one millionth high-performance tyre in the country. Among others, Marco Tronchetti Provera, Chairman of Pirelli & C. SpA, Francesco Gori, Managing Director of Pirelli Tyre, and local authorities were present.
The Pirelli Group is building in two different areas of Romania an integrated industrial and technology pole of international relevance, with the dual objective of conquering Central and Eastern European tyre markets while increasing high-end manufacturing capacity, and developing the new business of particulate filters.

The new Pirelli pole in Romania is composed of three manufacturing plants, two already operating and one under construction, for a total investment of approximately 235 million euros.

Tyres


A central element of Pirelli’s presence in Romania is the new factory in Slatina for production of high-performance tyres for cars and SUVs. The factory, inaugurated at the end of 2006, will close its first year of activity in line with expectations for production of more than 2 million pieces, to become approximately 4 million in 2008. The investment amounts to about 170 million euros.

The new factory in Slatina, one of the most modern in the world for tyre manufacturing, uses the best non-robotized manufacturing technology and was conceived for production of high-performance tyres, where Pirelli is leader, including the Winter, High-Performance, Ultra-High-Performance and SUV ranges. Only a few months from the start of production, the factory has already obtained ISO-TS quality certification, an important international recognition for suppliers of the automotive sector. In June of this year the innovative “Model Mixing Room”, which produces extremely high technology mixes, began operating. This will make the entire manufacturing process in Slatina completely autonomous. Thanks to a research agreement signed with the University of Craiova and the Fondazione Silvio Tronchetti Provera, in addition, a study has been undertaken for application of RFID (Radio Frequency Identification) technology within Pirelli. The aim is to create a system that allows for tracking, using a microchip, all the production phases of the tyres, guaranteeing greater and greater levels of quality and safety.

In Slatina there is also a factory in operation since 2005 manufacturing steelcord, the supporting structural element in radial tyres. The plant has capacity to produce about 30,000 tons per year of steelcord destined for EMEA markets, for a multi-year investment of about 40 million euros.

The entire industrial complex at Slatina, including steelcord, extends across an area of 500,000 square meters and at year end will employ about 1,200 workers, for which a significant two-year training program is planned with a total investment of about 500,000 euros. The Slatina pole is in a strategic position with respect to Western and Eastern European markets and represents for the Pirelli Group a logistics and commercial hub for all of Eastern Europe, an area in which the large automobile manufacturers are continuing to increase their production capacity. The export quota of tyres produced by Pirelli in Romania is more than 90%. Central and Eastern Europe will represent over the next several years a market of reference for high-performance tyres, with expectations for demand growth for Pirelli of more than 10% per year.

The new industrial plant in Romania allows Pirelli to increase its manufacturing capacity in the high-performance segment and is added to the investments in technological innovation currently underway in factories in Western Europe, in particular in Italy in Settimo Torinese, where a protocol has just been signed with local institutions for realization of a unique and modern industrial complex for production of car and truck tyres.

Particulate filters for diesel vehicles


In addition, construction work has just begun on the third factory of the Group in Romania, destined mainly to mass production of original equipment particulate filters. The plant, located on 10 hectare area in the Industrial Park in the county of Gorj in southwestern Romania, will be operational starting from the second half of 2008 and will have two production lines. The new factory, in a strategic industrial district on the border with Serbia, will be able to produce more than 500,000 silicon carbide filters for original equipment of diesel engines, with about 400 workers. The initial investment is estimated at more than 25 million euros. The new plant will allow Pirelli to develop its presence in the particulate filters sector. At the moment, thanks to the production line in the Milan area, Pirelli is already active in the retrofit segment (vehicles already in circulation) with applications on buses, light and heavy commercial vehicles, and off-road vehicles.

Pirelli’s particulate filters are systems for treatment of exhaust gases able to reduce particulate emissions of diesel engines by more than 90%. They are made in porous silicon carbide, a material that offers unique characters for resistence to heat and temperature variations, and can be fitted on new cars or on already circulating diesel vehicles. In the retrofit segment, the increasing distribution of particulate filters is clear from the plethora of incentive programs in Europe (Great Britain, Scandinavia, France, Germany, Switzerland and Italy), America (USA and Mexico), and the Far East (Japan). In London, for example, a low emission zone has been defined, extending from the city center to the M25 motorway, in order to disincentivate circulation of the most polluting diesel vehicles. This program, according to estimates, will involve about 2.4 million vehicles through 2012, which could be fitted with particulate filters to enter the city.

In the original equipment segment, with the new Euro 5 regulations which establish a limit on particulate emissions of 0.005 g/km, new diesel cars will be required to have a filter by the end of 2011, for a total of about 10.5 million cars per year compared with about 3.5 million per year currently.

Projects for the local community

Pirelli, in line with its tradition of strong roots in countries where it is present, is planning a series of initiatives in Romania, especially in the Olt province, in support of training and wellness of workers, of their families, and more in general of the local area.

In particular, in collaboration with FC Internazionale and the Association Comunit√† Nuova Onlus, Pirelli will set up in Slatina a new “Inter Campus”, the program that uses the game of soccer as an instrument of social promotion in favour of more than nine thousand needy children between 8 and 14 in seventeen countries around the world. In Romania in particular, the initiative is directed at young people in the Slatina community, offering them a fun and effective instrument for growing, socializing and psychomotorial recovery.

The Group has also promoted a collaboration project between the Niguarda Hospital in Milan and the Slatina Hospital for professional training of medical personnel, nurses and technicians. The project includes a training contribution for personnel at the Slatina Hospital, including through professional exchanges and training periods both in Milan and in Slatina.