Goodyear eyes second plant

Goodyear eyes second plant

SET-listed tyre manufacturer Goodyear Thailand Plc is set to build a 5.63-billion-baht radial aircraft tyre factory in Thailand to capitalise on the growing aviation industry.

According to the company's statement to the Stock Exchange of Thailand, its board of directors on Monday approved funds for the construction of the factory in Pathum Thani on land where its existing factory is located.

The expansion would be divided into three phases over a 10-year period, with the second and third phases being subject to market demand and other conditions.

The first phase, spanning 2016-18 with an investment cost of 1.62 billion baht, is targeted to be operational by 2018 to meet market demand as commercial airlines rapidly convert their fleets from bias to radial tyres.

The second phase targets investment worth 2.97 billion baht for 2018-22, while the third phase, worth 1.03 billion, is slated for 2023-25.

The target customers are commercial airlines both in Thailand and abroad.

The funding will largely come from the company's existing cash on hand, future cash flow from existing business operations and the new radial aviation tyre business, and loans from financial institutions.

The internal rate of return of the project is forecast at 9.7% and the net present value is projected to be 659 million baht at the assumed discount rate of 8%.

The project is expected to increase revenue, earnings before interest and tax, and net income once each phase reaches its full operating capacity.

The investment is necessary to maintain the company's position as a leading manufacturer of new and retreaded aviation tyres in the face of a long-term structural decline for bias aviation tyres.

"The world's aviation fleet continues to grow and is projected to double in size over the next 20 years," said managing director Finbarr O'Connor.

"The fastest growth is seen in the Asia-Pacific region. With this expansion, Goodyear, a global leader in aviation tyres, will be ideally positioned to capture this growth in demand for radial tyres."

Established locally in 1968, Goodyear Thailand employs more than 1,000 people.

That number is set to rise by 100 once the expansion is completed.

Do you like the content of this article?