Colombia is competing to become the host of a new factory of the United States-based tire giant Goodyear.
One of the largest producers of car and truck tires in the world, Goodyear is currently engaged in negotiations that would see the US multinational spend an estimated $500 million to begin constructing its newest plant in 2017, the company said in a press release.
Local media said Colombia is a leading choice for the new Latin America factory because of its continued macroeconomic progress, favorable foreign investment conditions, and central location on the continent and in relation to the United States. The company said no preferences exist and all options are open.
Goodyear arrived in Colombia 70 years ago, constructing a plant in Yumbo which opened in 1965. The new proposed Colombian plant would house the latest tire technology, with an initial annual production capacity of around six-million tires, according to the Portfolio magazine.
Interest shown despite weak year for Colombian automotive sector
Goodyear’s interest in Colombia contrasts with what has been characterized as weak year in the automotive market sector in the country. The National Administrative Department of Statistics (DANE) recently reported that the automotive sector shrank 5.7% in February 2014, amid lingering fears that the expansion of free trade policies to heavy industrial countries would undermine the industry.
A year ago, rival international tire company Michelin also closed operations in Colombia, El Espectador reported.
Nevertheless, the company still looks to Latin America to continue its global expansion aspirations. “Our investment supports another key element of our strategy, succeeding together with our consumers in profitable market segments,” said Richard J. Kramer, chairman and CEO of Goodyear.
Foreign investment in Colombia hit an all-time high in 2013 of US $16.8 billion, up .87% from 2012 according to international news agency, Reuters.
MORE: Colombia foreign investment in 2013 hits record high
“With the increasing demand for high performance tires in North American and Latin America, we are at the perfect place to invest in increased production capacity in Americas to maintain Goodyear’s leading position as well as increase our earnings beyond 2016,” Kramer added, as quoted in El Espectador.
Protests against Goodyear – Controversy
Goodyear has come under fire in the past decade after worldwide strikes protesting Goodyear’s intentions to close plants in the United States and Europe and move them overseas, to areas such as Latin America and Asia, in search of cheaper labor.
Most recently, in 2013 hundreds of worker in Amiens, France protested against the closing of Goodyear’s factory in the area, after a five-year legal battle to keep the plant open failed, the Huffington Post reported.
Goodyear’s profit margins in Europe especially had been slipping over the past decade, and in 2013, overall sales dropped 7%.
The company has consequently turned to other areas of the globe in recent years, investing millions in production overseas in countries such as Colombia, where cheaper labor costs, loose safety requirements, and prominent access to both Pacific and Atlantic shipping routes make for an ideal investment.
Sources
- Goodyear, con el ojo en Colombia (El Espectador)
- Nueva planta de Goodyear podría construirse en Colombia (Portafolio.co)
- Goodyear Workers Protest At Paris Headquarters In Effort To Save Jobs (Huffington Post)
- Goodyear Reports Higher Fourth Quarter Earnings, Full Year Results (Goodyear)