Trelleborg to close US factory, re-locate in lanka to produce tyres
Walter JAYAWARDHANA
RE-LOCATION: Trelleborg, one of world's largest industrial tyre
producers will close down its North American plant and relocate its
factory in Sri Lanka, the company announced.
Trelleborg, even at present is having two tyre factories at Kelaniya
and Biyagama and one of the factories will be expanded to take over the
moved industrial tyre production from Ohio, USA , Trelleborg further
said.
The company's industrial tyre section at Hartville, Ohio is currently
producing tyres and complete wheel solutions for materials-handling and
transport vehicles used at facilities such as ports and airports, for
example, fork-lift trucks and other highly utilised materials-handling
vehicles.
The company did not announce what factory they would choose between
Keleniya and Biyagama for the expansion when the Ohio factory is
relocated.
Observers said the relocation confirms the unshaken confidence of
foreign investors in Sri Lanka despite military clashes in isolated
spots in the Northern and Eastern provinces.
"Trelleborg is consolidating its industrial tire production to Sri
Lanka and will invest in increased production capacity at one of
Trelleborg Wheel Systems' plants in Sri Lanka.
As a consequence of this the production of industrial tyres will be
terminated and relocated from Trelleborg Wheel Systems' plant in
Hartville, Ohio, in the US.
The cost of closure, production transfer and investments will total
approximately Swedish Krone 130 Million (9.7 million British pounds)
over a three-year period," the company said.
"By doing this, we are creating the conditions for a strong global
production structure in Wheel Systems," said Maurizio Vischi, Business
Area President.
"This enables us to remain competitive and grow the business
organically. The measures will improve our profitability and position in
the North American market, where we are currently also building an
efficient sales and distribution organization."
In Hartville, industrial tyres are manufactured for material-handling
vehicles such as forklifts. The unit has about 200 employees, of whom
about 115 are involved in production.
The production will be transferred successively to Sri Lanka in 2008.
Production in Hartville is expected to continue until the first quarter
of 2009. Subsequently, there will continue to be resources in sales,
technical service and distribution in North America.
Trelleborg Wheel Systems' two plants in Sri Lanka, in Kelaniya and
Biyagama, outside Colombo has around 900 employees.
"We have conducted business successfully in Sri Lanka for many years,
and with this investment, we are improving the operations further," says
Maurizio Vischi.
"The investment in extended production capacity will involve upgraded
production and enhanced efficiency, and we expect to handle the
additional volume within the framework of the current workforce.
We have an excellent skills base in place and another benefit is that
Sri Lanka has a first-rate location with proximity to good supplies of
raw materials.
"The investment in production in Sri Lanka amounts to about Swedish
Krone 100 M, of which a large portion is attributable to the production
transfer.
The costs of closure and relocation of production from Hartville are
expected to amount to about Swedish Krone 30 M before tax, most of which
will mainly affect cash flow in 2007.
The positive earnings effect is estimated to amount to about Swedish
Krone 35 M before tax on an annual basis, with full impact from the
third quarter of 2009.
Costs and investments related to the transfer of production are
expected to have a payback time of less than three years, while this
will also create a better strategic position for the future." |