South Korea’s largest tire producer, Hankook Tire, plans to invest $1.2 billion to build a manufacturing plant in Indonesia in an effort to snare a greater share of the market.
The Seoul-based company plans to build a tire plant on a 60-hectare block of land in Cikarang, West Java, a province that is home to industrial and manufacturing plants.
Carmakers are forecast to produce one million vehicles a year by 2013 and 1.5 million by 2015, according to the Association of Indonesia Automotive Industries (Gaikindo). Last year car production totaled 650,000 units.
The company will start construction at the site by the second half of next year, and it will spend about $353 million on the first phase of construction. The plant operations to commence by 2014, and within four years it could reach its maximum production capacity of 20 million tires per year.
As part of its global expansion, Hankook Tire is also building tire plants in China and Hungary, and once all its plants are in production, it forecasts manufacturing 100 million tires annually.
Hankook currently supplies tires as an original equipment manufacturer to global automobile makers including Hyundai, Toyota, Ford, General Motors and International Truck and Engine. Hankook is part of a group of South Korean companies that have announced expansion plans in Indonesia. South Korean companies have been aggressive in investing in the country to capitalize on its growing economy and political stability.
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