- Associated Press - Monday, February 8, 2016

CLINTON, Miss. (AP) - A Continental AG tire executive said Monday that the company is likely to make a mix of heavy truck and passenger vehicle tires at the $1.45 billion factory it plans near Clinton, saying the company has been unable to satisfy demand in North America despite rapid expansion in recent years.

Paul Williams, the head of Continental’s Western Hemisphere truck tire business, said the company plans to begin clearing land this year, starting construction in early 2018 and production in late 2019. He spoke to The Associated Press ahead of a ceremony Monday at Clinton High School, where Gov. Phil Bryant welcomed the German-based company. Williams said Continental plans additional phases over a decade or longer.

Williams said Continental will also consider building a tire distribution center at the 2,500-job plant, which will ship tires in the United States, Mexico and Canada. He promised “competitive wages and benefits.” State officials have said wages will average $40,000.

Earlier Monday, Bryant was in Gulfport welcoming Edison Chouest Offshore, which plans to invest $68 million to build a 1,000-worker shipyard.

Mississippi’s Legislature approved $263 million in borrowing for Continental, including $20 million that will be repaid by Hinds County. With other tax breaks and aid, AP estimates the value of all incentives to Continental will exceed $600 million.

“We believe this can be the center of Continental’s universe in North America,” Bryant said.

The world’s fourth-largest tire maker already has factories in Mount Vernon, Illinois and Sumter, South Carolina, and has 22 other production and research locations worldwide. The company sold about $12.5 billion worth of tires worldwide in 2014.

Like Yokohama Rubber Co. Ltd., the Japanese company that opened a northern Mississippi tire plant last year, Continental seeks a larger share of the worldwide market.

J.P. Morgan financial analyst Jose Asumendi last month projected Continental’s tire business would grow faster than previously predicted.

“We expect tire margins to remain high,” he wrote, praising Continental’s profit margins.

Morningstar analyst Richard Hilgert said Monday the market for truck tires has been strong, but said there’s still a chance that overexpansion could lead to lower prices.

Some industry observers were surprised at the move into Mississippi, because Continental had invested hundreds of millions in Illinois and South Carolina recently. Williams said the Illinois plant is reaching capacity constraints, and said Continental is importing tires that it could make and ship more cheaply from Mississippi.

“With truck tires, it doesn’t make a lot of sense to transport those things across oceans, because you don’t get too many in a container,” said Williams, who said Continental examined sites in the U.S. and Mexico for the plant. He said the Hinds County site is in the center of U.S. truck tire demand, running in a crescent from the East Coast through Texas to California.

Continental is counting on shipping costs, plus technology investment, to protect it from Chinese competition. Williams said China has enough truck-tire capacity to supply the entire world.

Because Continental is also a major auto-parts maker, the company is trying to link tires with electronic systems, spokeswoman Kathryn Blackwell said. Like other manufacturers, Continental has also focused on making tires that improve fuel efficiency.

“You’d be amazed at how much technology goes into a tire,” Williams said. “It’s not just black and round.”

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Online: Continental announcement: http://www.continentaltire.com/node/4653

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Follow Jeff Amy at: http://twitter.com/jeffamy. Read his work at http://bigstory.ap.org/author/jeff-amy

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