Italian group Pirelli, the world's fifth-largest tyre maker, will start production on the Romanian market. However, the company will not be making tyres but metallic cord, one of the key accessories in tyre production.
Also, the Italian group will not launch a greenfield investment, preferring to buy the only Romanian cord manufacturer instead - Cord Buzau.
"We have not signed anything yet, but we will reach a conclusion by fall," said Gheorghe David, general manager of Cord Buzau.
The project is being run through the Romanian Agency for Foreign Investment, which estimates it at 10 million euros.
The Buzau-based company was privatised at the end of 2001, as part of the PSAL I programme. The 70% stake was bought by a Russian-Bulgarian consortium, EP Commerce, which had also tried to purchase the main stake in chemical plant Doljchim in 1999, but failed to meet the payment conditions.
"We need significant investments to keep the company running and even help it grow," Cord's general manager added. According to David, the Italian group could secure the necessary investments, whether it opts for a joint-venture with the Romanian company or for the acquisition of the entire stake held by the Bulgarian firm.
The acquisition of Cord Buzau could be deemed as the Italians' response to a similar move made by one of the company's main competitors, French group Michelin. The French have said they will start building a metallic cord plant this fall, under a 10m euro investment. Michelin thus went for a greenfield investment, with the output to be shipped to the factories operated by the French group in Romania - Victoria Floresti and Silvania Zalau.
Italian group Pirelli operates in two fields in Romania: tyres and the segment of cables and systems. The group sells its tyres in Romania, but also makes cables and systems at a Slatina-based plant. Pirelli officials at the end of last year said they were not interested in making tyres in Romania, as their medium-term goals aimed at boosting the import and distribution network. Pirelli owns 7% of the Romanian tyre market (according to its own estimates) and slightly more of the high-end segment.
Pirelli's tyre division operates 22 plants in countries such as Argentina, Brazil, Egypt, Germany, Great Britain, Italy, Spain, Turkey, the United States and Venezuela. Pirelli tyres are sold in more than 120 countries worldwide, having generated over 2.8bn euros in sales last year. Pirelli sold tyres worth more than 3 million euros in Romania.
Cord Buzau was established in 1976, based on a licence from GCR Italy. Cord Buzau posted over 200 billion ROL (7.7 million euros) in turnover in 2001.
"We are not suppliers to the Michelin plants in Romania because they brought their own suppliers for this type of products," said the general manager of Cord Buzau. ionut.bonoiu@zf.ro
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