Asian Tire Manufacturer Expands Into Europe

Nexen Tire plant to be located in historic Czech town near 30 OE auto manufacturers.

Žatec is a small, historic town in the Severozápad region of the Czech Republic known for growing hops.

It might not be where you’d think to put a new, state-of-the-art tire manufacturing facility, but if you’re Nexen Tire, a South Korean company making 30 million tires a year, it’s the perfect place to expand.

Nexen Tire and Czech officials at the Žatec plant ground-breaking ceremony October 1, 2015.

Nexen Tire and Czech officials at the Žatec plant ground-breaking ceremony October 1, 2015.

On Oct. 1, 2015, Nexen Tire celebrated its ground-breaking ceremony at the site of its newest plant to mark the beginning of construction. Operations are scheduled to start in 2018, with the facility gradually increasing its capacity to more than 12 million units.

But why did they choose little Žatec?

From an economical standpoint, it was actually a logical decision. North America and Europe are the world’s second- and third-largest automobile markets. While Nexen Tire is already exporting tires manufactured at its plants in South Korea and China, it makes sense to expand into these foreign markets. 

When the company announced its plans to set up two or three new manufacturing facilities in European countries back in 2014, it reasoned that building these plants would boost the company’s market share and increase price competitiveness.

Žatec presented itself as a perfect location – it is strategically located near Germany, France and Great Britain. This strategic location could help Nexen Tire meet rising demands in these hubs of the European market. It also happens to be close to some 30 auto manufacturing plants, including Fiat, Volkswagen and Skoda – giving the company the opportunity to supply original equipment (OE) to global automotive producers.


Projected design for new Nexen Tire plant

Projected design for new Nexen Tire plant.

The real impact of this new plant, however, will be on the economy of Žatec. 

The European Commission approved nearly €117 million in regional investment aid for the construction of the plant because the Severozápad region is an area where unemployment levels are high and the average citizen’s standard of living is lower than the overall EU level. The plant is estimated to create more than 1,000 jobs and will promote regional development without creating undue distortion in the internal market’s competition. 

For more information, visit nexentire.com.