{"id":585018,"date":"2023-04-09T00:00:00","date_gmt":"2023-04-09T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/where-we-stand-on-egypts-plans-to-localize-tire-manufacturing\/"},"modified":"2023-04-09T00:00:00","modified_gmt":"2023-04-09T00:00:00","slug":"where-we-stand-on-egypts-plans-to-localize-tire-manufacturing","status":"publish","type":"inside_industry","link":"https:\/\/enterpriseam.com\/egypt\/inside_industry\/where-we-stand-on-egypts-plans-to-localize-tire-manufacturing\/","title":{"rendered":"Where we stand on Egypt\u2019s plans to localize tire manufacturing"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"\"> <\/span><span style=\"font-weight:700\">How the private sector + AOI are working to develop Egypt\u2019s tire manufacturing industry:<\/span><span> Last week, <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/f3553e3f-013a-4dc4-877c-7eb93afbaaf0\" style=\"\">we took a deep-dive<\/a><\/span><span> into our troubled tire industry, whose problems have been exacerbated by the FX crunch and import restrictions. With Egypt\u2019s heavy reliance on imported tires, a shortage of domestic manufacturing of tires and the recent 300% surge in tire prices impacted both consumers and businesses alike. This week, we delve into the different measures and initiatives to address the scarcity by developing the domestic tire industry. The <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/www.aoi.org.eg\/en\" style=\"\">Arab Organization for Industrialization<\/a><\/span><span> (AOI) and several private companies are ready to step in and <\/span><span>st<\/span><span style=\"font-weight:400;\">rengthen the tire industry by prioritizing domestic productions, industry insiders tell us. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">REFRESHER- <\/span><span style=\"\">Egypt consumed around 10 mn tires in FY2022, of which only 15% (1.5 mn) tires<\/span><span> were produced domestically, with the remainder coming from imports. At present, Pirelli and Pyramid Tires stand as the only tire manufacturers in Egypt, covering around 8.2% of domestic demand, after domestic tire manufacturer Trenco \u2014 which previously covered 30% of the internal market \u2014 shut down operations last year. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">One step closer towards localizing the tires industry: <\/span><span style=\"\">The AOI <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/www.facebook.com\/AOI.OfficialPage\/posts\/pfbid02K9FdLXK6VEQRFw4LT7ff9TYmDpiNMFvtYprt4QyFCobPjVyjVNrjvFuanQWqxFmSl?__cft__[0]=AZVym_i8qFi6QEL_Fb8EVpd0PxeI_tVR_RvaZXo4rXhWGqAUXoCqiWhl8N1PguU0bSLaAsjhZTR7Y413MaAM5McR8K85ZJZVZiuWcwXBJe9xB_haVyStB7idmbWvWB_h6FhmgF9c8ilVHpVVGEgfylvSFveRKgUAGAgKuKE-97AUcMocvSkxm9F0SDXxGuopXZkzUXtewJRCvEfxP9oNHHMt&__tn__=%2CO%2CP-R\" style=\"\">inked an agreement<\/a><\/span><span style=\"\"> last<\/span><span> November with <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/www.hillintl.com\/\" style=\"\">Hill International<\/a><\/span><span> to set up a facility to manufacture tires for passenger cars, trucks, buses, tractors, and heavy equipment. It also agreed with <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/blackdonuts.com\/\" style=\"\">Black Donuts<\/a><\/span><span> and <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/www.rolandberger.com\/en\/\" style=\"\">Roland Berger<\/a><\/span><span> to work on separate feasibility studies to establish other tire factories, Black Donuts CEO Kai Hauvala told Enterprise.<\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">CAVEAT- There\u2019s a lot we don\u2019t know: <\/span><span style=\"\">Figures regarding outputs and how much of domestic<\/span><span style=\"font-weight:400;\"> consumption each of these facilities will cover have not been disclosed. There were also no details provided on the timelines for these projects. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">Ramping up domestic tire manufacturing would help our trade balance: <\/span><span style=\"\">These projects are<\/span><span> a stride towards opening new export markets, which will \u201cpositively reflect on the provision of foreign currency and the promotion of the Egyptian economy,\u201d AOI head Mokhtar Abdel Latif said. They also demonstrate progress towards expanding Egypt\u2019s exports and reducing dependency on imports, he said, and would also help narrow our current account deficit by reducing imports, which recently <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/enterprise.press\/stories\/2023\/02\/05\/current-account-deficit-narrows-20-in-1q-2022-23-95378\/\" style=\"\">narrowed<\/a><\/span><span style=\"font-weight:400;\"> by 20% to USD 3.2 bn in 1Q2022-23. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">\u2026 And help us part ways with logistics costs: <\/span><span style=\"\">Replacing imported tires with homegrown<\/span><span style=\"\"> ones would eliminate high logistical costs involved by transitioning to domestic logistics, canceling out impacts of supply chain breakdowns, <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/blackdonuts.com\/\" style=\"\">Black Donut\u2019s<\/a><\/span><span style=\"\"> sales representative, Ahmed Abou El Nasr told us. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">Deepening the tire industry has been on the government\u2019s radar for while:<\/span><span style=\"\"> The feasibility<\/span><span style=\"\">studies prepared fall in line with the joint vision between the Public Enterprises Ministry, Military Production Ministry, and the AOI to \u201cdeepen this industry locally in accordance with international quality standards,\u201d former Public Enterprises Minister Hisham Tawfik <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/www.aoi.org.eg\/en\/news\/discussing_feasibility_studies_for_establishing_a_factory_for_producing_all_kinds_of_vehicle_tires\" style=\"\">previously said<\/a><\/span><span style=\"font-weight:400;\">. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">And localizing manufacturing to reduce our reliance on imports \u2014 and boost exports \u2014<\/span><span style=\"font-weight:700\"> is a major policy priority:<\/span><span>In light of global market conditions and the war in Ukraine, import substitution and growing domestic manufacturing are now at the forefront of the Madbouly government's <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/06d7d8e9-a8dc-4967-a466-fa6730efdde4\" style=\"\">priority list<\/a><\/span><span>. The government has as an objective to boost exports to reach <\/span><span style=\"text-decoration-skip-ink:none;-webkit-text-decoration-skip:none;\"><a href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/158188ff-65a9-4146-adc1-5f53c1a3f6e5\" style=\"\">USD 100 bn<\/a><\/span><span> by the middle of the decade to slash the country\u2019s trade deficit and reduce consumers\u2019 vulnerability to import prices. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">The move to deepen the domestic tire industry comes as the government works to<\/span><span style=\"font-weight:700\"> launch the <\/span><span style=\"-webkit-text-decoration-skip:none;font-weight:700;text-decoration-skip-ink:none\"><a href=\"https:\/\/enterprise.press\/stories\/2022\/03\/13\/a-first-look-at-the-long-awaited-automotive-strategy-bidding-for-new-ev-charging-company-management-this-week-66761\/\" style=\"\">Automotive Industry Development Program<\/a><\/span><span style=\"font-weight:400;\"> (AIDP), which through certain incentives strives to localize production in the automotive industry as a whole. The program \u2014 which has been years in the making \u2014 aims to boost the country\u2019s existing assembly and manufacturing capabilities while also drawing in new avenues for investment. The localization of the automotive industry includes the manufacturing of automotive components such as tires. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">The good news: Egypt has the potential.<\/span><span style=\"\"> Egypt is definitely a potential tire-manufacturing<\/span><span style=\"\"> hub, due to the numerous cost advantages it holds, Hauvala told Enterprise. Cost-wise, reasonably low labor and land costs make it a very attractive location for foreign investment. The growing population also makes the market increasingly appealing for investments \u2014 in an automobile-dependent country, the demand for tires grows in proportion to the growing population, he added. <\/span><span>These factors make Egypt an interesting prospective market for investment, and there are currently a handful of serious private sector players eyeing the industry, he said, without disclosing the names of these companies. <\/span><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><span style=\"font-weight:700\">There\u2019s still room for more companies to get involved, but there are hurdles in the<\/span><span style=\"font-weight:700\"> Egyptian market that are holding back investments<\/span><span>, Abou El Nasr told us. The lack of know-how in the Egyptian industry and the high cost of capital investment stand as significant barriers to entry for players eyeing the market, Nasr stated. The lack of raw materials available domestically increases our dependence on imported components, which when coupled with the USD crunch makes tire production extremely costly, he added.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The domestic market has lots of promise, investors say<\/p>\n","protected":false},"featured_media":585019,"template":"","categories":[7334],"tags":[1548,633,7333],"class_list":["post-585018","inside_industry","type-inside_industry","status-publish","has-post-thumbnail","hentry","category-inside-industry","tag-enterprise-inside-industry","tag-enterprisepm","tag-inside-industry","wpautop","entry"],"acf":{"mongo_id":"f690219d-16e9-4cc9-9012-22da48774299","is_powered_by":false,"story_type":"2","photo_url":"https:\/\/ent.news\/2023\/4\/365.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Where we stand on Egypt\u2019s plans to localize tire manufacturing","related_issue":[585000],"teaser":"The domestic market has lots of promise, investors say","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2023\/4\/.2a33dd16-ac73-478f-977d-2b85e902c4f7.mp3"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - 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