Asian Tire Manufacturer Expands Into Europe

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.

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.