Investing beyond the horizon, tyre company upgrades
Addis Ababa, Ethiopia – EthiopiaÃ¢â‚¬â„¢s only tyre manufacturer, Horizon Addis is spending 1.1 billion birr on a massive upgrade. The company is currently working with Continental Germany, the worldÃ¢â‚¬â„¢s number four tyre manufacturer, to transform its age old machines to world class ones. Horizon is installing a machine that can produce 80,000 pieces of light truck radial tyre annually at a cost of 30 million birr. The new installation is expected to begin production by this September. This will allow Horizon Addis to make higher quality truck and bus tyres and the plan is expected to be executed in a year and half, according to Belay Dechasa, General Manager of the company.
By the time the plan is realized, it will have the capacity to produce 200 thousand pieces of truck and bus tyres.
According to the GM, there are two kinds of tyres; bias and radial and their difference lies on the threads they are made of. The former is made of nylon while the later is made of wire.
Horizon Addis currently produces 250 thousand bias tyres. This represents half of its installed capacity. Meanwhile, the company, on average, covers around 20 percent of the countryÃ¢â‚¬â„¢s demand.
Ethiopia imports 85 percent of tyres required for trucks, 75 percent for light trucks, and 55 percent for passenger vehicles. The remaining balance is supplied by Horizon Addis according to Umesh Davera, Commercial Director of the Company. For instance, Ethiopia imports close to 40,000 Isuzu tyres annually.
Ã¢â‚¬Å“The new engagement of the company is meant to substitute import, reduce cost through local purchases, ease hard currency dependence, ensure prompt delivery, and provide a full warranty against manufacturing defect,Ã¢â‚¬Â argued the commercial director.
Ã¢â‚¬Å“We have the technological capacity to provide all this benefits,Ã¢â‚¬Â he adds.
According to data obtained from the Ethiopian Revenue and Custom Authority, the countryÃ¢â‚¬â„¢s import bill of tyre stands close to 1.6 billon birr annually.
Horizon Addis imports all the material used to produce its tyres, including petroleum byproducts and natural rubber. In doing so, it adds close to 40 percent value at home.
Though Ethiopia has a suitable environment for developing rubber plants, its effort in the past has yet to bear any fruit.
A Slovak tyre manufacture, Matador Rubber Company, took over 61 percent ownership of the former Addis Tyre Share Company in 2004. The company was renamed Matador-Addis Share Company. In January 2011, Horizon Plantation Plc took over the share of Matador and renamed the company Horizon-Addis Tyre Share Company. The remaining 39 percent is owned by the government.
Horizon Plantation is owned by Sheik Mohammed Hussein Ali Almoudi, an Ethiopian born Saudi billionaire. Recently, it acquired the Ethiopian Coffee Processing and Warehousing Enterprise at a cost of 228.2 million birr. Horizon has also acquired Gojeb farm at the cost of 35.1 million birr.
Source: Capital Ethiopia