New Tyres Skid Into the Market

The new partnership means that horizon will now supply tyres for all of the MetEC's vehicles

Horizon – Addis Tyre SC signed a Memorandum of Understanding (MoU) with Metal & Engineering corporation (MetEC) to supply its products for vehicles assembled by the corporation, on June 16, 2013, at Sheraton Addis. The company is also set to introduce an additional 22 new radial tyres into the market, with the “Horizon” brand, within a month and half.

This requires the company to upgrade its production capacity by 16.7pc, from the current 600,000 tyres to 700,000 tyres, annually. Currently the company utilizes 64.3pc of its capacity, unlike previously where it only used 58pc of its capacity.

The radial tyres, which the company is going to introduce soon, will be used for high speed vehicles carrying relatively small loads, unlike its previous nylon tyres products, which are only suitable for vehicles carrying greater loads.

“We were producing far less than our capacity, as the result of not having enough demand for the product,’’ Umesh Davera, commercial director of the company told Fortune.

However, the deal with MetEC, is expected to reverse the fate of the company, since the agreement involves supplying both nylon and radial tyres.

The MetEC, which assembles close to 500 Bishoftu buses for the Anbessa City Bus Enterprise, has the capacity of assembling 6,000 light and heavy trucks, as well as multiple buses, annually.

MetEC will purchase tyres from Horizon Addis for all the vehicles it assembles, said Tena Kurundea (Col), deputy general manager of the state engineering complex, at the signing ceremony, last week.

“Our production will depend on the MetEC’s capacity, as well as the demand of the local market,” said Umesh.

The introduction of the new 22 types of radial tyres will come 40 years after the company’s inception.

Re-established in January 2004, with recapitalised shares of 76.6 million Br, Addis Tyre was renamed Matador-Addis Tyre (ATC), subsequent to the government’s decision to sell 69pc of the shares to Eastern Europe’s largest tyre manufacturer, Matador AS, for 13.9 million dollars, after the company was valued at 21.4 million dollars.

After Horizon acquired the company in 2011, it underwent its first phase of expansion, which enabled it to manufacture the new types of tyre on top of the 55 types the company was already producing.

“We have already started the second phase of the expansion, which will be completed in 2014,” said to Umesh.

“The second phase will enable us to produce tyres for construction machineries and tractors,” he claimed

The company hired Indian experts, in 2012, to handle the installation, control, production and quality assurance of the new facility.

This is good news for the MetEC, which has been spending 3,000 dollars, on top of transportation and insurance fees, for the 11 tyres that will be installed on each truck.

Although the MetEC started buying tyres from the local market six months ago, according to Gebrekidan  Gebreselassie (Col), general manager of Bishoftu Automotive Industry – one of the companies under the MetEC – the company decided to ink the agreement with Horizon – Addis, because of higher local price.

By Ashenafi Endale
Special to Fortune

Published on June 23, 2013 [ Vol 14 ,No 686]



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