Vittoria - Lyon Tyres: an Italian pillar in Thailand

Why a manufacturing plant in Asia and in particular in Thailand?
The start of the operation in Far East area can be traced back into the 70s, when the Vittoria founder decided to build up a factory in Singapore for reducing the production costs by enjoying the low local cost of labour. It was then created the company Lion Tyres Singapore. That company was producing vulcanized tubular, a labour intensive item which at that time represented the most popular and most sold product in the road race bicycle segment. The production of the highly sophisticated Hand Made tubular was kept in Italy, as the market conditions were still allowing that.

During the 80s, the situation in Singapore changed drastically with the sharp increase of the minimum salaries, making that country no more attractive for intensive labour based industries. That's why the Vittoria 
management decided to move the company from Singapore to Thailand. And in 1988 Lion Tyres (Thailand) Co. Ltd. was created. The company applied the BOI privileges which included foreign ownership, 7 years income tax exemption, import duties exemption and so on and so forth. The operations, located in Bang Poo-Samutprakarn, actually started the year after, in 1989 and the initial production was basically the same as the one in Singapore, which means vulcanised tubular. With the introduction of the High Pressure Tyre for road race bicycle, made by Michelin, the market started to move from tubular to tyres. In the meantime, the continuos growth of labour cost in Italy hit heavily into the margin of Vittoria, putting the profitability of the company into jeopardy.That's why the project of transferring completely the tubular production from Italy to Thailand was put in place. LTT kept on increasing its output, with the help of the Italian technicians, whilst the Italian production was exactly going the other way around.

In 1992 the production of the very high end Hand Made tubular was started in LTT and in Italy 80% of the factory was closed. In 1994 the closure of the Italian production was completed and the transfer of the whole tubular and cotton tyres technology was done. In 1992, a technical assistance agreement with Continental (Germany) was signed, to get the needed know-how for the production of nylon bicycle tyres, which represented by far the biggest (and constantly increasing) portion of the bicycle tyres market. It means that LTT, since its start, had the best possible technical support: from Italy for the "cotton" technology and from Germany for the nylon one. The mentioned know-how transfer, together with a constant investment policy on the best available machinery, resulted in one of the most advanced bicycle tyres factory in the world, not in terms of production output but in terms of product quality. Over the last 10 years, between the professional road bicycles riders, all other tyres brands together would hardly reach half of the victories of Vittoria at: Tour de France, Giro D'Italia, Paris-Roubaix, World Championship, etc. The most famous riders won with Vittoria on their bikes: Lemond, Indurain, Rominger, Ulrich, Rijs, Pantani, Cipollini, Bartoli, just to mention the most famous ones, or they won with other branded tyres, but produced in LTT, like Armstrong.

When basically all European bicycle tyres manufacturers (which represent the leading world's brands) realised that a production in Europe wouldn't have been anymore economically feasible, they started to reduce or close their factories and, for their high end products, they all came to LTT. LTT is producing or produced for the top world brands like: Continental, Ritchey, Hutchinson, Specialised, Vredestein, Gommitalia, Panarecer, Performance etc.. The policy of high end-high price products, had as a result a constant profitable situation of LTT which now has about Baht/Ml 150 of retained profit, reinvested in the company.

The headcount are now close to 1,000 people, all Thai; since 1998 no more expatriates (technicians) were needed in LTT (even though the marketing and financial support is always there) and, since the beginning, the management of the company was put in the hands of local people. The sales reached the Baht/Ml 500 in 2001 and will get close to 700 in 2002. From 1995 to 2001 IFCT/Nomura was owning 25% of LTT shares, with the aim of floating the company in the stock market; the Asian crisis of 1997 didn't allow the project and in 2001 Vittoria bought the shares back. Now therefore the ownership of LTT is 100% Vittoria Group.