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Apollo Tyres drops Hungarian tire plant project

India's Apollo Tyres has decided to withdraw its application to build a €200 million European manufacturing base in the Hungarian city of Gyöngyös because of delays in acquiring permits and a “potentially divisive” local referendum on the plant's construction.

The referendum's organizers, the local right-wing opposition Fidesz party, said the region, which is already overburdened with heavy industry, could not handle another source of pollution.

The company said the referendum “has nothing to do with the reality of modern tire manufacturing practices and standards adhered to by Apollo Tyres,” adding that its manufacturing and product technology is in full compliance with all environmental norms and statutory requirements in each of the markets it operates. Apollo Tyres noted that its environmental standards are audited and governed by regulations of the International Finance Corporation, a World Bank organization. Its products are E certified, a requirement for any tyre producer that sells products in Europe, and it is already compliant with most changes the EU wants to introduced for the tire industry by 2010.

“As a socially responsive organization, and one that lays great store by family and community values, Apollo Tyres does not wish to be the cause of any such division or disharmony among the population of Gyöngyös,” the company said on its decision to drop its plans before the referendum.

Apollo Tyres said it is asking the Hungarian Investment and Trade Development Agency (ITDH) to identify alternative locations in Hungary for the plant, but the company will also search for alternative locations in Europe at the same time.

Earlier, Gyöngyös mayor György Hiesz said Apollo Tyres told the management of the local council-owned industrial park that it is scrapping plans to build the plant.

Apollo Tyres told the management of the park it was dropping the plans for the plant, which would employ 900 people, after a referendum on its construction was initiated by Fidesz, said Hiesz, who is a member of the governing socialist party (MSzP).

Hiesz alleged politics, not environmental worries, were behind the referendum. He said he hoped Apollo would at least pick another city in Hungary for the plant rather than take the investment to another country.

Prime Minister Ferenc Gyurcsány announced Apollo Tyres would build a plant in Hungary during a visit to India in January. The government later awarded Apollo Tyres about €27 million in investment subsidies related to the plant. (MTI – Econews)