News from Notch Consulting, Inc.

January 4, 2008

Goodyear Ends Tire Production at Tyler — What Effect on Raw Material Demand?

Filed under: Carbon Black, Rubber Chemicals, Silica, Tire Cord, Tires — Notch @ 4:54 pm

According to Rubber & Plastic News, Goodyear ceased tire production at its Tyler, Texas plant on December 21, 2007. The closure reflects Goodyear’s plan to reduce production of private label passenger tires, which are under intense pricing pressure due to low cost imports. Goodyear officially announced the closure in October 2006, three weeks after about 12,600 workers went on strike at Tyler and 12 other Goodyear tire and engineered products plants. The strike — prompted in part by plans to close Tyler and possibly other plants — was called by the United Steelworkers on October 5, 2006 and was settled on December 22, 2006. As part of the settlement, Tyler’s closure was delayed from mid-2007 and another plant in Valleyfield, Quebec will be closed in 2008. The closure affected 600-650 jobs, either through layoffs, retirements or transfers to other plants. Some production is being moved to other plants, and Tyler will continue to operate a rubber mixing unit, which employs 135 workers. The plant had a daily capacity of 26,000 passenger and light truck tires.

According to Notch Consulting estimates, the Tyler plant running at full capacity used about 25 KT of carbon black per year (including about 8-10 KT carcass grades and 16-18 KT tread grades), about 2-3 KT of rubber chemicals (evenly divided between antidegradants and accelerators), and about 5 KT of textile reinforcements (primarily HMLS polyester). According to a silica supplier, Tyler did not use silica in its mix. Not all of this demand will be removed from the market, as some production is being moved to other Goodyear sites and Tyler continues to run a mixing unit. All in all, Notch estimates that shut-down will result in about half of this demand being lost.

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