News from Notch Consulting, Inc.

April 10, 2009

Structural Changes in the Tire Industry

Filed under: Tires — Notch @ 2:28 pm

An interesting article from Jim Rippy, a former Conti SVP, on structural changes in the tire industry over the last decade or so.

An excerpt:

Tire sizes in the United States went from 13”, 14”, 15” rim diameters to 16”, 17”, 18”, 19”, 20”, 22”. Everybody wanted to get on the bandwagon and produce higher margin, higher value added products in their higher cost domestic operations. This was especially true in those operations carrying the high legacy cost associated with their age. It appears that we have reached 50% of all tires sold in the US imported from off/shore almost under the radar. Everyday we read about some distressed plant in the US and if we search, we will find an increase in production in China. I spent over 40 years in the tire industry and I still do not understand the shift to high-performance/ultra high-performance in a country with 55-70 mph speed limits. C’mon? Do we really need 125mph to 175mph tires? Another thought on this subject. How long before China is qualified to make more than bread and butter broadline production? How long? A lot of folks think that they will not be low wage forever. I agree, but it will take much longer than it takes them to pass the learning curve on producing large high-performance tires.

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