News from Notch Consulting, Inc.

April 10, 2009

Europe Adopts New Tire Regulations

Filed under: Carbon Black, General, Silica, Tires — Notch @ 1:53 pm

I neglected to mention this news when it came across my desk. On March 10, the European Parliament adopted new road safety legislation that included regulations related to tire noise, wet grip, and rolling resistance. The new rules also make tire pressure monitoring systems (TPMS) mandatory on new passenger vehicles starting in 2012. The bill now must be approved by the Council of Ministers, where it is expected to be adopted before the summer.

The proposals are designed to reduce CO2 emissions by improving gas mileage and keeping the tire pressure within the optimum range.

Tire Business (subscription required) has details on the new rules:

The legislation, elements of which have been in the works since 2001, will combine about 50 existing directives applicable to tires into a single regulation, enforcable in all the EC’s member states.

. . .

The tire regulations will take effect starting in 2012. The noise regulations call for a reduction of two to five decibels, depending on tire type. The rolling resistance requirements are designed to reduce the CO2 output of a typical car by about 3.9 grams per kilometer traveled.

April 9, 2009

Rhein Chemie Announces Results, Details Recent Expansions

Filed under: Rubber Chemicals — Notch @ 5:37 pm

Rhein Chemie announced that it has ended FY 2008 with worldwide sales of EUR 281 million, down 5% compared to EUR 295 million in FY 2007. “Rhein Chemie performed very well in the first three quarters of 2008. This was marred by a significant fall in sales in the fourth quarter due to the general economic crisis,” said Dr. Anno Borkowsky, CEO and President of Rhein Chemie in a press release issued March 31, 2009. The marked downturn in the automotive industry had a particularly heavy impact on the company’s business.

Despite the difficult economic conditions, Rhein Chemie is pursuing expansion plans. At the end of 2008, new production facilities were started up as planned at the company’s Mannheim headquarters and in Qingdao, China. The investment for both projects amount to around EUR 12 million.

Rhein Chemie has been manufacturing its Rhenogran product line at its new production facility in Mannheim since the end of last year. This line consists of polymer-bound rubber chemicals that are used in the manufacture of tires and seals, for example, and improve the processing and quality of the end product.

At the end of 2008, the newly established company Rhein Chemie LOA (Qingdao) Ltd. began production of customized products and additive formulations for industrial lubricants in the eastern Chinese port of Qingdao. The new production facility includes a technical laboratory, where the company can perform a full range of key tests for its Asian customers. The company has been producing additives and service products for the rubber processing industry in Asia at its Rhein Chemie (Qingdao) Ltd. joint venture for the past ten years.

Three States Consider Tire Age Bills

Filed under: Tires — Notch @ 4:53 pm

Tire Business (subscription required) reports that three states — Hawaii, California and New York — have become the latest states to consider bills that would regulate the age of tires sold within their borders. In late 2008, the New Jersey Division of Consumer Affairs issued a notice of pre-proposal, soliciting comments on the feasibility of requiring the state’s tire dealers to disclose the age of the tires they sell.

The Hawaii bill would make it illegal to sell a tire more than six years after its date of manufacture, while the New York bill would require the manufacture date of the tire to be clearly molded on both sides “in a non-coded fashion.” The California bill would require all tire dealers to provide written information on sale documents about the age of each tire sold to customers, in English, Spanish, Chinese, Vietnamese, Tagalog and Korean. Customers would have to initial the information to signify they had read and understood it, and dealers would have to keep the documents for at least three years after the sale.

Goodyear CEO Outlines Strategy, Challenges

Filed under: Tires — Notch @ 4:38 pm

In his address at the company’s 2009 Annual Shareholder Meeting, Goodyear Tire & Rubber Co. chairman Robert Keegan said he “remains confident in Goodyear’s ability to drive performance during challenging economic conditions and emerge in a position of competitive strength.”

Keegan identified three specific areas that the company will emphasize going forward:

Top line – encompassing new product leadership, building core brand strength and leveraging Goodyear’s industry-leading distribution network;

Lowering costs – aggressively aligning Goodyear’s cost structure with today’s lower industry volumes; and

Managing for cash – focusing on the strength of Goodyear’s balance sheet and generating funds to reinvest in the business.

Rubber and Plastics News reports (subscription required) that Keegan also outlined a restructuring program at the meeting that would reduce Goodyear’s workforce by an additional 5,000 employees, bringing its total layoffs to 9,000 workers since mid-2008. The cost reduction program also includes instituting a global freeze on salaries; lowering its manufacturing costs through shortened work weeks, fewer manufacturing personnel and reduced third-party sourcing; increasing its lean manufacturing and Six Sigma processes; eliminating non-essential spending; and continuing to close underperforming retail stores.

The press release is here.

April 6, 2009

Survey: Auto Industry Woes Affecting Consumers’ Purchasing Decisions

Filed under: General, Tires — Notch @ 8:15 pm

The research firm AutoPacific Inc. has announced the results of a new survey about the American public’s views of the automobile industry’s woes. The Internet survey, which was conducted between March 31 and April 1, concluded that the American public is well aware of the challenges facing the American automobile industry as well as the Obama administration’s actions to confront them. In addition, a majority of those surveyed have concerns about buying a vehicle made by General Motors or Chrysler.

Only three percent of respondents said they were not aware of the billions of dollars in government loan guarantees made to GM and Chrysler; 94 percent knew both car makers were required to submit viability plans in hopes of receiving additional government aid; and 89 percent were aware the White House had declared neither plan represented “a credible path to viability.” Survey findings were based on more than 700 responses.

In addition, 52 percent of respondents expressed concern about buying a GM vehicle, while 63 percent were concerned about buying a Chrysler vehicle. When those previously considering buying a GM product were asked whether the White House’s rejection of GM’s restructuring plan would now make them more or less inclined to buy from that company, the response was 3:1 against purchase, which was virtually identical to the response regarding Chrysler vehicles.

The survey results indicate that 72 percent of respondents indicated they were more likely to consider a Ford Motor vehicle because the auto maker has not asked for government loan guarantees. Only 15 percent expressed concern about buying a Ford vehicle. Finally, 72% of respondents indicated that it would be more than a year before they would be in the market for a new car.

Goodyear’s Antitrust Suit Against SR Producers Can Proceed

Filed under: General, Tires — Notch @ 7:17 pm

Rubber & Plastics News (subscription required) reports that Goodyear’s antitrust suit against a group of synthetic rubber suppliers will proceed after a federal judge rejected the defendants’ motion for dismissal.

On March 2, 2009, Judge David D. Dowd Jr. of the U.S. District Court for the Northern District of Ohio that the defendants’ arguments for dismissal were insufficient. However, the judge suggested that the issue of whether the charges had passed their statute of limitations might be taken up at a later date.

In the suit, which was filed in May 2008, Goodyear alleges that the defendants overcharged it for polybutadiene and sytrene-butadiene rubber in an international price-fixing cartel. Goodyear seeks treble damages, attorneys’ fees and injunctive relief.

According to R&P News, the defendants in the original case were Bayer A.G.; its subsidiaries Bayer Corp. and Bayer MaterialScience L.L.C.; Dow Chemical Co., with its subsidiaries Dow Deutschland Inc., Dow Deutschland GmbH & Co. OHG and Dow Europe GmbH; Eni S.p.A.; Syndial S.p.A.; and Polimeri Europa S.p.A., with its subsidiary Polimeri Europe Americas Inc.

April 1, 2009

Chrysler Announces Alliance with Fiat

Filed under: General — Notch @ 12:32 am

On March 30, Chrysler LLC announced on its website that the company and its majority owner, Cerberus Capital Management L.P., had agreed on the terms of a formal global alliance with Fiat S.p.A. In the statement, Chrysler said that it was “encouraged by the commitments of the Administration, U.S. Treasury and President’s Auto Task Force to the American automobile industry and Chrysler’s viability, with a Fiat alliance.”

The statement continued:

Chrysler has consistently said that the alliance with Fiat enhances its business model that expands its global competitiveness. We appreciate the willingness of the Task Force, along with industry and financial experts, to consult closely with us in order to achieve this significant step.

By providing Chrysler with product and platforms, technology cooperation and global distribution, Fiat strengthens Chrysler’s ability to create and preserve U.S. jobs; gives U.S. consumers more choices for environmentally advanced vehicles; gives its dealers more of the products they need to be successful; helps stabilize the supplier base; and allows Chrysler to pay back government loans sooner.

Chrysler has had a series of very constructive discussions since our plan was submitted February 17, including weekly face-to-face meetings with the Task Force. We have been impressed by their speed, diligence, good faith and strong grasp of the difficult issues our industry faces in this financial crisis. This is evidenced by the U.S. government’s initiatives to support consumer warranties and suppliers, as well as their appointment of Dr. Edward Montgomery, Director of Auto Recovery.

Obama Administration Boosts CAFE Standards

Filed under: General — Notch @ 12:19 am

On March 27, the Department of Transportation announced that fuel economy standards will be increased in the United States for the first time since they were established in 1975. Under the new rules, which are scheduled to be released this week, fuel economy standards for passenger cars will be increased to 30.3 miles per gallon (mpg) from the current 27.5 mpg, while standards for light trucks would rise to 24.1 mpg from 23.1 mpg.

The new standards only apply to model year 2011 vehicles, thus differing from those proposed (but not implemented) by the Bush administration, whose proposal also included standards for 2011-2015. However, the new rules are considered a first step toward Congress’s mandate that automakers reach 35 miles per gallon by 2020.

The new standard for passenger cars is lower than the 31.2 mpg that the previous administration had proposed. With regard to future standards, the Obama administration has requested that DOT undertake a more thorough review of future standards, including a forthcoming report on fuel economy from the National Academy of Sciences that was required by the 2007 Energy Independence and Security Act, which had also required the more stringent fuel economy rules.

According to US News and World Report, another test for the administration will come in May, “when it’s thought that the administration will make a decision on whether to allow California and 13 other states to enact laws to reduce carbon emissions. Those laws would cut new-vehicle emissions by 30 percent by 2016. In one of his first moves in office, Obama issued a directive ordering the EPA to re-examine the Bush administration’s rejection of the states’ bid—a worrying sign for automakers.”

The National Highway Traffic Safety Administration’s Corporate Average Fuel Economy Standards are available here.

Tire Business on the new standards (subscription required)

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