News from Notch Consulting, Inc.

November 29, 2011

Nokian cutting truck tire production

Filed under: Tires — Notch @ 6:50 pm

On November 25, Nokian Tyres P.L.C. announced plans to reduce production of heavy truck tires and lay off staff to adjust for weaker demand.

The preliminary plan is to change the working pattern of the heavy tyre production to a discontinued five-day three-shift model, and to reduce the work input of approximately 100 factory employees and 15 white-collar officials with lay-offs and possibly with personnel cuts. The production adjustments are estimated to start in January-February 2012 and to continue until further notice.

Nokian said that its passenger tire division has seen no weakening in demand, and expects to report improved sales and operating results for the year.

Is this a harbinger of a weaker 2012 tire market?

Tire Review:

“While this is not huge news (Nokian expected weaknesses in 2012) it stresses how fragile demand is for the pro cyclical heavy and truck tires is in a recessionary environment,” financial analysts from Morgan Stanley reported in an investor’s note published the day of the news.

The analysts view is that this move highlights the possibility of further risks for other players in the market, which have high exposure to truck and specialty tires. In this respect Morgan Stanley points out that Michelin, for example, generates more than 40% of revenue excluding mining and two-wheel tires. By contrast, exposure for Pirelli to this segment is said to be no more than 8%-10% of sales, but the point remains that this scenario could affect other players too.

As quoted by Reuters, Michelin’s Michel Rollier has stated that the global market remains relatively healthy and that the weakness is limited mainly to the heavy truck tire market in Europe.

Lockout at Cooper Findlay

Filed under: General, Tires — Notch @ 5:45 pm

On Monday, November 28, Cooper Tire & Rubber Co announced that it locked out the unionized workforce at its Findlay, Ohio tire plant following “repeated attempts to extend its recently expired contract or reach agreement on a new long-term contract with United Steelworkers Local 207L (USW),” according to a press release from the company. Cooper plans to continue manufacturing operations at the Findlay facility with a temporary workforce during the lockout.

In its own press release on the lockout, the United Steelworkers (USW) condemned the decision, saying it had made a good faith offer to keep working while negotiations toward a new labor contract proceeded. USW District 1 Director Dave McCall said that he expects the union to pursue unlawful bargaining charges against Cooper with the National Labor Relations Board (NLRB) and added that the union is still committed to negotiating a fair contract in Findlay.

Dates for future negotiations are currently being finalised.

Sibur-Russian Tyres approved to acquire Matador-Omskshina

Filed under: General, Tires — Notch @ 5:12 pm reports that Russia’s Government Commission on Monitoring Foreign Investment has approved Sibur-Russian Tyres’s plan to acquire 100% interest in the Matador-Omskshina joint-venture, which it previously operated as a 50/50 joint venture with with Continental AG. Following the acquisition, the joint venture has been renamed Cordiant-Vostok.

Sibur-Russian Tyres says that it plans to increase passenger tire production capacity at the joint venture.

The joint venture with Slovak tyre producer Matador, which was subsequently bought German firm Continental AG, was founded in 1995. In 2010, the company increased production by 23 per cent, to 2.75 million units under the Cordiant and Matador brands. In June 2011, Continental AG withdrew from the joint venture, deciding to focus on the development of its own business in Russia.

Here is the press release (Russian language).

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