Lines of Distinction?

(Akron/Tire Review) Our industry – at home and abroad – has been building tires for more than a century. Along the way, we allowed ourselves to be fooled every once in a while by ‘technology’ that really didn’t live up to its billing. One example is the single-ply tire promoted as being as strong as a two-ply tire.

Great progress has been made, both in technology and in marketing. Let there be no doubt about the safety advances built into today’s tyres compared to those built in 1908. And, yes, there have been some stinkers along the way, but by and large, this industry has led the world in packing more performance and safety into one single product than any other.

If anything remains unchanged, it continues to be our penchant for putting an acronym or label on everything, the latest being the so-called “global tyre,” which doesn’t sound half as meaningful as the phrase it replaced – “world-class tyre.”

If any country should understand a global tire, it’s ours. We used to make 2- or 4-ply units in nylon, rayon and polyester for shipment to anyone who wanted to buy them. We shipped 4-ply, polyglass-belted tires around the world and built tire factories in other countries to produce them.

Yet, we must recall painfully that, at that time, much of the world was light years ahead of us in tire technology. Other countries had radial-ply tires and performance tires that took us decades to master.

Looking beyond our borders today, a global tire is pretty much the same as any other tire. We’ve been exporting and importing so-called “global” tires in the U.S. for as long as anyone can remember. Even our associate and private brands have reached such status.

Important to all of this is the fact that the U.S. tire industry was especially strong following WWII. Recall that much of Europe’s and Japan’s manufacturing capacity was destroyed during the conflict, while U.S. and Canadian producers got through the war structurally unscathed.

Perhaps we lost our focus on world trade after WWII because we literally had no foreign competition. The U.S. made or grew or pumped products for the world, not the other way around. Our tires were “world class,” as were our cars, our food and our medicine – virtually every product we made.

Today, that claim is shared by many nations and manufacturers. In the 1950s and 1960s, products made in Europe, Japan and China were considered inferior – if not outright laughable. But, no one is laughing now. If nothing else, we managed to spoil ourselves by believing the ride would never end.

For a lesson in reality, go online to purchase a research and market report for global tires or send a “post” to Research & Markets, Guinness Centre, Taylors Lane, Dublin 8, Ireland. There are hundreds, if not thousands, of such reports available online from all around the world, and they aren’t cheap.

If you are driving on Kumho tires, you are driving on a global tire. The same with Michelin, Vredestein, Bridgestone, Yokohama, Pirelli, Continental, Toyo and Hankook – all of which started on these shores with tiny sales outposts, a handful of products and a desire to be like the big boys: Goodyear, Firestone, BFGoodrich, U.S. Rubber. If you dig through a tire company’s history, you will find shared technology, technical agreements, joint ventures and the like – most of which helped smaller, less advanced tiremakers reach world-class status.

It’s also necessary to understand that just because a company is based abroad, that doesn’t mean all its profits end up overseas. General Motors dwarfs Toyota in its number of U.S. employees, yet both companies have many U.S. shareholders with profits earmarked to finance operations in the U.S. and abroad.

With brand-new tire building equipment and freshly trained employees armed with state-of-the-art tire technology, it shouldn’t be a surprise to anyone that Southeast Asian tiremakers are fully capable of building quality tires. After all, we’re talking about a $70 billion dollar global tire market dominated by replacement sales. Bridgestone, Michelin, Goodyear, Continental and Cooper can only service so many of the multi-billions of tire customers around the globe, leaving plenty of room for others to emerge.

And, emerging they are, from Eastern Europe and Russia, from China and Taiwan, from India and Indonesia. Some of this growth is the result of decades of technical tie-ups, some from good-old bootstrapping by aggressive firms who saw opportunities beyond their borders.

These companies are household words in their homelands and building recognition elsewhere, and the question of quality, longevity or viability of their tiremaking ability is above reproach.

Should you feel safe buying and selling a Michelin tire made in China? Absolutely. Michelin technology and quality systems are the same there as they are in South Carolina or Clermont-Ferrand. And, the same holds true for nearly every tire company in the world.

There are reliable numbers from 2004 that report the U.S. was exporting 31 million passenger car tires to 141 countries. At the same time, we imported 92 million such tires. In the 10 years since 1996, we have seen tire imports rise from 43 million tires to 102 million in 2005 – nearly half of the U.S.’s 255 million OE and replacement units shipped that year.

In a parallel line of thought, we like to talk about the domestic content of cars and light trucks and have even set a standard to determine if a car is “domestic” or not. “Buy American” is the battle cry, but how can we do that when so many components reach us from overseas or from foreign companies that manufacture finished vehicle or automotive parts in the U.S.? Just two years ago, a Toyota minivan had greater “domestic” content than a Ford Mustang.

Once upon a time, it was impossible to replicate products from country to country. With today’s standardization, technology, instant communications and raw-materials buying practices, it is quite possible to produce 100% identical tires at the same time in plants 6,000 miles apart.

Yes, there are, and will be, stumbling blocks, such as the recent questions about Chinese-made light truck tires (not to mention food, toothpaste and children’s toys). We can point fingers, but we’ve had a few ‘doozies’ of our own, and they have been major. Soon enough, testing and quality assurance standards will catch up to our global production might.

Writing for the Carnegie Endowment, Josh Kurlantzick notes that, “10 years ago, China’s rising military and industrial power felt like a threat to the developing world, particularly its neighbors. But today, polls in Africa, Asia and South America reveal much more warmth toward Beijing.”

While the world continues to get comfortable with imported goods, the so-called ‘advantages’ many overseas tire producers now enjoy will erode over time. We can see Chinese tiremakers having to deal with a cut in government export rebates and facing rising transportation costs. Recent BusinessWeek articles have discussed wage creep in both China and India, which is further reducing their cost advantages.

How long will it take for China to build a society hungry for UHP radial tires? That will require new technologies and training, adding to the cost. How long will it take before someone says the word “union” in China? Communist or not, China is becoming a free market economy, and its workforce may wish to participate. How long will it take for all of us to understand that the word “global” is now just another marketing word?

Planet Earth is now one big marketing blob. The space and time obstacles that once separated us before the jet and Internet ages are gone. That’s the object lesson we must now understand.

How quickly we forget how the U.S. was studied and prodded by overseas visitors and students for the last half century. Now, it’s our job to study other cultures, languages and tendencies in the same manner that they learned ours. We must study on their soil and build relationships based on mutual goals.

Historically, the global tire never existed any more than global silk (ask Marco Polo) or global food. And, the U.S., which not so long ago reigned supreme in virtually every aftermarket and OE market at home and abroad, is now just another player.

Being a global player – like being a global tire – is not about individual quality or capacity or accomplishment. It is about our ability – our combined ability – to leverage those once-unique attributes to create a single, highly consistent product in every part of the world.
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Global is about every country in the world being as one, just as dozens of separate components are combined to create a single tire.