Imports
The quantity of Chinese made consumer tyres is indeed harming the local industry, the US International Trade Decision has ruled. On June 18 the ITC voted 4-2 in favour of a United Steelworkers initiated petition, which seeks to restrict permissible imports to 2005 levels. A ruling in favour of the petition means the ITC will meet again later in June to decide upon recommendations for the Obama administration.
Continuing today’s theme of the fallout from the US International Trade Commission’s ruling that Chinese imports have disrupted the country’s markets, China’s Ministry of Commerce has expressed its “deep regret” at the decision. Yao Jian, a Commerce Ministry spokesperson posted the department’s reaction to the events on the ministry’s website:
“China has repeatedly expressed its opposition to foreign governments’ using safeguard clauses to launch investigations of Chinese products. The decision does not conform to objective facts, and also violates relevant World Trade Organisation rules in addition to U.S. law. We hope the U.S. will fully consider the actual situation of this case and proceed from the overall interests of the two countries’ industries,” Yao said.
Reuters reports that lawyers acting on behalf of Chinese manufacturers are arguing that US companies’ neglect of the low range market had occurred before they moved into the marketplace. The news organisation also notes that the complaint, which originated from the United Steelworkers, had not been voiced by US tyre producers.
In a statement released on June 17, the Tire Industry Association has claimed the USW initiated petition currently before the US International Trade Commission (ITC) will neither benefit consumers nor help preserve manufacturing jobs in America. While the TIA refers to the proposal under consideration by the ITC as “well-intentioned”, the organisation believes it to be one that will bring severe financial harm upon many retailers and motorists by restricting the availability of affordable tyres.
The US International Trade Commission will determine by June 18 whether or not consumer tyres imported from China are harming or have the potential to harm potential tyre manufacturers, and will report its findings to President Obama and the US trade representative the following day.
India’s Automotive Tyre Manufacturers’ Association (ATMA) is seeking to have the customs duty on natural rubber waived in order to help domestic manufacturers compete against imported tyres. The issue was undoubtedly raised when Apollo Tyres chairman and managing director Onkar S Kanwar met with officials from India’s finance ministry on behalf of the ATMA in early June; as part of its pre-budget memorandum, the industry association has requested a reduction in the customs duty on natural rubber to 10 per cent from the current 20 per cent level. Alternatively, it has been suggested that the duty on the import of tyres could be raised to 20 per cent. Tyre imports from China and Korea, which account for nearly 80 per cent of all imports, currently attract 8.6 per cent duty under the Asia Pacific Trade Agreement.
Trouble is brewing between Indian tyre manufacturers and dealers. A duty on passenger car tyres imported from China is expected to be introduced by the end of June, and the two parties hold differing views on the matter.
“We have invited views from all concerned. We will look at all representations before taking a decision. However, on the face of it, there does seem to be a case for application of safeguard duties,” a government official told India’s Economic Times newspaper on condition of anonymity.
The United Steelworkers (USW) reports that its president, Leo W. Gerard, asked the U.S. International Trade Commission (ITC) on June 2 to give the U.S. tyre industry a “fighting chance” against consumer tyres imported from China. According to the USW, Gerard told the ITC that the union has used every tool at its disposal to save the US consumer tyre industry from total collapse, including contract concessions, wage increase deferrals and improved productivity.
“But all of these efforts aren’t worth a dime if the market is being pulled out right from under us,” Gerard said. “With a short period of relief, we can start to build a sustainable foundation for the future of the American tyre industry and its workers.”
DN Tyre & Rubber Plc, formerly known as Dunlop Nigeria Plc, has taken delivery of the first consignment of tyres imported from South Africa. The company’s external communications manager Olusola Adebanjo said in a press statement that dealers in various regions have been “delighted” to receive the imported Dunlop brand tyres and that their delivery will end the tyre scarcity in the Nigerian market that followed the recent ending of local production.
“Our accredited dealers, who are placing orders will therefore be stocked with this product so as to satisfy the needs of premium vehicle owners who appreciate the superior quality of the brand,” said Adebanjo.
A group of six US tyre importers – including two major private branders – have joined forces to battle efforts by the United Steelworkers to limit the importation of China-made passenger tyres. The group, which calls itself the American Coalition for Free Trade in Tires, includes Hercules Tire & Rubber Co. and Del-Nat Corp., as well as importers American Omni Trading Co., Dunlap & Kyle Co. Inc., Orteck Global Supply & Distribution Co., and Foreign Tire Sales Inc.
In 2007, Foreign Tire Sales faced the recall of some 250,000 light truck tyres it imported from China’s Hangzhou Zhongce Rubber. Less than 20,000 of those tyres were recovered in the recall, which threatened to bankrupt the importer. The group has retained Washington, D.C., law firm Jochum Shore & Trossevin to represent it in the matter. (Tire Review/Akron)
In late April Dunlop Nigeria’s long awaited end of local production was realised. Less than four years after the decision was taken to invest an estimated 6.5 billion naira (£29.4 million) on radialising plant technology with a view to further boosting commercial vehicle tyre output, domestic production has been replaced by tyres imported from South Africa.
The Dunlop Nigeria plant held a capacity to turn out 300,000 heavy-duty tyres per annum and manufactured products such as the Supersteel 315/80, which was launched in May 2006. Its demise so soon after upgrading is being blamed upon a combination of the faltering domestic economy and an influx of cheaper foreign produced tyres. The unreliability of power supplies in Nigeria is also said to have pulled the plug on the manufacturer’s competitiveness, and the company’s hope of a reliable source of affordable carbon black from local refineries was never realised.
According to the organiser of Automechanika Middle East, the exhibition’s host country retains a strong tyre industry despite the global slowdown. Dubai’s direct trade in tyres, it says, was valued at more than AED 6.6 billion (US $1.8 billion) in 2008, an increase of 12 per cent from 2007. And organiser EPOC Messe Frankfurt GmbH believes that “even with the economic downturn catching up, wheels of the tyre market in the UAE are set to keep turning in 2009” – and thus it has high hopes for the exhibition, which opens on May 31 and runs until June 2 at the Dubai International Convention and Exhibition Centre.
Apollo Tyres’ India operations profits were less than half that of last year according to the year-end financial report released today by the manufacturer (April 2008-March 2009). While net sales grew 10 per cent from 36.9 billion to 40.7 billion rupees in the period, operating profit came down to 3.3 billion from 4.7 billion rupees and net profit more than halved from 2.1 billion to 1 billion rupees. Despite the relative gloom of the full year figures, Apollo came closer to matching the January-March 2008 quarterly operating profit in the same period this year, down merely 40 million rupees from 2.14 billion to 2.1 billion. The board of directors recommended a dividend payout of 45 per cent to shareholders.
India’s government intends to introduce import duties for passenger car radials in an attempt to protect the domestic industry against the growing quantities of the product being shipped into the country. According to an anonymous official, the Directorate General of Safeguards, a section of the national Revenue Department, is examining an industry filed complaint. Tyre manufacturers allege that the sharp increase in imports over the past year is causing them harm. A formal case is likely to be initiated by the Director General of Safeguards.
There is a new message coming from Goodyear Dunlop regarding its European retread brand and product strategy. The retreaded truck tyre business is now clearly seen as an integral part of the group’s new truck tyre business, and it is thus focusing directly on large and small fleets across the whole of Europe, serviced by a professional dealer network. As part of what is called “Goodyear Retread Technology”, the American Corporations’ European subsidiary will now focus more on the complete concept of offering a cradle to grave philosophy. This concept starts with the development of a new tyre with a high focus on fuel saving, mileage and reliability – in other words, using the company’s “MaxTechnology”. Consequently the usage of special compounds, new designs and new casing construction will allow multiple retreading and offer the lowest cost to the customer, points out Danny Van Essche, retread manager at Goodyear Dunlop Tires Europe.
According to statistics published by the United Steelworkers, between 2004 and 2008 the volume of tyres imported from China increased 215 per cent, and the value of these imports by 295 per cent. During this same period US tyre production declined by more than a quarter and the domestic industry’s share of the US tyre market dropped from 63 per cent to less than half. These figures represent conditions in a relatively robust period for the industry – since the second half of 2008 the market has shrivelled considerably, and US based tyre producers are feeling the pinch more than ever. For this reason the USW has filed a major trade case against, in its own words, “the flood of imported consumer tyres from China that have led to thousands of job losses and a growing number of plant closings throughout the US.”
If you would like the latest news from the Chinese tyre industry in Chinese, visit our partner site TyrepressChina.com. Or click below to continue on Tyrepress.
