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Chinese OTR Imports Set High US Duties

Following two cases filed jointly last year by Iowa-based union workers and Titan Tire Corporation (and supported by Bridgestone), the US Commerce Department has placed up to 210 per cent final duties on OTR tyres imported from China. The ruling demonstrates the body’s belief that prices for the tyres were unfairly low, while David Spooner – the Assistant Commerce Secretary – stated that the exporters had “received government subsidies and sold at below the cost of production in the US.”

OTR imports totalled 15 million in 2006, a sharp increase from the 12.4 million imported in the previous year, leading to the introduction of preliminary duties to combat the alleged “dumping activities” of Chinese tyre importers. The new rates are in the majority of cases lower than the preliminaries, also varying from company to company. In the most extreme case, Xuzhou Xugong Tyre Co saw their preliminary duty dropped from 51.81 per cent to nothing. However many Chinese suppliers will face the full 200 per cent duty.

9th July 2008/by Tyrepress Editors

Firestone Delivers Notice of Planned Factory Closure

Notification of the planned closure of a US Firestone factory producing automotive and industrial air springs was given to union representatives in June 27. The Firestone Industrial Products Company (FSIP) delivered a “Notice of Potential Plant Closure” for its Noblesville, Indiana facility to representatives of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW). In the notice, the company stated that the air springs market is increasingly global, making it difficult for FSIP to compete. Although no final decision has been made, the company advised the USW of the possible closure of the facility due to the losses being incurred at the Noblesville plant.

30th June 2008/by Tyrepress Editors

Travelling the Road to Off-Road Success

In the last decade or so the off-road tyre market has seen a name appear, seemingly out of nowhere, and grow to become a significant player in many markets, particularly in Europe. That name is BKT, or Balkrishna Tyres. The Indian company, flagship business of the large Siyaram Poddar Group, has only been producing tyres for two decades and exporting them for little more than one decade. Yet in a short span of time – between the 2000/01 and 2007/08 financial years, BKT’s annual sales have rocketed from US$8 million to more than $250 million. These are results many competitors can only dream of, but the company still holds even greater ambitions.

“Our vision is to obtain global leadership in off highway tyre solutions,” stated Arvind Poddar – vice chairman and managing director, Siyaram Poddar Group, at the Reifen Essen Exhibition. “I’m sure we will make it possible in the shortest possible time.” To achieve this, explains Mr. Poddar, the company has set itself the goal of maintaining its current growth rate of 30 to 35 per cent. This means sales of $325 million in financial year 2008/09.

25th June 2008/by Tyrepress Editors

India’s Tyre Output Growth Falls Short of Forecasts

Growth in India’s tyre production is likely to fall short of forecast results, with output levels hampered by dumped Chinese tyres and high manufacturing costs. According to Automotive Tyre Manufacturers’ Association (ATMA) director general Rajiv Budhraja, in an interview with Reuters, these factors mean domestic manufacturers will remain under pressure in the short term.

The ATMA previously forecasted growth in 2008 to increase by 2 to 3 percentage points to about 12 or 13 per cent. According to Budhraja, however, “a steady, subdued growth” is now expected in place of this. “Fuel price is going to be a major dampener,” he added, referring to a recent state-ordained 10 per cent increase in the cost of fuel, the greatest price rise in more than a decade. He added that a drop in mileage covered by private vehicles would lead to a fall in demand for tyres in both the OE and replacement markets.

11th June 2008/by Tyrepress Editors

India Now 3rd Largest Market for Budget Chinese Tyres

Data released by India’s Automotive Tyre Manufacturers Association (ATMA) adds weight to complaints from Indian tyre manufacturers about the quantities of budget tyres arriving from China. According to the ATMA, since 2002-03 India has jumped from being the 39th largest market for Chinese tyres to being the third, and the organisation predicts it will slip into top place in the near future.

India’s Business Standard newspaper reports that during April-February 2008 Indian imports from China, at 1.2 million units, had almost doubled compared with the same period a year earlier. Chinese tyres hold a 15 per cent of the RS 78 billion (£927 million) replacement tyre market for trucks.

9th June 2008/by Tyrepress Editors

Poole Harbour Terberg Tugs Switch to Michelin

Poole Harbour Commisioners have fitted their fleet of six Terberg TT22 4×2 tractor units with Michelin’s X-Terminal T tyres.

Engineering Manager, Paul Gillingham, explains the reasoning behind the switch: “The new Michelin tyre is on target to increase tyre life on the steer axle by over 300 per cent and on the drive axle by 140 per cent. We are anticipating that the tyres will give our drivers the comfort and traction they need when pulling the trailers or loading the ferry.”

6th June 2008/by Tyrepress Editors

ATMA Issues Anti-Dumping Plea

Indian news sources have reported that the Automotive Tyre Manufacturers Association (ATMA) have requested a government-implemented anti-dumping duty on radial truck and bus tyre imports. The request follows concerns over the 1,300 per cent increase in Indian tyre imports from China in the last five years.

According to business commentary in India, the increasing cost of raw materials in India has left domestic tyre manufacturers exposed to the challenge from cheaper Chinese imports.

4th June 2008/by Tyrepress Editors

Devalued Rupee Leads to Opposing Opinions on Tyre Dumping Duty

Depreciation of India’s Rupee against the US dollar is leading to stronger voices being raised for and against the country’s dumping duty on imported tyres. At present the duty is applied to bias tyres, and the All India tyre Dealers’ Federation (AITDF) is calling for its abolition in face of prices that effectively have increased 10 per cent in the last two to three months.

“Over the last eight to ten weeks, the rupee has depreciated by 10 per cent vis-à-vis dollar,” commented AITDF head SP Singh. “This has resulted in an increase of Rs 2,100 in the prices of a pair of radial truck and bus tyres. Moreover, the existing anti-dumping duty on bias tyres has already hit imports. So, we want the import duty to be abolished to compensate for the impact of rupee depreciation on the import of latest technology radial tyres.”

2nd June 2008/by Tyrepress Editors

Michelin: Tyre Markets Recovered in April

Sales in the European tyre replacement markets recovered in April, according to Michelin and industry analysts. European truck tyre replacement sales are reported to have grown 10 per cent; while Michelin’s numbers suggest that European passenger tyre replacement sales grew 4 per cent in April (compared with a -1 per cent year-to-date figure). Total OE sales are said to have grown by “a high double digit figure.” Responding to the report, Deutsche Bank analysts put the perceived recovery down to “the Easter weekend effect.” However, Tyres & Accessories’ research shows that the current sales situation may not be so rosy overall.

Taken in isolation, April was a very good sale month in France (which no doubt meant strong sales for market leader Michelin). This may explain why their calculation puts the European market up 4 per cent, but it conflicts with the ETRMA Europool data T&A has seen.

28th May 2008/by Tyrepress Editors

Chinese CV Tyre Imports Continue Unabated in India

The Indian government’s July 2007 anti-dumping legislation is having little effect on the numbers of Chinese truck and bus tyres being brought into the subcontinent. Instead increased numbers of Chinese-produced radials are being imported into India. According to a Hindu Business Line report, there has been no reduction in the share of Chinese tyres in this part of the domestic replacement market; and the price differential between Indian products remains in the range of 10-30 per cent. Imports of commercial vehicles tyres have reportedly skyrocketed in the last five years, with the Chinese tyres making up 91 per cent of the overall tyres tyre imports, according to ATMA figures tracking the market between September 2007 and March 2008.

27th May 2008/by Tyrepress Editors

Hayes Lemmerz to Close US Aluminium Wheel Facility

On May 12 Hayes Lemmerz International announced the planned closure of its aluminium wheel manufacturing facility in Gainesville, Georgia (USA) by the end of this year. The company has taken the decision to close the factory due to global overcapacity in the light vehicle aluminium wheel market and the increasing level of aluminium wheel imports coming into North America from countries with lower production costs. The company says the closure announcement reflects its overall strategy to continue to focus its business on the “right products in the right geographic regions”.

The Gainesville facility, which has been producing wheels since July 1994, employs approximately 290 people. Employees were advised of the closure during a meeting at the facility. A portion of the production currently at Gainesville will be moved to the Hayes Lemmerz aluminium wheel facility in Mexico.

13th May 2008/by Tyrepress Editors

Motaquip: Poor Quality Wheel Bearings ‘Threaten UK Aftermarket’

Low cost and counterfeit wheel bearings are pouring into the UK market, posing a direct threat to motorists, Motaquip has warned. Motaquip, one of the UK’s leading aftermarket suppliers, singled out Far Eastern suppliers of low cost wheel bearing kits for criticism saying: they fail to meet Original Equipment (OE) or matching quality specification.

The non-OE wheel bearings issue surrounds Far Eastern wheel bearing kit imports which feature ball bearings rather than the newer taper roller technology. Increasingly complex modern vehicles require that safety critical parts such as wheel bearing kits meet Original Equipment (OE) or matching quality specification. In order to reduce costs, parts sourced from the Far East often use fewer balls than the OE part, which leaves them vulnerable to breakage, disintegration, collapse or locking when in use – with potentially devastating consequences.

8th May 2008/by Tyrepress Editors

Quality Counts

Until recently the root cause of the OTR tyre shortage was under-production caused by increased demand for both finished OTR tyres and the raw materials need to make them. The latter just adding fuel to the OTR tyre price-increase fire that spontaneously combusts when demand exceeds supply. Since then, large scale manufacturers including Michelin, Bridgestone and Yokohama (to name but three) have pumped literally billions of dollars of investment into building new OTR tyre factories and expanding production at existing sites. However, these kinds of projects take time and in the interim, businesses reliant on OTR machinery have been looking further afield to source products.

Manufacturers in the emerging tyre production nations of India and China have been particularly quick off the mark in responding to the OTR tyre shortage. and some industry observers have been surprised at how quickly the Chinese manufacturers in particular have been able to radialise their production output. Tyres & Accessories recently visited the RTF Tyre Exhibition in Qingdao, China where literally dozens of companies are now offering radial OTR products.

Until recently the root cause of the OTR tyre shortage was under-production caused by increased demand for both finished OTR tyres and the raw materials need to make them. The latter just adding fuel to the OTR tyre price-increase fire that spontaneously combusts when demand exceeds supply. Since then, large scale manufacturers including Michelin, Bridgestone and Yokohama (to name but three) have pumped literally billions of dollars of investment into building new OTR tyre factories and expanding production at existing sites. However, these kinds of projects take time and in the interim, businesses reliant on OTR machinery have been looking further afield to source products.

Manufacturers in the emerging tyre production nations of India and China have been particularly quick off the mark in responding to the OTR tyre shortage. and some industry observers have been surprised at how quickly the Chinese manufacturers in particular have been able to radialise their production output. Tyres & Accessories recently visited the RTF Tyre Exhibition in Qingdao, China where literally dozens of companies are now offering radial OTR products.

When the US Department of Commerce put “anti-dumping” duties of up to 210 per cent on Chinese OTR imports in February, it closed the door on many Far Eastern OTR tyre manufacturers’ North American sales strategies. In light of the global OTR/earthmover tyre shortage these companies had been seeking to capitalize on their relatively low production costs by selling products into markets (like the US) where the shortage had pushed prices up. According to the US authorities the move was designed to stop “price distortion by Chinese exporters,” however another effect has been that this flow of OTR product has been redirected to other markets, including Europe and Africa.

Increased production and US restrictions mean Far Eastern tyremakers want to sell more OTR tyres in Europe

The figures available certainly seem to be in-keeping with the suggestion that premium manufacturers are leaving a gap in the market for cheaper competitors. The latest full-year ERMC Europool data for Western Europe shows that just over 134,000 OTR tyres were sold in the western European markets in 2007. However it is interesting to note that this actually represents a 6.6 per cent drop year-on-year. Broken down by application segment, it is clear that the 6.6 per cent overall drop is reflected across the board with two notable exceptions: Firstly, radial mechanical handling tyre sales grew roughly 5 per cent last year to approximately 23,000 units across Europe; and secondly radial crane tyre sales skyrocketed almost a fifth to over 17,000 units.

With no data to suggest that European market demand has reduced 6.6 per cent, and bearing in mind that these figures don’t include tyres produced outside Europe, the overall market drop could represent the gap in the market the imported tyre manufacturers are looking to fill. That said there is little in the way of evidence to show exactly how many tyres are being imported into Europe.

All this speculation about increased Far Eastern tyre product has led some global mining operations to conclude that the OTR tyre shortage will soon be over. Earlier this year, De Beers director Debbie Farnaby told Mining Weekly that she expects the shortage problems to be resolved by the end of 2008, despite earlier indications suggesting that the shortage of large OTR tyres would last two or three years longer.

During this interview Faranaby revealed that her company has been testing unidentified Far Eastern tyres at Venetia, De Beers’ largest South African diamond mine. However, just as interestingly (later in the same interview), Farnaby revealed a possible explanation as to why. The implication is that certain manufacturers appear to be offering preferential supply arrangements in exchange for information. “We won’t buy anything that’s not Michelin, we report everything that we get offered and, as a consequence, they’ve been very good in supplying us, and we have managed to keep all mines operational,” Farnaby told Mining Weekly. At the same time there are reports of Mining companies investing in increased tyre-making in partnership with tyre manufacturers so their investments can be repaid in kind with tyres.

The point is that those companies that don’t have such good relationships with manufacturers end up buying whatever they can source. And this does not always fulfil customer expectations.

Some customers report that tyres they expected to last 7000 hours in fact were useless after 1000 hours. While it is important not to tar all Far Eastern brush products with the same brush (some manufacturers are going to great lengths to demonstrate that they use premium materials and machinery in their tyres), this dramatic example is consistent with the worst reports T&A has encountered. Speaking off the record to one respected testing engineer revealed that with some exceptions, most Chinese radial OTR products he had tested do not yet offer the performance or retreadability that customers have come to expect from premium offerings.

Something similar appears to be true when it comes to high speed crane tyres. A year ago King’s Road Tyres’ Peter Gaster predicted that this market would soon reach saturation point: “In six months to a year from now the market with reach oversupply point. But you have to ask if all the products on the market are fit for purpose? One has to be sure that products are up to the job, especially when it comes to high-speed crane products.”

This view is further supported by the less than scientific anecdotal evidence provided by this month’s T&A question of the month. The overwhelmingly vast majority of those that answered our question (Has the European EM/OTR Market Reached Saturation Point?) answered “No – There may be more product than before, but I can’t get the right tyres.”

So on the one hand the OTR shortage may soon be over in some segment, but on the other hand that doesn’t necessarily mean there won’t continue to be a shortage of “the right kind of tyres.”

7th May 2008/by Tyrepress Editors

Gori: EC Standards may Agitate Problem of Low Quality Imports

Pirelli chief executive Francesco Gori, in his capacity as president of the ETRMA, has voiced concern that planned European Commission standards will hinder European tyre manufacturers in their competition with Asian rivals. In an April 23 interview reported by Reuters, Gori commented that Asian manufacturers who produce low-cost tyres can easily circumvent the standards, and the costs involved in conforming to them, as the volumes in which such tyres are arriving in European ports makes it difficult to effectively monitor product quality.

“There are not enough resources to control this invasion of products that do not conform to European standards,” said Gori. “It’s very complicated to find a solution.” While Gori does not object to the standards’ aims of improving tyre safety and environmental footprint, his objection lies in the fact that only products made in Europe must conform. “You can use cheaper materials if you make tyres that do not meet the standards. We would want that even the tyres that are imported in Europe met the same standards.”

According to Gori, Asian manufacturers hold between 10 and 20 per cent of Europe’s tyre market, and this figure is increasing by a double-digit figure annually. He added that 20 per cent of replacement tyre sales in Europe were in the budget segment where Asian made products are the strongest.

Should the proposed standards fail to deliver safeguards against tyres that do not conform, Gori said that approaching authorities in major European national markets to discuss potential means of deterring the sale of these tyres was a possible option. He spoke of strong penalties being dished out on offenders as an example to others, and raising consumer awareness of tyre safety and quality.

25th April 2008/by Tyrepress Editors

Kraiburg “Satisfied” With 2007 Figures

With a turnover of 83.4 million euros in 2007, Kraiburg Austria recorded an increase of around four per cent on the previous year. The company’s mainstay of sales remains its retreading business division, accounting for 56.9 million euros.
This stability has been achieved in spite of the increasing competition due to material providers from overseas and cheap truck imports from the Far East. Positive results have begun to show through from the restructuring measures initiated last year in the sales organisation.

To improve the operating result, the company had taken the decision to manage customer contacts in selected countries without commercial agencies directly via the field and indoor service team. This cost-saving measure has been welcomed by all Kraiburg retreading partners.

22nd April 2008/by Tyrepress Editors