Raw Materials
Effective February 2006, Kraiburg Austria will be increasing its prices for quality tyre retreading material by five per cent in Central Europe. This is down to continuing rising energy and transport costs as well as the drastic rise in the price of raw materials with, for example, natural rubber currently costing around 40 per cent more than in August 2004.
Tyres & Accessories recently asked its diverse readership – comprising of manufacturers, wholesalers – retailers and everyone in-between, what they thought about the recent spate of price increases. For their part the manufacturers claim rocketing raw material prices have forced them into a corner, with regard to end-product price increases. However wholesalers and distributors are likely to feel that these increases are an attack on their margins, which can only be remedied by passing the cost onto the consumer, therefore making retail more difficult.
T&A asked readers: Are price increases a necessary evil, or just the result of prudent financial planning on the part of the manufacturing business? 60 per cent of those that responded put price increases down to the nature of supply and demand, while the remaining 40 per cent said manufacturers had more ‘business orientated’ motives.
Continental Tire North America has asked 1,000 employees at the company’s Charlotte plant to give up 35 per cent of their pay and benefits by January. If the workers’ union doesn’t agree, the company is ready to immediately cut the plant’s production by 30 percent, and hasn’t ruled out closing the plant altogether, the Charlotte Observer quoted chief executive Alan Hippe as saying. The plant’s union leaders have not yet made a decision on the request.
Michelin does not envisage raising prices in Europe at the moment, despite price increases in North America and Japan. “Our philosophy has not changed, we reflect the rise in the prices of the raw materials in our selling prices,” Reuters quoted one Michelin spokesperson as saying. Michelin’s last price increase in Europe was a year ago.
(India/Rubber Asia) With annual consumption by the Indian tyre industry of over 400,000 tonnes of natural rubber (NR), “a price increase of just 1 a kilogram, imposes an annual financial burden of over 400 million rupees on us,” says Paras K Chowdhary, CMD of Ceat Tyres and chairman of Automotive Tyre Manufacturers Association (ATMA) of India.
The average price of NR has gone up from 39.17 rupees/kilo in 2002-03 to 63 rupees in 2005-06 (October) — an increase of 23 a kilo in about three years. This translates into about 8,800 million rupees annual financial burden on the Indian tyre makers, he said. (1$ = about 44 rupees).
Chester-based Allan Morris Transport, established in 1893 and one of the oldest transport companies in the UK, has switched to Bridgestone and its independent Truck Point dealer network for its tyres and tyre management services.
Pirelli & C SpA has reaffirmed its guidance for “significant improvement” in full-year results compared with 2004. The news follows strong nine-month results, which saw net profits rise 34 per cent. Revenue in the first nine months of 2005 was 2,707 million euros, an increase of 9.8 per cent compared with 2,466 million euros on 30 September 2004. EBITDA was 412 million euros (15.2 per cent of sales), an increase of 17.7 per cent from 350 million euros in the first nine months of last year.
The Bridgestone Corporation has announced that it will raise the replacement market prices of tyres, tubes and flaps sold in Japan. The move will take effect from 1 February 2006. Prices for winter tyres will be increased on 1 April 2006. Specific price increases include five per cent for passenger car and light truck tyres, seven per cent for truck and bus tyres, seven per cent for construction vehicle bias tyres, 10 per cent for construction vehicle radial tyres, and five per cent for other kinds of tyres (excluding those for motorcycles) and for tubes and flaps. Bridgestone points out that these figures are the average increases across each of the respective ranges.
(Akron/Tire Review) Hankook Tire Co saw profits increase 16 per cent in the third quarter, reaching $51 million against sales that rose 7 per cent to about $450 million. The South Korean tyremaker said the results were due to increased sales to automakers and price increases.
“Sales rose as Hankook raised prices of tyres in the US two times this year and once in Europe,” said Suh Min Chul, assistant manager of Hankook’s investor relations department. Hankook Tire, he noted, paid 11 per cent to 15 per cent more for raw materials compared to previous periods.
Bridgestone Corp has announced that it plans to build a technical centre beside its existing tyre plant in Wuxi in Jiangsu Province. The US$14 million facility, Bridgestone (China) Research & Development Co, will be responsible for testing raw materials supplied to the company’s Chinese tyre factories, according to a statement issued by the Japanese manufacturer.
The centre is expected to go into operation next July with some 20 employees and will be Bridgestone’s fourth technical centre worldwide in addition to facilities in Tokyo, Rome and Akron in the US state of Ohio.
When Bridgestone recently announced that it would increase prices in Europe it was the latest in a string of decisions by tyre manufacturers around the world. It seems that no matter where in the world a company is based, companies cannot avoid the increased price of raw materials and particularly natural rubber, synthetic rubber and steel. But T&A would like to know what you think about the recent spate of price increases issued by manufacturers around the world? Are they a necessary evil, a stealth tax on distributors or just the result of prudent financial planning on the part of the manufacturing business? To place your vote and leave your opinion click here.
Raw materials and the right machinery are integral to the tyre production process. But who delivers the best raw materials and how have the markets been affected by high oil prices and booming demand from so-called low cost countries. And how influential are prices on the finished product?
The President of Kazakhstan, Nursultan Nazarbayev, has visited InterKomShina JSC in Shymkent, South Kazakhstan. This company is engaged in the production of tyres for light vehicles and road freighters, agricultural machines and special equipment. InterKomShina claims to be the only tyre manufacturer in central asia.
Bridgestone Europe NV/SA announces that it will increase prices on all of its tyre brands and categories. It will apply to all replacement channels in all European countries. The increases are up to 5 per cent and are scheduled to take effect from 1 January 2006.
According to Guenter Unterhauser, senior vice president sales & marketing of Bridgestone Europe: “Our manufacturing divisions are facing huge increases in raw materials costs. The recent increases in oil based raw materials, as well as natural rubber and energy, puts us in the situation where we have to increase prices.”
Bridgestone Corporation officially opened Bridgestone (Shenyang) Steel Cord Co, Ltd, in Liaoning Province, China. Bridgestone invested US$94.3 million in the construction of the plant, which began producing steel cord for truck and bus radial tyres in August this year. Production capacity is projected to reach 70 tons per day by the end of 2007.
About 100 people attended the opening ceremony, including Chinese government and municipal officials such as Song Qi, deputy mayor of Shenyang. Heading the Bridgestone contingent were Masaharu Oku, the board of directors, vice president and senior officer responsible for tyre production and distribution, Hiromichi Odagiri, vice president and senior officer, chief representative of Bridgestone tyre operations in China, Kaoru Fujioka, vice president and officer in charge of steel cord, and various other plant officials.
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