Various Groups Weigh in on Chinese Tire Tariffs

Over the last several weeks, numerous interested parties have weighed in on President Barack Obama’s pending decision on whether or not to impose tariffs on imports of Chinese passenger and light truck tires into the United States. On June 18, the International Trade Commission voted to recommend tariffs against Chinese tire imports of 55 percent the first year, 45 percent the second, and 35 percent the third. On September 2, the Office of the U.S. Trade Representative (USTR) submitted its recommendations (from Tire Business, subscription required) to the president on whether to implement the tariffs, though, as is customary, its recommendations were not made public. A decision on the matter is due by September 17.

On September 1, the Committee to Support U.S. Trade Laws (CSUSTL) — a coalition consisting of nearly 100 organizations, including the United Steelworkers (USW), which was the original petitioner to the ITC — has written the president to urge approval of the tariffs.

In a press release, David Hartquist, executive director of CSUSTL, wrote, “We write to underscore both the importance of Section 421 as a legitimate trade remedy, and to respectfully urge its application in appropriate cases. Campaign promises should be fulfilled and effective enforcement action taken to provide full relief where merited.”

On September 2, Harold Meyerson of the Washington Post wrote an editorial (subscription required) in favor of the tariffs. On August 4, the Wall Street Journal published an editorial strongly opposing the tariffs:

As Mr. Obama faces his moment of truth on tires, he ought to look at a report issued last week by Rutgers economist Thomas J. Prusa examining how the ITC’s proposed tariffs would ripple through the U.S. economy. Mr. Prusa calculates that each job “saved” by the ITC’s tariffs would come at the cost of at least 12 jobs lost, and possibly more than 25. Most tire-related employment in America consists of the people who distribute and install tires, not people who produce them. By depressing tire sales, a tariff would jeopardize those jobs.

As reported by Tire Business, the Tire Industry Association and many major tire retailers and distributors are fighting the tariffs, as are tire makers including Cooper Tire & Rubber Co. and Toyo Tire U.S.A. Inc. These parties assert that the duties would disrupt the U.S. tire market far more than anything they were supposed to correct.

Goodyear Reducing North America Production

According to Rubber & Plastics News, Goodyear is reducing production of truck and passenger tires at its North American plants due to weak demand. The reduction is expected to last at least over the next several months, and will affect truck tire plants in Danville, Virginia and Topeka, Kansas, as well as passenger tire plants in Union City, Tennessee; Fayetteville, North Carolina; Lawton, Oklahoma; Napanee, Ontario; and Gadsden, Alabama. More details here (subscription required).

Where is the growth in the tire industry?

Just-Auto has an interesting interview with James Bailey, Goodyear’s corporate communications manager.

An excerpt:

just-auto: Overall, we are seeing the mature tyre industry growing at about 3% a year, but I guess there are some tyre segments growing faster than others. Which tyre segments are the fastest growing? Is it the performance markets of W, Y, Z and 4×4?

James Bailey: Yes, the main growth is in high performance fitments. A 17 or 18 inch tyre was supercar territory in the early 90s – now it is the main tyre for the Mondeo market. Our fastest growing area is RunOnFlat tyres. With standard fitments across the BMW and Mini ranges, and option choices for many Ford, GM, and Mercedes models, the growth has been rapid.

And later in the interview.

James Bailey: A 6% cut in rolling resistance equates to a 1 percent cut in fuel consumption. Goodyear is working on the development of an ultra low rolling resistance RunOnFlat tyre with environmentally friendly materials. On this project Goodyear is working in close cooperation with two research partners: The Italian research company Novamont and our OE partners, BMW. One of the project’s main tasks is to develop a new ‘bio’ filler as an alternative to traditional fillers used in tyres. This new filler, which will be made out of renewable resources like corn starch, may have a major environmental impact and lead to a reduction of CO2 emissions during its production process.

Update on Gustav, Part II

The news coming out of the Gulf is fairly consistent, minimal damage from the storm but extensive damage to electrical power transmission due to downed lines caused by high winds, particularly around Baton Rouge.

From the Associated Press,

The path of Hurricane Gustav offered New Orleans a reprieve, but 80 miles away where utilities say the devastation was the worst they have ever seen, the storm offered nothing but punishment.

The region’s top power company, Entergy Corp., said the Baton Rouge area has never suffered damage as severe as that caused by Gustav. The last storm that caused damage close to Gustav was in 1992 when Hurricane Andrew hit south Florida, crossed the Gulf of Mexico and then slammed Louisiana.

The Department of Energy said Thursday morning that 1 million customers are without power, including 925,963 in Louisiana. That is down nearly 200,000 customers from Wednesday afternoon.

Entergy is reporting 664,857 customers without power Thursday afternoon, down from a peak of 850,000 Tuesday morning and the second most in the utility’s 95-year history trailing only Katrina in 2005 when the utility had 1.1 million outages. Entergy said most customers in Arkansas should have power back by the end of Friday.

Rubber & Plastics News (subscription required) is reporting that Lion Copolymer’s SBR plant in Baton Rouge and EPDM plant in Geismar both sustained only minimal damage. The SBR plant plans to resume production early next week, contingent upon power being restored by Friday (September 5). No word yet on startup at the Geismar plant.

ExxonMobil has provided an update on the situation on its website.

ExxonMobil Baton Rouge personnel are continuing a detailed damage assessment and have begun clean-up and restoration activities. At this time, the Baton Rouge Complex, which includes Refining and Chemical facilities, continues to be shut down due to damage associated with Gustav. We are assessing restart options, but are unable to provide a restart schedule at this time.

Chalmette Refining is also conducting assessments to determine the impact of Gustav. A damage assessment team is at the facility, and based upon initial assessments damage does not appear to be severe. Restart plans have been developed pending results of the final damage assessment, but we are unable to provide a restart schedule at this time.