There have been no real public comments made by major tire players with regards to the USW petition for higher tariffs on imported China-made consumer tires, so it’s been hard to gauge attitudes and plans among tiremakers.
But in yesterday’s investor earnings call, Goodyear chairman and CEO Rick Kramer and executive vice president and CFO Laura Thompson offered a bit of the firm’s perspective.
SeekingAlpha.com’s transcript of Goodyear’s earning call showed that a Deutsche Bank analyst asked about the potential pricing impact of the ITC investigation.
In response, Kramer offered: “The first thing I guess I’d have to say about that is that as we look at potential of the ITC, we continue to be in favor of free and fair trade around the globe. That was our position the last time, it’s our position this time. So as you know, that’s not the part of the market that we actually play in. It’s not exactly in our sweet spot in terms of what happens. But we know that if those tires don’t come here, they may go to other places around the globe. Tires move around. So we don’t know exactly what the implications of that are going to be yet as we move forward.
“I will tell you, the decision from the ITC is out into the future. We don’t know where it is. But we’ve already seen some, let’s call it, ‘irregular’ order patterns of maybe people anticipating something happening, the early stages of that. I don’t know exactly what we think is, what is going to happen if this thing moves forward. I can tell you, we’re going to stick to our strategy of driving tires in our targeted market segments. And that’s worked for us, as shown by our results, as shown by what we did over the past few years when the 421 tariff was in place. So we’ll sit back and see what is going to happen at this point.”
Then Thompson added: “And no doubt, the last time we had the tariff, we did see an impact in the lowest tiers of the market. But I’ll remind you that was in the environment of significantly lower raw material costs. They were dropping like a rock, right? So we’ll see. We saw an effect last time in the lowest tier, we’ll see what happens this time.”
Kramer then returned: “The things that we’re paying attention to are the distortions that will happen to the industry. Because we see people buying ahead and then, as the tariff came on, we saw people stop buying. And then once the tariff came off, they started buying again. And this all happens at the low end. So you get these big distortions in the marketplace that really aren’t indicative of normal sell-in to the market, let alone normal sellout to the market. So I think that’s as much on our minds as anything else.”
