Another Vague Argument - Tire Review Magazine

Another Vague Argument

OK, who didn’t see this one coming?

The United Steelworkers now wants the government to put a quota on China-made passenger and light truck/SUV tires, which it claims have almost single-handedly led to the downturn in domestic tire production and the closure of six U.S. tire plants since 2004.

It wasn’t a year ago that the USW, with help from Titan International and Bridgestone Americas, won its argument about China-made small OTR and ag tires, with the U.S. slapping added import duties on a range of imported tires, many of which weren’t even being produced domestically. But what the heck.

So now, at long last, the Steelworkers are tackling Chinese consumer tires. This time, though it is going it alone as no tiremaker has stepped up to join the fray. And I wouldn’t expect any tiremaker to jump in on this one.

Why? Well, as the USW fails to acknowledge, plenty of those tires are being produced by Goodyear, Bridgestone, Michelin and Cooper – all with USW contracts – not to mention the Hankooks, Kumhos and Kendas of the world. The USW claims that 48 million China-made consumer tires landed in the U.S. last year – fully 18% of the 270 million OE and replacement consumer tires the RMA said were shipped in 2008. There is no way that all of those tires came here wearing purely Chinese brand names.

The USW argues that tons of American tire production jobs have been lost to the nasty, low cost Chinese makers. But it fails to acknowledge its contribution to the exodus of tire production to lower cost countries. For decades prior, it is the one that negotiated fat contracts that finally came home to roost. USW says Chinese imports increased 215% between 2004 and 2008, the same period, oddly, that the four major U.S. producers had upped their Chinese ante to lower costs.

USW says that the “domestic industry’s share of the U.S. tire market declined from 63% in 2004 to below 50% in 2008.” At the same time, “Chinese producers’ share of the consumer tire market in the U.S. increased from less than 5% to more than 17%.”

The union fails to clearly define what it terms a “domestic” tiremaker. Is it Goodyear and Cooper, the only two “American” tire companies left? Is it just the USW-represented plants? And just who are these “Chinese producers”? Goodyear? Bridgestone? Cooper? Michelin? And if the “domestics” share fell 13% while the Chinese’s share hit 17%, where did the other 4% go?

The huge, massive, monstrous increase in China-produced tires led directly to the closure of six U.S. plants since 2004, the Steelworkers want you to believe. Well, to those not paying any attention to this industry, that might appear to be the case. But let’s take a closer look.

Continental AG shut down its Mayfield, Ky., and Charlotte, N.C., plants in 2004 and 2006, respectively. Why? Looking back, a major reason was that the USW would not give Conti the concessions it felt it needed to become profitable. CTNA, if you will recall, hadn’t made a dime here since it bought General way back when. So when CTNA management finally got serious about succeeding here, the union wasn’t that interested in helping. Was Conti making and importing Chinese tires? No. It was just trying to survive.

Bridgestone closed its Oklahoma City plant in 2006. Now, Bridgestone has never really had a good relationship with the USW, but the Oklahoma City plant was old and produced nothing but broadline tires, products the company could easily source from places like, say, Mexico and South America. China? No.

Goodyear shuttered its Tyler, Texas, plant in 2008 for much the same reason…and it did so with the full cooperation of the USW! That closure was negotiated into Goodyear’s strike-ending 2006 master contract. Why? To preserve jobs at the other unionized Goodyear plants. Besides, the USW fully knew at that time that Goodyear was bringing offshore product into the U.S. as part of its massive cost-cutting measures. Was China to blame here? No, but everyone knows that some of Goodyear’s lower value tires are coming from across the Pacific.

Cooper, which has been importing China-made tires for years, closed its NON-UNION plant in Albany, Ga., earlier this year. The USW happily went along with that plan because it preserved UNION jobs at Cooper’s three other U.S. plants.

And Michelin just announced that it was closing its aged Opelika, Ala., tire plant by the end of this year. This was a plant inherited when Michelin bought out the Uniroyal-Goodrich Tire Co. back in the 1980s, and had poured millions into to make the plant more efficient. Was this closure because of Chinese-made tires? No. It was because 1) Michelin, like the rest of the industry, isn’t selling any tires during this downturn, and 2) it could no longer continue to string out all of its North American plants in an unheralded efforts to avoid layoffs as long as possible.

So while the USW wants the government to slap an arbitrary quota on the number of consumer tires being imported from China, let’s make sure we all keep things in perspective. I’m not saying the union doesn’t have an argument, but I do question the validity of its claims…especially in today’s economic atmosphere.

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