In the Wall Street Journal on Apr. 21, an “industry analyst” was quoted as suggesting that “25 million fewer tires from China could support three more plants.” The idea here is that if the U.S. government cuffed Chinese imports, U.S. producers would have the opportunity to make up the difference. I’m sure this individual didn’t think that three tire plants would magically appear. Cause they won’t.
The USW, in the same article, said the artificial quota would improve job security and help “U.S. tire producers” regain lost marketshare and increase production, sales and capital investment.
Not sure on which what planet this scenario works, but it ain’t here.
I wonder, too, why the USW only wants a three-year quota. Does it think in three years China will decide to not compete in the U.S. market? Or that, some how, production costs here would be such that U.S.-produced tires would become price competitive with Chinese brands?
We’re in the middle of a massive recession – frankly it’s a depression minus the soup lines. Tire sales, to be kind, are abysmal, and there is no sign that they will improve any time soon. By and large, the tires being sold here are being sold on price…the lower the better. And this flocking to price and not flying to value stands to become a long-term dynamic, not a short-term fad.
So where does it leave U.S. consumers and tire dealers and, by extension, producers, when consumers refuse to pay $1,000 for a set of U.S.-made tires that they can get for $600?
We learned a long time ago that U.S. consumers no longer care where products are made, only that they cost less. In these troubled days the traditional “value proposition” doesn’t hold up any more for a large part of the population. Oh, yes, they still want “value” – getting the most for the least amount of money – but they now place greater emphasis on the latter, not the former.
Finally, let’s say the U.S. goes along with this scheme to save USW jobs. There will always be a market for lower cost radials. And dealers will find them, be it from India, Malaysia, Indonesia, Eastern Europe. So you cut off one low cost source, and another will always pop up. What will the USW expect then? Eliminate ALL imported tires?
Further, what will the USW do if it sees its dream of more U.S. production come to pass – south of the Mason-Dixon Line where non-union tire plants thrive? Cause that’s where new plants will go. Sure, we’ll get marginally lower cost production, but the USW will find itself trading tire units made on these shores for further and deeper job losses.
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– Jim Smith
