My day job is Operations Manager of a large tire wholesaler in the middle of the United States of America. While I spend every evening and spare moments Writing, Editing, and Formatting my next books for E-Publication, I pay for my families existence with trying to move tires in and out of our facility, day in and day out, as efficiently as possible. In the tire industry it is just as crazy and topsy turvy as the publishing industry seems to be.
First a bit of history concerning the economy of tires, the world market, and the Chinese.
Over the last 11 years as tire sizes have changed and newer tread designs have emerged, tire companies worldwide would sell their older tread design molds to factories in China to manufacturer the older designs as cheaper tires to place into the world market of tires. This had the benefit of keeping the tire lines available at affordable prices and helped China by supplying the molds and equipment to increase their manufacturing base and improve their place in the world economy. The (Certain) Unions went to President Bush numerous times asking for a trade tariffs against Chinese built tires being imported into the United States, without any knowledge of the supply chain and how it actually works concerning the building and supply of tires. President Bush never levied a tariff on imported tires from China.
These unions were strictly looking at stopping the import of Chinese goods because U.S. companies with their exuberantly priced unions are losing ground in the world market of manufacturing because other countries will provide products at a cheaper price. Over the last decade with the increase in manufacturing in China more of their population has moved from the poverty level to their middle class than we have in total population in the United States of America. Essentially they are experiencing an Industrial Revolution in China.
In 2008 the tire industry was down and companies were looking at anything to help protect their bottom line and numerous tire manufacturers closed plants in the United States and other parts of the world. Bear in mind that only Cooper Tire is a strictly U.S. manufactured tire and they even have stuff they import because it is cheaper and more economical than building themselves. Every other tire manufacturers are global companies with manufacturing facilities scattered all over the globe. The tires are brought together in huge mixing warehouses where they are distributed to wholesalers around the world who them stock and supply the literally millions of tire shops around the world. Basically though in 2008 everybody was downsizing and tightening their belts.
President Obama came into office and enacted a tariff against Chinese imported tires of 30% over the next three years. Currently we are in the second year of the tariff.
First off, the tires that companies in the U.S. were importing cannot build these Chinese built tires, because they have the molds! We sent them there! In order that they could be built as cheaply as possible.
Secondly, and what nobody could have seen coming is the rebound of the auto industry, the increase in the Chinese buying automobiles by the millions, because more of their population can afford them now. China is looking at limiting the sale of automobiles because there are so many cars they are experiencing areas of total grid lock daily in that country.
Thirdly, that the rubber manufacturing industry would have the worst years ever in producing rubber because of floods, bad weather, and a myriad of other problems. Natural rubber trees can only be grown in a few special parts of the world. They take five years from the time you plant a rubber tree to even begin producing the rubber sap which is literally tapped from the tree daily and harvested to get the stuff with which they make natural rubber.
Tires are made from natural rubber and synthetic rubber. The natural rubber comes from trees and the synthetic rubber from crude oil, and we are all aware of what has been happening with the price of oil. If a there is anything in the news or rumors of news the price of crude oil jumps up and gasoline in America goes up even if the price of oil slips a little bit. Hell, this blog post will probably cause gas prices to rise some more.
2010 saw major jumps in the price of tires from every manufacturer in the world, with the price of natural rubber being the primary culprit. 2011 and increasing tire prices makes the gasoline industry seem tame by comparison. It is only the beginning of March and there have been prices increases, prices bumped again before your done changing prices from the last increase.
A German company is experimenting with getting a rubber substance that is almost identical to the sap from rubber trees from a variety of Dandelions! Yes, Dandelions. The world can rid itself of many things but haven't figured out to prevent these yellow marvels from invading our yards each spring. In the near future 30% of what we drive on may be manufactured from these pesky weeds. It does open up more areas that can be able to produce rubber if this works out; because I am sure the little buggers even grow in hell. Researchers have found that a particular breed of Dandelions produces a substance which is almost identical to natural rubber. Dandelions don't take five years to start producing either. Soon we may see Dandelion farms all over the place to help produce natural rubber for the myriad of products which use natural rubber in their production. Ok, so the tire industry may start making the publishing industry look kind of lame, because Dandelions, Really!! It's true.