AnalysisInsiders’ Guide to the tire industry 2019

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We have just published our annual publication, Insiders’ Guide to the tire industry 2019.

It is a mammoth, 180-page collection of data, insight, analysis and perspective on the global tire industry.

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Every month, we put out our global tire intelligence report, which comprises half news stories, and half features and analysis. Once a year, I bring the best of that analysis together, with our unique table of investments around the tire industry and add in some fresh analysis of what is going on in the world of tires.

Tire business feels winds of recession

One of the key parts of that analysis is the current downturn in the tire industry. Things got bad in the last quarter of 2018. When I asked people then about their expectations for 2019, the common theme was that it would all be better by the third quarter.

That’s not how it has turned out. Global risks have accelerated with the US and China getting more bellicose over trade; a sharp downturn in car manufacturing in China; reduced car sales in Europe, India, China and parts of South America and uncertainty over Brexit, with the signs pointing toward a disruptive ‘no-deal’ resolution to the 3-year crisis caused by the UK voting to leave the economic bloc, all leading to the threat of a recession that will drive down sales of truck tires.

While tire makers have cut capital spending and have de-stocked to deliver short-term stock market performance and good cashflow, their suppliers are suffering. Profits in the carbon black business have plunged. The elastomer producers are feeling the pinch as volumes decline sharply.

All this looks to me like an industry hunkering down for an extended period of slow demand globally.

Get the full analysis of these important topics by buying our Insiders’ Guide to the tire industry 2019.

Updated China analysis

As one of the foremost analysts of the China tire industry in the world, we have updated our analysis of the situation there. Things are developing more or less as we predicted three years ago. At that tire, we said there would be a major restructuring of China’s tire industry in the 2018-19 period. We were maybe six months early in that prediction, but the wholesale restructuring is now in full swing in the tire manufacturing heartlands of Shandong.

At the end of 2017 there were around 600 tire factories in China, many of them very small. That number is rapidly falling. We estimate that at least 150 had closed by the end of 2018, bringing the number down   to 450 or so. By the end of 2019, we think the number will be around 300, and down to  150 or so by the end of 2010, managed by a couple of dozen companies.

In the meantime, we have published lists of the top tire makers in China and how they are responding to the increase in domestic competition following the imposition of duties on truck tires by the United States and Europe.

Get the full analysis of these important topics by buying our Insiders’ Guide to the tire industry 2019.

Future of tires

This subject has been exercising the whole tire industry over the last couple of years. In this issue, we talk a lot about how the move toward electric vehicles is affecting the tire industry.

In a series of articles, we present the views of leading industry figures as well as offering our own views on the future of tires. Many of our experts referred primarily to the technical aspects of this transition to electric, but in our view, the effects will be a lot more than increased wear and lower rolling resistance, higher inflation pressure and different aspect ratios – we show why manufacturing will be affected from mixing processes to much tighter tolerances within the process. These changes will permit lighter tires, lower rolling resistance and better use of resources.

The extra load of heavy batteries will also require new constructions and new classifications for XXL loading in addition to the existing XL designations.

We also look at the differences between city cars with limited range and larger cars designed to travel for hundreds of km on a single charge. Limited range city cars won’t have t carry much more weight than existing small cars, but those long-distance thoroughbreds will need much greater load carrying capacity.

However, it’s not just about electric cars – we also look hard at the possibilities for airless tires, such as variants of Michelin’s Tweel – the UPTIS.

We have industry-leading analysis of the place that technology holds in the industry; how it might develop and what role it plays in Michelin’s strategic development.

Because we use multiple sources in addition to the PR put out by Michelin, we have more rounded, more useful and more actionable insights than other publications.

One of our main themes this year has been that the future of the tire industry does not revolve only around tires, but that data acquisition and analysis will also play a substantial part in how the industry develops.

We have along piece on TPMS  – not so much the technical details, but looking at it from a business sense. Why small companies are developing TPMS systems and how the big brand players are using the smaller companies to outsource their TPMS technologies.

This is just a taster of what is in our Insiders’ Guide to the tire industry 2019..

Business development

The third main section of the report covers business development:

  • Why Bridgestone bought TomTom telematics
  • What strategies will come out of Hankook
  • The relationship between Prometeon and Aeolus
  • The demise of DMack
  • Linglong’s business plans for its Serbia factory
  • Michelin’s strategies revealed at Investor Day
  • Liquid-phase mixing and how it is developing
  • Performance of worn tires (but minimal input from Michelin)
  • OE strategies among the top tire makers
  • Changes in the tire distribution business driven by a desire for data
  • Results of our survey into what tire professionals think of the top tire makers
  • Vertical nature of the tire industry needs to change

Get the full analysis of these important topics by buying our Insiders’ Guide to the tire industry 2019.

Sustainable development

Anyone who still thinks the tire industry can get away with greenwashing and hiding behind corporate PRs was not watching the tire industry in 2019.

The tire industry is – by far – the biggest consumer of natural rubber (NR) in the world. NR has been declared as a critical raw material in Europe, China and elsewhere. That means governments are interested in how it is used, how to produce more and how to ensure there are adequate supplies of the material should the supply chains be compromised.

As the biggest consumer of NR, tire makers are necessarily involved in the dialogue surrounding security of supply.

However, the supply of NR depends on many factors, from the price to the ability of supply chains to track the origins of the material and to demonstrate that the material is truly sustainable.

Through the year, we tracked the development of the Global Platform for Sustainable Natural Rubber (GPSNR), and attended the first official meeting of the newly-formed group in Singapore in March 2019.

We have the detail of that event, but also a lot of background material that helps non-specialists to understand how the NR business works.

The tire industry has a reputation for being secretive and difficult to understand. However, within the tire industry, the NR business is even more so. The people involved have a different mentality from many tire executives. It’s a weird and wonderful world that – in my opinion – should be better appreciated by everyone in the tire industry.

We also look at the differences between synthetic rubber industry and the natural rubber side. The two barely meet and talk, and that has had a negative impact on the NR side of things, as they ten not to have deep, detailed dialogue with the tire makers.

It is leading to great advances in the synthetic rubber side that may change the balance of consumption between NR and SR – we have the details in our report.

Finally, tire makers publish their CSR reports and environmental data – we have analysed the numbers and compared performance. It’s fascinating stuff.

Learn more about sustainability in the global tire industry, and which companies are leaders and which are lagging by reading our Insiders’ Guide to the tire industry 2019.

Legislation and policy

Legislation is one of the main drivers of development in the tire industry globally. We keep track of key developments, and identify trends that are likely to lead to future legislation.

Examples of that include pollution associated with micro-plastics. While tire wear dust is not strictly a micro-plastics (maybe ‘micro-polymer’ might be a better term), it has come under close scrutiny by EU legislators and red=searchers, who are seeking to reduce this form of pollution in the environment.

Tire start out with a deep tread pattern, When they come to the end of their life, the tread is much shallower.

Where does that material go?

This question has risen swiftly up the agenda in recent months. The answer is complex. Some ends up as very fine dust that can become airborne. Particles of rubber have been found in fresh snow in the arctic and other remote regions of the planet.

Some of it combines with particles from the road surface and this ends up at the side of the road. From there some is washed into watercourses and from there possibly out into the oceans.

Throughout the year we have tracked this developing situation, giving background and insights that have not appeared anywhere else in the tire industry specialist press. Our coverage has been uniquely detailed, helping the industry to understand some of the critical factors around this highly sensitive subject.

One thing is for sure, as the vehicle industry moves toward electric power trains, then tailpipe emissions of particulates will fall sharply. That leaves brake dust and tire dust as the major sources of particulates from cars and trucks and urban buses. When regenerative braking is the norm, that will leave tire dust as the main source of particulate emissions from vehicles.

This issue is not going to go away. On the contrary, it will become under more intense scrutiny in the coming years and is likely to be the subject of legislation in Europe and some other jurisdictions.

Of course governments have applied duties on tires and we have tracked that subject too.

Get the full analysis of these important topics by buying our Insiders’ Guide to the tire industry 2019.

Analysing the data

The last one-third of the report (60 pages out of 180) covers data of many different kinds. We have tire production figures by region, as well as forecasts by region.

We track the synthetic rubber overcapacity situation and give our forecasts for materials pricing.

We take data from the main tire federations: ETRMA (Europe), JATMA (Japan), USTMA (United States), CRIA (China), ATMA, (India) and so on to give a picture of the tire industry around the world split by tire types (light vehicle tires, heavy vehicle tires and so on).

We track end-of-life tire data and collect the different statistics from different agencies.

In a large table, we list every tire plant included in the United States DoT tire plant listing, along with their relevant DoT codes.

The final section is a full table of investments around the world, together with our analysis of what it means.

In the last 12 months, total investment has fallen by one third. Although some new projects have been announced, it looks to us like the industry majors are preparing for a significant slow-down. A lot of the new investments come from small companies and new entrants to the tire industry. By region, investment have fallen sharply all round the world with the exception of India. In India the actual investment levels are similar to those a year ago, but the percentage taken by India has jumped, due to the reduction in investments elsewhere.

In the main tables, we track each and every investment project that we have identified over the last three years, unless the project has already been completed. We list them by company and also by region, so that readers can quickly identify the hot areas for development.

Get the full analysis of these important topics and be among the first to have this invaluable data by buying our Insiders’ Guide to the tire industry 2019.

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A weekly newsletter of developments in the China tire industry including news reports and David Shaw’s expert commentary and analysis.

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Monthly English & Chinese language newsletter bringing together global news stories covering retail, strategy, sustainability and legislative issues.