We have just published the February issue of our global tire industry newsletter, and distributed it to subscribers.
This 36-page publication includes:
- A strategic-level analysis of the tire industry
- Data on Australia’s tire market
- Analysis of sustainable materials for the tire industry
- Analysis of NR: SR consumption in tire manufacture
- How Cabot’s ATC is helping the company grow in Asia
And for good measure we have included our monthly update on the China Tire Industry.
Then there is a further 22 pages of news, covering the most-important news from across the global tire value chain including investments, appointments, legislation, statistics, Raw materials, company results, company information and environmental developments.
Strategic-level analysis of the tire industry
I’ll be presenting the opening paper of the Strategy and Management session at the Tire Technology conference in Hanover on 20 Feb. I helped the organisers to develop the programme and speakers for that session, and this paper brings together the concept behind the whole session.
I’ve put a summary of my Tire Tech paper into this issue. Essentially I’m arguing that the tire industry has got a big problem.
First, the big-brand companies have developed a risk-averse management culture over the last few decades. That’s good in an unchanging world, as was the case between about 1970 and 2010. But it is not good in a business environment that is changing.
This industry, along with every other part of the transportation value chain, is about to be hit with at least five types of disruptive change, from new sources of energy for fuel, to shared ownership and data-driven business models.
The US and European tire industry is populated by a middle management that is largely risk-averse, older men and there is insufficient cultural or racial diversity. Those people tend to be fearful of change, and that means many of them are not well-equipped to take advantage of the opportunities created by the disruptive changes we are about to live through.
It is the primary and critically-important task of the senior leadership team task to change attitudes among these managers and staff.
To my mind, that is the overwhelming challenge facing the tire industry today. There is – in my opinion – no aspect of the tire industry that is more important than changing business culture to be more embracing of change.
In my presentation, and in this article, I outline the industry response. At best we can say there is a lot of room for progress.
Second, I show that the tire industry is fully commoditised. A few specialist segments aside, this is not a specialist industry. Corporate revenues depend far more on input costs than they do on any strategic decisions taken in the board room. That applies to the premium brands just as much as it does to the low-cost tire makers.
While tire makers continue to make products that are basically black and round, they are in a race to be the most cost-efficient manufacturer in the world.
In a business that is already commoditised, top management’s task is even more urgent to change attitudes among the main workers.
Finally, I look at the issue of cultural flexibility. Just as the tire industry saw a phase of globalisation in the 1980s as Japanese tire makers sought a more global footprint, we are at the beginning of another phase of globalisation involving Indian and Chinese tire makers. Back in the 1980s some of the M&A activity was successful; some was less so. I draw lessons from that period to predict which companies are likely to do well in the new round of globalisation.
Australian tire market
In a new venture for our company, we have teamed up with a data provider to market some detailed, in-depth data on tire markets around the world. We’re combining their raw data with my analysis to deliver a new range of products looking at the most popular tire sizes; the fastest-growing tire sizes and the most profitable tire sizes in the key markets around the world.
The data we present on the Australia market is a taster of what we can do in all the key tire markets around the world.
I’m really excited about this new offering from our company. I’ve looked at the competition and believe we offer data that is as good as anyone out there, with better analysis.
If you are interested, email me on Research@TireIndustryResearch.com.
Sustainable materials in the tire industry
Among the changes facing the industry is a new emphasis on sustainability. A new generation of buyers cares about what impact their purchases have on the planet. One of the best initiatives I have seen in a while is the Sustainable Materials Group launched a year ago by Artis, the specialist rubber and tire consultancy in the UK.
I was at the launch a year ago, and again at their 1st anniversary meeting in January. Things have come a long way.
In the first year much of the activity was around recovered carbon black (rCB). The group has catalysed some terrific and positive changes among that community, and we describe how the industry is moving forward.
In the coming year, the group aims to look at wider issues around sustainability in the rubber industry.
To find out more, subscribe to our monthly report on the Global tire industry
NR and SR usage in tires
All the tire engineers I know are contributing to a steady transition away from natural rubber (NR) toward synthetic rubber (SR).
However, the trend in consumption has been – up to now – so subtle that it is swamped by other gross trends such as the emergence of China’s tire industry and substitution between NR and SR based on price differentials.
If anything, those gross numbers show the opposite trend – an increase in the use of NR at the expense of SR over a decade or more.
I’ve gone into the data as deep as I can to analyse what is really going on and how fast the tire industry is substituting synthetic materials for rubber from the hevea Brasiliensis tree.
I show the breakdown in various markets over the last decade or so and show how the opening or closure of a single factory, or a price swing can swamp the data showing steady trend away from NR.
But once all that is stripped away, there is a clear trend away from NR in favour of SR. This is, so far as I am aware, the first time this analysis has been done in such depth.
Late last year I took a tour of Cabot’s new Asian Technical Center in Shanghai. I’ve included a description of the center, but more to the point, I look at the company’s strategy for developing its business in China and the rest of Asia.
We identify successful strategies and show how attitude is a key part of success in that region.
China’s tire industry in January
As a final bonus, we have added our widely-praised summary of tire activity in China. This has become the industry’s go-to publication to understand the changes taking place in China’s tire industry. The themes of price increases; environmental taxes, consolidation and new legislation come up every month, but this summary has become the industry benchmark for understanding China’s increasingly influential tire industry.
Want to know more? Subscribe to our global tire industry newsletter
Background to the newsletter
The aim of this newsletter is to offer a clear path through the massive amount of information you can get on the global tire industry. Each month our editors scour the world’s news and pick only the stories that are relevant to change in the industry. Then we write a brief, easy-to-digest together with links to the original source for those who need deep-dive detail.
We’ve therefore migrated all of our analysis to this newsletter, and added news from around the world.
You can download the full contents from here.
We are encouraged by the industry reaction since its launch a year ago, our subscribers are getting the full analyses on these and other matters. Can you afford to be without it?
Because of the popularity of the publication, we are able to offer it at an affordable price, and to move away from an advertising-supported model. Each corporate licence covers all direct employees worldwide, and what’s more, we personalise the newsletter for your company.
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