November 04, 2009
Dealers react to tariff decision
Some brace for supply disruptions, price hikes
By: Mike Manges
That sentiment is shared by Chris Roberg, owner of Pacific Tire Distributors Inc. in Portland, Ore.
The company wholesales to retail tire shops.
Roberg says tariffs will lead to price hikes that will be passed down the customer chain. “We work on high volume and slim margins. We’re not in a position to absorb anything. And that gets right down to the consumer — the end person in the chain is going to feel the impact.”
Chinese tires make up about 25% of Pacific Tire Distributors’ total product screen. That percentage includes tires from domestic tire manufacturers who have set up factories in China. “In the short-term, there are going to be bumps in the road, primarily with supply. We always have containers on order or on the water. Right now, nobody is accepting orders.”
“I think (the tariff decision) is going to have the opposite result from its intended result: to spur more jobs in America, sell more American-made tires, that kind of thing. In effect, it’s going to put more people out of business. There are a lot of distributors who do nothing but import Chinese tires.”
Not all tire dealers believe the tariff ruling will hurt them. Bob Kellogg, president of Warren Tire Service Inc., a 14-store chain based in Queensbury, N.Y., says the ruling may impact 1% of the tires his company sells. Warren Tire sources most of its products from American plants.
According to Kellogg, very few of the tires it gets from Goodyear Tire & Rubber Co., “only two small segments of certain lines of tires,” are made in China. The ruling “levels the playing field a little bit more.”
“We don’t sell a lot of what I would call the ‘Pep Boys-type’ of Chinese tires — the real low-end, no-name tires,” says Barry Steinberg, owner of Watertown, Mass.-based Direct Tire & Service Inc. “We’ll sell some Wanli’s, Federal’s and Maxxis tires, but they’re not a big part of our business. But I’m sure TBC, Del-Nat and the other big private brand guys... are going to be in a funk because their sources have just dried up at that level. The $25 tire doesn’t exist anymore.” ■
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