May 03, 2011
OTR tires in 2011
Rasey addresses rising rubber costs and mining trends
By: Greg Smith
Greg Smith, publisher of Modern Tire Dealer, moderated the OTR panel discussion. Panelists included Shawn Rasey, Bridgestone; Roger Lucas, Michelin; James Wang, Techking; Paul Hawkins, Titan; and Nelson Richards, Yokohama.
The buzz surrounding this year’s Tire Industry Association Off-The-Road Tire Conference was constant and loud: “What impact will runaway natural rubber prices have on our industry?” This sentiment, whether by the formal speakers or during breaks, was on everyone’s minds.
And the overriding answer to the question was, nobody really knows how long or how high the prices are going to move, or what it ultimately means for the industry. There were a variety of opinions on the subject, however.
Shawn Rasey, president of the Bridgestone Americas Off Road Tires division of Bridgestone Americas Inc., is no stranger to giving the keynote speech at the conference. In 2007, he was the keynoter at the conference in San Diego, Calif. This year, he gave the keynote address at the 56th annual event, held in Miami, Florida in February.
His position on rising raw material costs? “Personally, I’ve never seen anything like it... the price of natural rubber has risen 92% in just one year. In fact, the price of natural rubber is up almost 250% from November 2009!”
Rasey said there are three primary drivers that have caused these unprecedented prices. “The first driver is mother nature. During the past year, the available acreage and yield of natural rubber plantations around the world have suffered enormous losses from both heavy flooding and drought. Then there’s the second driver, which is explosive growth and demand of natural rubber by the BRIC countries — Brazil, Russia, India and China. And the third driver has been ‘market speculation.’
“As scarcity from flooding and drought combined with explosive demand by the BRIC countries, natural rubber commodity investment speculation suddenly became a ‘sexy investment,’ further driving prices higher to today’s unprecedented level of $5,600 per metric ton.”
Change is a constant, he said. “Just think for a moment about how much change our industry has experienced in just four short years! It seems everything is changing and shifting faster than ever. One thing is for sure, more changes and shifts are coming, and they’ll likely keep all of us a little edgy and ill at ease from time to time.”
Rasey pointed out some key forces that continue to change and challenge the off-road tire industry:
• the continuation of rapid industrialization and growth of the BRIC countries;
• continued exponential growth of the Internet, “creating a flatter and faster world than most of us might have ever imagined”;
• a global mining and petroleum boom — occurring “as the industrialized nations of the world compete for raw materials, food and the intellectual capital to drive their economies ahead.”
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