Retail

When China and friends took over

Bob Ulrich
Posted on August 18, 2014

The year is 2024. Consumer tire imports from China are way down compared to 10 years ago.

In 2013, a then record 51.4 million of them were shipped to the United States, representing 30% of total imports. That was too much for the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, which, to avoid the unwieldy acronym of USPFRMEAISW, was more commonly known as the United Steelworkers, or USW.

The USW complained, and the government listened.  Claiming the number of Chinese imports materially injured the tire industry, the U.S. International Trade Commission (ITC) ruled in favor of imposing an additional 88% tariff on them in 2015.

The number of consumer imports from China dropped immediately, from 65 million, representing 34% of total imports, in 2014 to less than half that within two years.

Because the vast majority of the imports were low-cost radials, there wasn’t enough supply to meet demand. Domestic tire manufacturers, experiencing what is now referred to as their “Golden Age of Prosperity,” had previously given up on producing loss leaders, and were in no hurry to ramp up their plants to do so again.

Tire pricing skyrocketed as a result. Low-cost radials were affected first; then all tire prices were raised in order to give consumers good-better-best options. By 2017, with pre-tariff inventories having long since been depleted, a set of P205/65R16 replacement tires for a Toyota Camry cost a minimum of $600.

Ford Mustang owners had to shell out $936 for four P215/65R17 tires. The cost to outfit a Corvette ZR1 with new tires? $3,600.

Tire costs were so high and tire manufacturers so flush with cash that even today, historians debate whether or not to refer to the period as the “Platinum Age of Prosperity” instead.

The same thing had happened in 2009, although not to the same degree, when the 35% tariff on Chinese passenger and light truck tires went into effect. While imports from China dramatically decreased, tire prices increased some 30%.  The price increases might have been even higher if not for low-cost manufacturing in Southeast Asia. Tire exports from countries such as Thailand, Indonesia and Vietnam helped fill the gap created by the tariff.

However, implementing the 88% tariff caused two major events in the U.S. tire industry. First, tire manufacturers from China and Southeast Asia started building plants here in the states. Second, the union suffered through an identity crisis.

Singapore-based Giti Tire Group proved farsighted with its consumer tire plant in Chester County, S.C. The company announced it was building the facility in 2014, before possible tariffs became an issue. Now it has two plants in the U.S., both in South Carolina.

Others from Asia followed suit, including Triangle Tyre Co. Ltd. After years of trying to make Triangle “the Chinese brand of choice” in the U.S. from its home base in Shandong, the company built a plant in South Carolina.

By 2020, five more Chinese tire makers had opened plants in the Americas. Four of them were built in South Carolina; the other was built in Mexico, reportedly because there was no undeveloped land left in South Carolina.

As for the former USW, the tire tariff its leaders championed indirectly led to its undoing. Faced with stiff competition from transplanted tire companies, domestic manufacturers with union plants were forced to look for more amenable locations.

Not surprisingly, the contract negotiations in 2017 were very contentious. When those contracts ran out in 2021, despite the hue and cry and posturing of the USW’s leaders, every tire plant was stationed in one of the 21 Right to Work states. And every major tire manufacturer was represented in one of those states.

Faced with a declining membership, the USW folded into the American Federation of Labor–Congress of Industrial Organizations (AFL-CIO). The name of the organization was not changed.

Ironically, the Chinese companies decided against manufacturing low-cost radials in the U.S. because they weren’t profitable. That led to an influx of consumer tire imports from Southeast Asia. Nobody cared, however, because supply was satisfying demand. Unemployment was down. The economy was booming. And those endless emails from unknown Chinese tire companies offering  their trailer or winter tires at cut-rate prices stopped.

China and friends had become the leaders of our industry, if only out of necessity. And life was good.    ■

If you have any questions or comments, please email me at bob.ulrich@bobit.com.

To read more of Bob Ulrich's editorials, see:

Ed Bobit: end of an era

Status: single -- Family-owned stores continue to lead the way

"Made in America': That phrase still has meaning to tire dealers

Related Topics: Bob Ulrich, Bob Ulrich editorial, Editorial

Bob Ulrich Editor
Comments ( 0 )
More Stories
Joe Venezia will lead Bridgestone's retail efforts at its 2,200-plus company-owned stores.
News

Bridgestone Retail Stores Have a New Leader

The 2,200-plus retail stores owned and operated by Bridgestone Americas Inc. have a new leader. Joe Venezia is the president of Bridgestone Retail Operations LLC (BSRO) effective June 19, 2017.  

News

Giti's Made-in-USA Tires Earn Fitment on Volkswagen Passat

Two sizes of the All Season Giti ComfortA1 tire will be featured as original equipment tires on the 2019 Volkswagen Passat. Giti Tire (USA) Ltd. says the tires represent the first OE fitment that will be manufactured at the company's U.S. tire plant.

News

Texas Governor Vetoes Used Tire Bill

Texas Gov. Greg Abbott has vetoed a bill that would prohibit the sale of unsafe used tires. "Texas does not need to impose new criminal penalties on people who put tires on cars.

What do millennial buyers want? They want information quickly, concisely and as high-tech as possible.
Article

Leading the Millennial Generation

We hear others speak about the up and coming generation all the time. The millennial generation is most often spoken of in a negative way, mainly because negative press seems to get more attention than positive.

Article

Tire Pricing: A Taboo Topic

When tire dealers get together in an open forum, they can talk about almost anything. Stiff competition. Eroding or improving supplier-dealer relationships. The effect low-cost Chinese tires are having on their businesses.

Under the big top at Michelin's Movin'On conference, CEO Jean-Dominique Senard said Movin'On is a call to action for the 21st century.
News

Sustainability Is Driving Michelin's Growth Now, and for the Future

Sustainable mobility is the driving principle of Michelin Group’s global growth plan, and it’s not some far-off dream. The company says sustainability will play a key role in increasing both tire sales and services. Pete Selleck, chairman and president of Michelin North America Inc., says by 2020 Michelin wants revenue from tire sales to rise 20%.

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!