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Manufacturers are scrambling to boost output, Ludwig says

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"I'll bet you are having problems getting all the consumer tires you want from your supplier," says Saul Ludwig in the latest installment of the "Ludwig Report" in Modern Tire Dealer magazine.

"At the end of 2009, inventories of consumer tires in manufacturers' warehouses were 30% below those of December 2008 as inventories were slashed all through 2009. As demand has now picked up sharply (consumer replacement shipments in N.A. were up 13% and OE was up 55% in 1Q10 alone), manufacturers are feverishly scrambling to boost output to improve fill rates.

"It is these times when supplier loyalty pays off! As manufacturers increase purchases of tire raw materials, those costs are surging and that is why tire prices have to go even higher, in my opinion. As I see it, stay tuned for price hike announcements soon."

Ludwig is a managing director with Northcoast Research Holdings LLC based in Cleveland, Ohio. He concentrates on the tire and chemical industries. Look for the full "Ludwig Report" in each issue of Modern Tire Dealer magazine.

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