FINDLAY, Ohio (Aug. 8, 2014) — Cooper Tire & Rubber Co. executives feel the company will not be as impacted by the likely implementation of U.S. duties starting next year on imports of consumer tires from China as it was in 2009-12 because the company’s product mix is more high end now.
“We’re 25- to 30-percent less exposed today than where we were before,” Cooper Chairman, CEO and President Roy Armes told financial analysts in an Aug. 7 conference call.
Ultimately, although the company is moving farther away from the lower end, these tariffs do make a disruption, so Cooper will have to adjust as needed. Mr. Armes noted that the last time the tariffs were in place, other imports were still coming in.
“At the same time we saw other countries enter into the market and pick up a lot of slack on these import because during that period of time of the tariffs, imports continued to increase,” he added.
The International Trade Commission has made a decision on the antidumping and countervailing duty investigation against certain passenger and light truck imports and the Department of Commerce is conducting further investigation and determination.
Although the outcome of the duties determination is still unknown, Mr. Armes said, “based on our past experience, we know that tariffs have been disruptive to a normal market and if they are imposed again they’re likely to be disruptive again.
“Tariffs are felt in the market place where they are being applied, but they also often affect other markets. We continue to support free and fair trade in a globally competitive market.”
Concerning another matter in China, that of determining the value with Cooper’s Cooper Chengshan (Shandong) Tire Co. Ltd. joint venture, Mr. Armes said the valuation should be established by Aug. 11, although it’s not known how much information will be made public. Cooper does intend to disclose the valuation.
“We continue to work through that process and regardless of the ownership outcome, China will continue to be an important part of Cooper’s long-term growth strategy,” Mr. Armes said.
Although the valuation has yet to be created, Cooper did reach an agreement with its joint venture partner at the end of January regarding the process of determining the long-term owner of CCT, which ceased making Cooper-brand products last July at its plant in Chengshan, China, in protest of Cooper’s then-pending alliance with Apollo.
Once a valuation is established, Cooper said Chengshan will have 45 days to either purchase Cooper's 65-percent stake in the company or sell its own 35-percent interest to Cooper. Should Chengshan decide not to exercise either option, Cooper has the right under the agreement to purchase Chengshan's share.
Although the CCT halted production in the last half of 2013 and the beginning of 2014, CCT has now returned “to normal production levels, which helps support the volume growth in the quarter.”
This includes the CCT resuming production of Roadmaster-brand truck tires earlier this year and production of all brands is on going with the plant now nearly at full production levels. Mr. Armes said customers have been responding well to the Roadmaster tires and Cooper is working to continue this business segment.
“We are regaining our position with 90 percent of our top 30 customers and expect to continue to make progress in the second half,” said Brad Hughes, senior vice presdent, international operations, and CFO.
Mr. Armes added that although Cooper does not yet know the resolution of the CCT ownership question, it does have the “financial wherewithal to meet all of our obligations, support our growth strategy including investment in our growth in China through CCT or otherwise along with the accelerated share repurchase to ensure a bright future for Cooper.”
Cooper is also working on a supply-chain relationship with its joint venture in Mexico to support growth in South America. For the first time the company shipped product during the second quarter into South America from Mexico.
How does your shop support the community during the holiday season?
|We collect canned goods||
11% (5 votes)
|We collect items for Toys for Tots||
31% (14 votes)
|We provide free automotive service for those in need||
4% (2 votes)
|We collect money for local charity||
9% (4 votes)
|We don’t participate in any organized efforts||
44% (20 votes)
|Total votes: 45|