AKRON-Three months of labor strikes apparently have had little effect on the replacement tire market, according to tire dealers and industry analysts. That situation could change, however, if the United Rubber Workers strikes against Bridgestone/Firestone Inc. and Pirelli Armstrong Tire Corp. continue indefinitely, they added.
Since the recent round of labor unrest began with workers walking out of five BFS tire plants July 12, two of the four U.S. tire makers affected, Dunlop Tire Corp. and Yokohama Tire Corp., have settled with their unionized workers, leaving the BFS and Pirelli Armstrong plants still functioning with white-collar and replacement workers.
While production may have been hampered at these plants, the tire makers apparently have been able to fulfill their original equipment contracts with automakers, who recently introduced their 1995 models, according to Harry Millis, an analyst with Fundamental Research in Cleveland.
Dealers contacted by TIRE BUSINESS have experienced only a few problems getting certain tires sizes, particularly in farm tires, but said they compensated by shopping around for other sources or substituting other brands to meet customers' needs.
The strikes have ``not had a meaningful impact on the system overall,'' said Nicholas Colas of First Boston Corp., noting that with overcapacity in the tire industry, ``you could shut half of the plants in the U.S. and the market would stay the same.''
He said there has been a lot of wholesale buying in the replacement tire market lately in an effort to beat the price increases taking effect in October and November.
Mr. Millis added that the price increases, which average about 3 percent, will be supported by shrinking tire supplies if the strikes linger.
However, when the strikes do end, Mr. Millis said, the industry could indulge in price cutting as tire companies try to regain market share lost during the strikes.
Mr. Millis said the tire companies involved in the strikes probably aren't losing much market share and the industry as a whole has experienced minimal impact for several reasons:
The industry had been operating at high production levels going into the strikes;
The targets of the strikes are owned by foreign companies with alternate off-shore sources for their tires;
These companies built up their inventories prior to the strike;
Auto production has leveled off since the introduction of the 1995 models; and
The strikes are entering the slow season for replacement tire sales; the peak season is in the spring.
From his observations of the market, signs of shortages or added demand for tires didn't begin appearing until early September, Mr. Millis said.