AKRON-Whether or not the tire price hikes planned by manufacturers will hold up in the marketplace may ultimately be determined by how much excess production capacity remains within the industry to drive pricing downward. It's difficult to raise prices when there are too many tires and too few buyers, manufacturers have found.
This may have been partly to blame for what occurred in 1994, when tire makers, in two separate rounds of price hikes, attempted to increase prices by a total of 5 to 7 percent.
As frequently happens, only a portion of these price hikes ``stuck'' in the marketplace, leaving manufacturers with only part of their intended increase-probably no more than 3 or 4 percent-in the opinion of most tire-company executives surveyed by TIRE BUSINESS.
Meanwhile, the never-easy task of estimating how much excess production capacity exists within North America's tire industry at any given time became all the more difficult in 1994 as a result of the United Rubber Workers strike, several survey participants were quick to point out.
Thus it's not too surprising that there was considerable disagreement on the part of the participating tire company executives as to how much excess capacity-if, indeed, any-ex-ists to impact the tire pricing picture in 1995.
Similar views, expressing doubt about the existence of excess capacity, were voiced by several other survey participants.
``We feel the industry is very close to being in line with competitive capacity,'' said Kelly- Springfield Tire Corp. President Lee Fiedler. ``There is some (non-)competitive capacity,'' he allowed, ``but it will fall along the wayside as the year progresses.''
As a result, Mr. Fiedler predicted, ``the year will see no overcapacity, but (instead) reflect some shortages.''
On the other hand, Cooper Tire & Rubber Co. President John Fahl perceives the situa-tion differently. ``When you can take a large portion of capacity out of production due to the (strike-imposed) work stoppages at some companies during the year and still supply a fast track replacement market and double-digit OE market, it's obvious there is overcapacity,'' he said.
Titan Tire Corp. President and CEO Maurice Taylor Jr. and Vice President of Sales and Marketing Steven A. Root agreed. They estimated the existence of 25 percent excess capacity to wreak havoc on the 1995 marketplace.
Likewise, Continental General Tire's Vice President of Marketing Walter S. Stashkiw estimated that, if U.S. imports also are taken into account, the market is glutted with 20 million excess passenger tires.
``I think that, early in the year, there was an overcapacity problem,'' said Dan G. Wire, vice president sales and marketing for San Francisco-based Sumitomo Tire (U.S.). ``However, as the year went along, the demand and supply became more balanced.''
This he said was due to sev-eral factors-improved OE de-mand in the U.S. and Japan, the URW-imposed strikes and less competition from imports thanks to the improving world economy.
Russell Chick, Yokohama Tire Corp.'s manager of marketing communications and marketing research, agreed the U.S. tire market may not have suffered from excess capacity in 1994-particularly in view of production slowdowns caused by the URW strikes.
But overcapacity may well be a factor in the marketing of broadline passenger tires and some performance sizes during the coming year, Mr. Chick predicted.