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June 24, 1996 02:00 AM

INDUSTRY SPLIT AS CONGRESS MULLS TIRE GRADING

Miles Moore
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    WASHINGTON-Congress again is blocking any move by the National Highway Traffic Safety Administration to implement a fuel economy/low rolling resistance grade for passenger tires. Department of Transportation appropriations legislation for fiscal year 1997 is now before the House Appropriations Committee.

    Among other things, the DOT bill contains a provision prohibiting ``funds to plan, finalize or implement a rulemaking which would require passenger tires to indicate their low rolling resistance.''

    The provision is identical to a portion of the FY 96 DOT bill which forbade rulemaking on low rolling resistance, a House Appropriations staffer said.

    President Clinton made fuel economy/low rolling resistance grading for tires a part of his October 1993 Global Climate Action Plan, at the recommendation of Michelin North America. The rest of the tire industry, however, opposed such a mandate.

    NHTSA eventually issued a proposal to replace the temperature resistance grade of Uniform Tire Quality Grading with a low-rolling-resistance grade. This document generated intense debate, including a public forum at NHTSA, but was made moot by the FY 96 DOT bill.

    ``Since Congress was not involved in authorizing the (low-rolling-resistance) program, the action it's taking now.*.*.*is perfectly appropriate,'' said Jim Tozzi of Multinational Business Services Inc. (MBS), a consulting firm representing the majority of the tire industry on this issue.

    Michelin is ``not surprised'' by the FY 97 bill, ``since this Congress is no different from last year's,'' said Kenneth W. Farber, a Washington attorney representing Michelin. ``We will continue to try to educate the public on the benefits of low rolling resistance.''

    The move to make fuel efficiency part of the UTQG has split the tire industry, pitting Michelin against several other major tire makers, who stand vehemently opposed because of cost issues and doubts about low-rolling-resistance tires' performance.

    The opponents-including Goodyear, Bridgestone/Firestone Inc., Continental General Tire Inc., Cooper Tire & Rubber Co., Dunlop Tire Corp. and Pirelli Armstrong Tire Corp.-say their concerns aren't with Michelin, but government intervention in the free market. All of the opposing tire makers referred questions to MBS, but some did issue statements, all with the same message: They are prepared to compete with Michelin, but dislike the government's involvement.

    Michelin-which markets its line of Energy-brand tires, also called ``Green'' tires, as reducing fuel consumption between 4 and 5 percent-claims it proposed the labeling rule to make customers more aware of tires' impact on the fuel economy of a car.

    ``It's mainly the customer who benefits,'' said Clarence Hermann, vice president of product engineering for Michelin North America.

    The proposed rule only would mandate that manufacturers label tires with fuel economy ratings, he said. It does not force any firms to manufacture more low-rolling-resistance tires.

    ``Everyone has the technology to produce low-rolling-resistance tires,'' Mr. Hermann said, adding automakers require lower-rolling-resistance tires as original equipment to help aid in fuel economy.

    Opponents question the accuracy of Michelin's claims about its Energy tires.

    Michelin, using Society of Automotive Engineering standards, tested its tires against other premium label brands, including those from competitors, to compare rolling resistance, Mr. Hermann said. From those test results, along with similar tests from the DOT and the Environmental Protection Agency, an outside firm computed fuel savings and emissions figures for Michelin, he said.

    Opposing tire makers still dispute the accuracy of those claims, pointing to Michelin advertisements overseas that had been the focus of some complaints last year.

    In Japan, Michelin Okamoto Tire Co. Ltd. issued a correction for a television commercial that stated ``polluted substance can be reduced by 3 million tons per day'' using Energy tires. The actual figure was 128,000 tons per day.

    Michelin Okamoto also issued an apology concerning a television ad that claimed the firm's Green tire reduces fuel consumption up to 5 percent. In the apology, Michelin said that number was reached by comparing the Energy tire to a conventional Michelin MXT tire, not to competitors' tires.

    In Italy, a complaint was lodged with a government group regarding fuel saving claims made in a Michelin print ad. Michelin said it provided test information backing up the claim to the consumer group and has yet to hear back from it.

    In the United Kingdom, the Advertising Standards Authority upheld a complaint regarding fuel savings claims included on a Michelin Energy Tire poster. The group-which does not hold any legal jurisdiction but acts as a public interest body-determined the ad should have been qualified with the information that the tires had only been tested against standard Michelin tires, the company said.

    These complaints just support opponents' concern with fuel saving figures Michelin is posing, said Brooks Bowen, vice president for regulatory affairs for MBS.

    Michelin agrees the problems with the ads prove a point, but that point is that a standard, such as labeling, is needed to prevent advertising people from unknowingly misrepresenting the facts.

    Foes also dispute Michelin's claim that its Energy tires have reduced rolling resistance without a tradeoff in other characteristics, such as traction and handling.

    And if Michelin has come up with such a technology, the tradeoff comes in the price to the consumer, Mr. Bowen said.

    With opposition to Michelin's proposal to alter tire labels so intense, the question comes to mind: Who really would benefit from fuel economy labeling on tires?

    ``When Michelin comes asking you for something, run, because they don't ask unless it's in their best interests,'' said Dave Meyer, a University of Akron professor who follows the tire industry, referring to the firm's proposal.

    With the investment the tire maker has put into tests and lobbying, Michelin must feel it will have an edge in the fuel-saving tire market, Mr. Meyer said.

    ``Something's up their sleeve,'' he said.

    CS First Boston analyst Nick Colas agrees a labeling move might benefit the tire maker in the marketplace. ``They feel they have the technology in place to make a brand differentiation,'' Mr. Colas said. ``It's their version of the Aquatred.''

    Still, Michelin said the only reason it's pushing labels is to aid consumers.

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