SINGAPORE-Tire makers in Southeast Asia are in an enviable position. Not only are they positioned in the middle of the fastest-growing region for vehicle demand (10-percent annual growth), they have a unique opportunity to learn from the development of the tire industry in North America and Europe, said Michael Hochschwender, president and CEO of Smithers Scientific Services Inc.
Speaking earlier this year at the TyreTech Asia '96 trade show, Mr. Hochschwender said these Southeast Asian companies have ``an opportunity to leverage the experience of tire and rubber industry leaders to help insure a more profitable long-term future.''
In other regions, rapid growth historically has tended to mask inefficient operations, he said, leading some companies into situations of overcapacity, complex and expensive tire manufacturing systems, long product development cycles and inconsistent dealer support.
``Many of the planning challenges for tire and rubber industry management in this region are being driven by trends outside the region,'' Mr. Hochschwender said, ``particularly as Southeast Asia increases (its) share of the world tire market.
``Consequently, management's perspective and agenda will need to consider a response to the impact of global competition; managers will reconsider many of the traditional assumptions underlying manufacturing, research and development, marketing and distribution of company products.''
Looking at the importance of research and development and the need for strategic alliances, Mr. Hochschwender said: ``Successful companies will sit at the center of a partnership network with suppliers, competitors, customers and investors all moving together in a common direction.*.*.*.*Alliances that are part of broader, companywide strategy can cut costs, boost the bottom line, forge synergies and secure a competitive advantage.
``Lack of leadership or a failure to stipulate criteria for success can sabotage these alliances.''
Currently, the Asia/Pacific region represents about a third of global rubber consumption-depending on the definition of Asia/Pacific one uses-and demand there is growing 6 to 7 percent a year, according to rubber producers, processors and suppliers.
At this pace, the region will account for 45 percent of global rubber consumption by the end of this decade, and this could continue to rise to 50 percent, or more, in the first decade of the 21st century, according to several forecasts.
Southeast Asia alone-Indonesia, Malaysia, the Philippines, Taiwan and Thailand-will account for 18 percent of global rubber consumption by 2000, Smithers data indicate-nearly on par with North America and larger than western Europe.
This growth, resulting primarily from the surge in demand for motor vehicles and a parallel boom in tire manufacturing capacity, has filtered down into nearly all the tire industry supply sectors: synthetic rubber, rubber chemicals, fillers/reinforcements, textile and steel cord, and even into the machinery business.
Currently, there are projects in the works in China, India, South Korea and Thailand for more than 400,000 metric tons per year of capacity for producing various polymers used in making synthetic rubber for tires.
Tens of thousands more tons of capacity are in the planning stages in Indonesia, Thailand and
elsewhere, data shows.
Likewise, new capacity for steel tire cord in the region adds up to more than 40,000 tons coming on stream in the next two to three years, with 40,000 or 50,000 tons more under discussion by serious players.