AKRON-If there's any certainty about 2004, it would be about prices and imports-they're going up.
All of the major tire makers and importers/marketers have either raised prices recently or announced price increases for January or February, in a range from 3 to 6 percent. The common denominator? Rising raw material prices.
These latest increases follow by only a few months price hikes announced at mid-year or in the third quarter. In some cases they are the third change in a year.
When contacted by Tire Business, several major tire makers and marketers indicated tire prices would have to rise in 2004, by as much as 8 percent in one company's opinion. The steady high price of crude oil continues to plague suppliers of synthetic rubber, carbon black and rubber chemicals, while at the same time natural rubber is trading at a several-year high.
Despite the price increases, industry players predict profits will continue to be hard to come by. Kenda USA President Jimmy Yang, for example, said the continuing low pricing levels make it difficult for companies to improve their profit position.
David Hudrlik, senior vice president of sales at Kumho USA Inc., also sees increasing costs of doing business and the pricing pressures exerted by low-cost imports will put ``extreme pressure'' on profits.
James McMaster, executive vice president of Yokohama Tire Corp., on the other hand, said improved replacement market volume and better product mix should allow companies to increase profitability.
At the same time, industry players anticipate imported tires will continue to pick up market share in the U.S. as both Asian tire makers improve their market positions in North America and U.S.-based manufacturers turn more heavily to offshore sources for tires.
Imports of passenger and light truck tires through October were nearly 17 percent ahead of the pace in 2002, according to the latest Rubber Manufacturers Association (RMA) data, while U.S. production was down about 5 percent.
For 2004, Cooper Tire & Rubber Co. sees imports continuing to grow at 5-percent clip, outpacing the market growth of 3.2 percent, pushing the offshore share of the market to 43 percent, according to Thomas A. Datillo, chairman, president and CEO.
Cooper will contribute to import growth in years hence. It recently began outsourcing all its medium truck radial production to China and announced plans to build a passenger and light truck tire plant in China.
The major players were in agreement that the market will see continued growth for performance tires, especially in the larger diameter sizes, 18-inch and above.
Kumho sees growth in these areas significant enough to mention the continuing diminished market presence of 70/75 series tires, according to Mr. Hudrlik, who predicted manufacturers will take action to bring capacity more in line with the falling demand.
For the record, the RMA predicted in August that replacement passenger tire demand should exceed 3 percent this year as the millions of tires replaced in 2000 and 2001 as part of the Firestone Wilderness/ATX recalls and Ford Motor Co. replacement program will be due for replacement.
For its part, Cooper is bullish on 2004, pointing to the growth its customers are experiencing, to lowered manufacturing costs and to its efforts to increase capacity for the right products.