WASHINGTON (March 8, 2005) — America waging war has meant a huge, short-term spurt in military business for some rubber product sectors and not much of a change for others.
Tire manufacturers were the big winners in the buildup to the invasion of Iraq by the U.S. and its allies. Tires procured for military use that totaled $57 million in 2002 soared to $241.2 million in 2003, and still re-mained high at $118.1 million for fiscal 2004.
Sales of gas masks and other rubber-related protective gear also were brisk. On the other hand, retreads—which were pulled from military vehicles in the Persian Gulf War in 1990 when they sometimes failed in the harsh desert conditions—never made it to the front this time around.
For many rubber product sectors, there are no statistics available showing if the wars in Iraq and Afghanistan and the increase in U.S. defense spending in general has been a boon to business. Anecdotal evidence says “yes and no,” depending on the individual product.
The need for tires
The highly mechanized U.S. military machine needed tires, and they got them via the U.S. Army Tank Automotive Command (TACOM).
The Tire Group at TACOM is responsible for acquiring all tires for ground use for the Department of Defense (DOD), as well as inner tubes, flaps, tire valves, run-flats and tire repair materials, according to Don Jarosz, a TACOM public affairs specialist.
“Our strategy has maintained a very high supply availability for tires within the Army system,” Mr. Jarosz said. The Tire Group has 178 multi-year contracts for its highest-volume items, maintaining an average three-month stock on hand. It also keeps three-month supplies of less high-volume items by issuing purchase orders as required.
The logistics of getting tires to troops in the desert have been monumentally difficult, he said. Tires often are airlifted from supply depots, but getting them from airfields to military units is even more difficult because of the tempo of the fighting and the poor road conditions in Iraq.
“The threat of ambush and ongoing insurgency have caused troops to not stop for any reason until their patrol is completed,” Mr. Jarosz said. Tire maintenance and repair have suffered as a result, especially considering the harsh conditions of the Iraqi desert.
The Army isn't using retreads in the current conflict for a couple of reasons, according to Mr. Jarosz. TACOM has strict testing criteria for retreaders, developed by the Society of Automotive Engineers (SAE), and has yet to certify any retreader under the SAE testing guidelines for war use. TACOM also decided shipping retreads and casings to and from the war zone wouldn't be cost-effective.
Local commanders are responsible for ordering retreads for their own bases, Mr. Jarosz said. While TACOM has no data on retread use at individual bases, the reports it has received about retread quality have been glowing, he added.
Titan Tire Corp. is one of the tire makers that is a big supplier to the military. The tire-making arm of Quincy, Ill.-based Titan International Inc. provides industrial-type tires to the military and last September won a $40 million contract from TACOM to supply non-directional, cross-country tires for 2.5- and 5-ton Army trucks.
According to Titan President Maurice Taylor Jr., the problem in supplying the military is bureaucracy.
“Dealing with the military, it's always, ‘We've got to have a meeting, we've got to set up a calendar, we've got to go through this or that or the other,'” Mr. Taylor said. “Why don't they have the materials? It's because things just don't get done. That's the reality of it.”
The Air Force is in charge of aircraft tire procurement, while the Defense Logistics Agency handles procurement of other rubber goods for military use.
Protecting the troops
Orders for gas masks and related gear have sparked a production expansion for at least one supplier to the DOD, Avon Rubber P.L.C.
The U.S. is the biggest customer of Stratford-Upon-Avon, England-based Avon, a longtime supplier of gas masks and other respiratory protection products to armed forces all over the world, according to Jim Naylor, market development manager for the Avon Protection Division. That unit generates about 5 percent of its sales from military goods but expects that to rise to 15 percent with shipments of a new product, the Joint Services Mask, for which it holds a DOD contract.
Gas mask, protective glove and boot demand has jumped about 20 percent each year for Acton International Inc. since 9/11, said Earl Laurie, military products business manager for the Acton Vale, Quebec-based AirBoss of Americas Corp. subsidiary.
“There was an initial surge, then very high sales one year, then flat the next, then high again,” Mr. Laurie said, adding that's typical for niche players in military and defense products.
Rubber manufacturers provide an incredibly vast range of other items to the military—everything from sealing products for aircraft carriers to hoses, fittings and footwear.
Several companies said while military contracts are a fairly minor part of their business, a high priority is placed on the design and engineering of military products.
The Fluid Conveyance Division of Eaton Hydraulics, part of Eaton Corp., has a history of supplying the military that dates from the 1940s, when it was still an independent company, Aeroquip Corp. Raja Rajagopalan, Eaton Aeroquip group product manager for hose and connectors, said the DOD came to the firm “for solutions, especially for frangible coupling for fuel cutoff.”
He cited one example during World War II, when the Army was suffering high casualties from helicopter crashes. “Soldiers weren't dying because of the crash, but because of the fire that occurred when the fuel line ripped off,” he said. “We provided a coupling that shut off the fuel automatically in the case of a crash.”
Crain News Service's Mike McNulty contributed to this report.