Major tire makers in the U.S. have been carefully watching recovery efforts in the Gulf Coast after Hurricane Rita hit last month, disrupting raw material supplies and hampering some tire production.
Dan Zielinski of the Rubber Manufacturers Association said it's still too early to tell how raw material shortages and production slowdowns may affect tire shipments to dealers. The association has not yet compiled its preliminary September shipment data, he said.
Cooper Tire & Rubber Co. said two of its three U.S. tire manufacturing plants will operate on reduced schedules because of raw material shortages as a result of Hurricane Rita, taking about 30,000 tires a day out of production.
The Findlay-based tire maker said that its plants in Texarkana, Ark., and Tupelo, Miss., began reduced production schedules Oct. 2.
Cooper said several of its suppliers of carbon black and synthetic rubber were severely damaged and have not restarted operations following Hurricane Rita, which hit the Gulf Coast on Sept. 24. Also contributing to the shortage is access to roadways, which is being limited by authorities, and lack of rail cars as businesses compete for shipping alternatives, the company said.
``Materials currently in stock will be utilized for high-demand products and the current finished goods inventory levels should help maintain a steady flow of products to customers,'' the company said in a statement.
Because of those inventory levels, Cooper estimates the only financial impact it will see from this move is the impact of reduced production. Since this announcement, however, Cooper's stock price had dropped to $14.99 on Oct. 4 from $15.46 on Sept. 28.
Goodyear also said it reduced tire production temporarily by about 30 percent as a result of raw material supply shortages. Company officials said, however, that no deliveries to customers have been impacted to date, and the tire maker said it is in discussions with customers to determine priority product needs.
``We are sensitive to our customer needs and are working diligently to meet their requirements,'' said Christopher Clark, senior vice president of global sourcing.
The tire maker expects to increase production as the raw material supply situation improves in the coming weeks.
``At our present production and inventory levels, we currently anticipate that we have the ability to meet our obligations,'' Mr. Clark said in an Oct. 3 statement.
Goodyear's synthetic rubber plant in Beaumont, Texas, resumed partial production Sept. 30, the company added. Full operations will resume when utilities are restored.
Goodyear said it is still assessing the financial impact of Hurricane Rita and its aftermath. Much of that impact, though, likely will come from higher production and raw material costs as well as higher transportation costs, the effects of which will be felt in the third and fourth quarters. Goodyear's stock price also tumbled to $14.94 on Oct. 4 from $15.77 on Oct. 3.
The tire maker is still assessing damage from Hurricane Katrina. Five of Goodyear's retail stores in Louisiana and Mississippi hit by that hurricane last month will remain closed for an indefinite period, company executives said Sept. 23.
Goodyear said 12 of its retail stores were or still are flooded, and two Wingfoot commercial centers along the Gulf Coast were damaged following Katrina's landfall. About 100 employees were displaced. It did not identify which stores remain closed or the extent of damage.
Bridgestone/Firestone's synthetic rubber plant in Lake Charles, La., is restarting production, and the company's tire plants have made some production adjustments. A spokeswoman said the company has not altered production of radial truck and bus tires.
A BFS spokeswoman said the tire maker has made tire production adjustments to cover the most needed tire lines, but she said the adjustments so far have not been on a major scale. BFS also has shipped from its synthetic rubber plant some existing inventory that was produced before the storm. The plant is without power, though BFS is working to get alternative sources of energy into the plant to restart before the area's power grid is fixed, the spokeswoman said.
As for the tire plants, the spokeswoman said BFS is evaluating the raw materials situation daily.
``(Outside suppliers are) still out too,'' she said. ``We're working off those inventories. We'll have to go day to day to see how additional adjustments may or may not have to be made.''
Finally, Michelin North America Inc. said its manufacturing plants in the U.S. have not seen any disruption.
A Michelin spokeswoman said the Greenville, S.C.-based tire maker got notification soon after the storm's landfall that some of its suppliers of synthetic rubber, carbon black and silica were affected by the storm. However, Michelin's plants did not see any immediate disruption. The spokeswoman said company officials will continue to monitor the situation.
``If everyone comes back up when they say they're coming back up, we should be fine,'' the spokeswoman added.