TB Editorial: What a wild ride it's been

AKRON (Dec. 23, 2015)  —  After the year we've had, no one can accuse the tire industry of being staid, even though many people view it as an old-line manufacturing business.

As those who work and compete in the field know, the tire business is anything but tired and boring. To the contrary, it's a vibrant global industry — full of intrigue, paced by mega mergers and acquisitions, cutting-edge technology and global aspirations, and people making a difference. 2015 was certainly no exception.

Have any doubts? Just peruse our annual “Year in Review” section in this issue, chock-full of the headlines, companies, individuals and bullet points that made this a year of rampant industry change.

During the past 12 months, one of the most venerated tire manufacturers in the world, Italy's Pirelli & C. S.p.A., was acquired by a Chinese company, China National Chemical Corp. (ChemChina), parent of China National Tire & Rubber Co. That this acquisition could happen at all is a testament to how far the Chinese tire industry has come and how much of a player it will be in the future.

This move by ChemChina overlapped with the U.S. International Trade Commission's levying new countervailing and anti-dumping duties on Chinese passenger and light truck tires imported into the U.S. — which, in some cases, doubled the sums Chinese tire companies and importers were paying previously.

While this move slowed or even stopped some shipments of consumer tires into the U.S. from China, it has not had nearly the impact on the U.S. tire market as many tire industry observers expected. It's clear the Chinese tire industry is looking at its long-term prospects and not reacting to a short-term blip.

The farm tire business, not normally known for rapid change, experienced some upheavals over the past 12 months. The biggest move came late in the year when Sweden's Trelleborg A.B. struck a deal to buy CGS Holding a.s., parent of Czech farm and industrial tire maker Mitas a.s., for $1.25 billion.

When completed, this acquisition will shake up the rankings of farm tire businesses, vaulting Trelleborg to the top, or near the top globally among farm tire manufacturers, while giving the company two U.S. tire factories, including its own newly opened plant in South Carolina when a year ago it had none.

The year also saw Goodyear become the first tire maker in North America to begin selling tires directly to consumers through its website. This controversial move, which Bridgestone Americas and Michelin North America Inc. also are considering, has the potential to change the relationship between tire manufacturers and tire dealers as well as how vehicle owners purchase their tires.

Bridgestone also aggressively moved to secure more retail sales power with its decision to purchase Philadelphia-based retail tire and automotive service chain Pep Boys–Many, Moe and Jack for nearly $900 million, outbidding — at least for now — Icahn Enterprises Holdings L.P. Should this purchase go through, it will give Bridgestone a powerful retail tire and service network of more than 3,000 locations in the U.S.

Tire dealers also experienced a bit of déjà vu during the year when the U.S. Senate and House approved a transportation bill that, among many other things, makes it mandatory that tire retailers register the tires of their customers.

This action reversed hard-fought legislation passed by Congress in 1982 that put in place a voluntary registration process in which customers, rather than dealers, voluntarily registered their tires. The legislation pitted mandatory tire registration supporter Rubber Manufacturers Association against the Tire Industry Association, which lobbied for voluntary registration.

If you think 2015 was a wild ride for the venerable tire industry, who can't help but wonder if next year will match or surpass it? Stay tuned to these pages.

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This editorial appears in the Dec. 21 print edition of Tire Business. Have an opinion on it? Send your comments or a letter to the editor to [email protected]. Please include your name, title, official business name, city and state where it's located, and also a daytime phone number where you can be reached.