The pending antidumping duties case covering imports of passenger and light truck tires from South Korea, Taiwan, Thailand and Vietnam boils down to a fundamentally different interpretation of available market data: What impact does branding have on pricing?
In its argument for duties, the United Steelworkers (USW) union claims that the "subject imports" increased their share of the domestic market for P/LT tires by 5.3 percentage points during the period of investigation, in large part because such products "undersold the domestic-like product about 90% of the time."
Underselling at significant margins was "nearly universal in all products," the USW contends, "covering tires from all countries and regardless of whether the imports and domestic product were branded or private label."
This underselling permitted imports to take market share from domestic producers and drive down domestic prices in most of the pricing products, the USW claims.
The union's position ignores the role of branding in the marketplace — a stance pointed out by nearly every individual testifying against the imposition of duties during the International Trade Commission hearing on May 25.
Sumitomo Rubber North America Inc.'s (SRNA) Richard Smallwood summed it up perhaps most succinctly:
"The U.S. tire market is in a state of constant and accelerating transition, and producers in the U.S. do not have the capacity or production flexibility to fully and profitably service all market segments.
"This is not a problem caused by the subject imports, and they should not be punished for supplying tires that the market needs."
Mr. Smallwood and others pointed out repeatedly that tire makers with capacity in the U.S. — including his own — have prioritized their investments in their domestic production on high-value-added products, primarily those of 18-inch rim diameters and larger, and tires for the growing light truck/SUV/CUV market segments.
In our Mid-Year Tire Report, SRNA said its $122 million, three-year expansion of its plant in Tonawanda, N.Y., is proceeding as scheduled. The expansion will more than double capacity at that plant for P/LT product lines.
The investment also includes additional building machinery that the company said will serve the burgeoning need for light truck and CUV product lines.
And Bridgestone, Continental, Hankook, Pirelli, Toyo, Nokian and others continue to ramp up capacity at their North American plants to address supply issues.
This investment strategy has meant capacities for smaller-rim-diameter tires and/or private-branding has largely been phased out or is being phased out.
Michael Matthis, president of Atturo Tire Corp., underscored this situation in his testimony, calling attention to the USW's "deceptive position" that "dimensionally similar tires are interchangeable."
He added: "There is virtually no domestic availability of private-brand tires," which forced Atturo and other private-brand marketers to look overseas for supply.
It's an interesting conundrum: the USW argues U.S.-made products were undersold as manufacturers race to make more domestic products to sell.
