FINDLAY, Ohio — Cooper Tire & Rubber Co.'s strong third quarter may have a damping effect on its performance through year-end, President Brad Hughes told the financial community today, as the company struggles to rebuild inventories drawn down because of production shutdowns in the first half of the year.
Coming off an "exceptionally strong" third quarter and taking into account the coronavirus-related production disruptions earlier in the year, Cooper's inventory levels are lower than normal, Mr. Hughes told financial analysts in an Oct. 29 conference call.
This likely will lead to "constrained" inventory levels in the fourth quarter and into early 2021, Mr. Hughes said.
"In the near term, this will challenge our ability to meet continuing strong customer demand," Mr. Hughes said. "We are leveraging our global manufacturing footprint and taking actions to increase production to meet the growing demand."
Cooper reported 9% higher consumer tire unit sales in the U.S. during the quarter, compared with a 1.2% decline by the domestic industry, as represented by the U.S. Tire Manufacturers Association.
At the same time, though, total industry shipments during the quarter were up over 8%, Mr. Hughes said, reflecting increased import activity.
Mr. Hughes stressed that the management and staff at the company's plant in El Salto, Mexico, are hard at work to get that factory up to full capacity, after having to be idled twice for up to 10 weeks in March/April and May.
Cooper is moving quickly to make that factory — a former joint venture unit 100% under Cooper's control since late January — a "true Cooper" facility, Mr. Hughes said.
The company also committed $55 million in June to investing in its tire plant in Kruševac, Serbia, to expand capacity and broaden the site's production portfolio.
Mr. Hughes said Cooper expects its second-half unit sales volumes in the U.S. to fall short of those reported in 2019 because of the aforementioned circumstances.
At the same time, Mr. Hughes told the analysts that the high demand it's experiencing for its products is because the Cooper brand "resonates strongly" with customers looking for a value-priced product.
Mr. Hughes said the increased demand for its products is coming from "across the board" — i.e., from new customers, from established customers, from mass merchandisers and from e-commerce.