Missions Accomplished Eat Into Tire Industry Reviews
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©Entire Contents Copyright 2018 by Crain Communications Inc. All rights reserved. February 26, 2018 THE TIRE DEALER’S NEWSPAPER SINCE 1983 $79 per year, $4 per copy INSIDE Material costs Infrastructure bill draws mixed Missions accomplished eat into tire industry reviews .......................3 Conti adds tread rubber production Councils roll out tools, initiatives during makers’ pro ts to Mount Vernon site ...................3 Tire Pros National Conference By Bruce Davis High-performance tire demand Tire Business staff growing in U.S. ..........................4 AKRON — With a few notable excep- tions, the world’s leading tire makers Commerce Dept. calls for stiff tar- took it on the chin last year, earnings iffs on steel imports .....................5 wise, as higher-than-expected spend- Don’t underestimate body language, ing on raw materials ate into their op- writes Dan Marinucci .................... 7 erating results. Eight of the dozen major tire mak- ers to report their scal 2017 results thus far recorded lower operating pro ts, while all but one, Cooper Tire Strut knowledge when selling & Rubber Co., reported higher sales. expensive shocks ........... 9-10 Continental A.G., Kumho Tire Co. Tenneco to launch videos on sus- Inc. and Pirelli & C. S.p.A. have yet to pension conversion kits ........... 11 report their 2017 results. Of the seven with lower operating Federal-Mogul moves Abex brake income, all cited elevated spending production to Ky. ..................12 on raw materials — especially natural Brembo’s new facility to produce rubber — as a key reason for the pro t carbon brake pads, discs ........14 drop. Group Michelin was nearly in Conti brings ATE brake parts to Tire Business photo Don by Detore the same league — its income rose 1.9 N.A. market ...........................14 Pat Fleischmann of Community Tire Pros of Phoenix talks with Bob Bittner, vice president of Tire Pros operations, percent — and it also cited higher raw during the eighth annual Tire Pros National Conference in San Antonio. Ms. Fleischmann, a member of the Cus- materials prices as a serious headwind. tomer Experience Mission-Based Council, discussed the development of Tire Pros’ new dealer playbook. Cooper and Goodyear also cit- ed elevated manufacturing-related DEPARTMENTS By Don Detore program and an online dashboard benchmarking tool — costs related to reduced production Automotive Service ....................7 Tire Business staff during the four-day event, attended by close to 1,000, at the volumes as contributing to the lower Classifieds ................................19 JW Marriott San Antonio Hill Resort and Spa, Feb. 8-11. earnings picture. Commercial Tire Service .... 16-17 SAN ANTONIO — It was a little more than a year ago when Tire Pros of cials had one uni ed reaction to the work Besides Michelin, the companies Editorials ....................................6 four groups of American Tire Distributors’ (ATD) Tire of these groups: Missions accomplished. reporting higher earnings were Noki- On The Move ............................15 Pros dealers began to meet regularly, each assigned a “I’m ecstatic over what they’ve done,” Ron Sinclair, ATD’s an Tyres P.L.C., Trelleborg A.B. and similar but distinctive task: Figure out opportunities senior vice president of retail strategy and partnerships, told Yokohama Rubber Co. Ltd. within their group’s topic to provide tools and services Tire Business following the conference, which also featured All of the companies reporting LATE NEWS for dealers to be more successful. a trade show with more than 55 vendors as well as several thus far were in the black on a net So it was quite tting that within short drive of The informational sessions on a variety of topics. basis, including Toyo Tire & Rubber Alamo, a one-time mission and historical landmark, that “I’m just really proud of the work that those councils Co. Ltd., which reversed its fortunes Conti taking steps these groups — called Mission-Based Councils (MBC) have done and the staff has done over the last 12 months.” from a loss in 2016. toward sustainable — revealed the fruits of their labors during Tire Pros’ According to Mr. Sinclair, the Tire Pros program num- The overall mood of those compa- eighth annual National Conference. bers 715 points of sale in 46 states. nies that offered guidance for scal NR sourcing Tire Pros of cials as well as representatives from each “There is a lot of change happening around us, and we 2018 was upbeat, if cautiously so. HANNOVER, Germany — Continen- MBC discussed the new tools — including a “playbook” don’t always realize it, but we have to get our hands around it Bridgestone, for example, is fore- tal A.G. and an international aid for best business practices, a revamped dealer evaluation See Tire Pros, page 20 casting gains in both income and sales agency are forming a partnership but cautions that uctuating currency designed to improve the sustain- exchange rates and raw material/feed- ability of the natural rubber (NR) stock prices along with an “ongoing supply chain in Indonesia. China regains No. 1 trading partner status lack of clarity” in the global economic The partnership with the Deut- situation will require careful attention. sche Gesellschaft für Interna- By Bruce Davis were the top three destinations for tires China’s gain over 2016 came from Michelin cautioned that raw mate- tionale Zusammenarbeit (GIZ) Tire Business staff exported from the U.S., accounting for higher shipments of OTR, farm and rials costs could rise again and a uc- G.m.b.H. will strive to develop nearly 72 percent of U.S. exports by other non-highway tires, according tuating currency-exchange situation a “criteria catalog” for sustain- WASHINGTON — The U.S. tire sector value. to the Commerce Department data. could impact earnings negatively. able production of NR, to train trade de cit shrank slightly last year On the import side of the ledger, China’s exports of passenger, light Those companies active in the OTR farmers in sustainable produc- as the value of exports shot up near- China regained the title as the U.S.’s truck and medium truck/bus tires, tire eld all noted a measurable up- tion in accordance with these ly 62 percent while the value of im- largest trading partner in tires, as the by contrast, all declined last year swing in demand, while the agricul- criteria and to track the rubber ports rose close to 10 percent in 2017 value of its overall exports to the U.S. from 2016, re ecting the continued tural tire sector is showing strength in from smallholders to production to a record $13.8 billion. jumped 28.2 percent to $1.95 billion imposition of elevated import duties some regions but not others. at Continental. As a result, the U.S. trade de cit a year after the value of its shipments on consumer tires and the shift by The companies’ individual reports Among the initiative’s aims in tires slipped to $9.66 billion last to the U.S. slid 1.9 percent. See Tire, page 22 follow, in alphabetical order: are improved rubber quality, year — down from $10 billion in higher yields and supply-chain 2016 — re ecting $4.1 billion in Bridgestone suffered a 6.8-percent See Conti -GIZ, page 22 exports and $13.8 billion in imports. drop in scal 2017 operating income It’s the rst time the tire sector trade to $3.74 billion on revenue of $32.5 Get up-to-date information at the de cit has shrunk in recent memory. China $1,949M 28.3% Cooper, Double Coin, Giti, Guizhou, Maxxis, Sailun, billion, cutting the operating margin Tire Business website Canada, Mexico and Australia Sentury, Triangle, ZC Rubber, etc. two points to 11.5 percent. Net income http://www.tirebusiness.com Thailand $1,860M 35.8% Bridgestone, Deestone, Goodyear, Linglong, Maxxis,Michelin, rose 8.6 percent to $2.57 billion. Otani, Sentury, Sumitomo*, Vee, Yokohama, ZC Rubber Bridgestone said its scal year played out against a scenario where Canada $1,544M -2.5% Bridgestone, Goodyear, Michelin many overseas economies showed S. Korea $1,344M -6.3% Hankook, Kumho, Nexen gradual recovery in the midst of con- tinued political and economic insta- Japan $1,091M -7.6% Bridgestone, Sumitomo*, Toyo*, Yokohama bility. The company singled out rising Total $13,760M 9.7% demand in the mining industry along Source: U.S. Department of Commerce; Tire Business research *Sumitomo includes Dunlop and Falken brands; Toyo includes Nitto. See Major, page 18 White House post Trump’s infrastructure package, Visit us on the web at www.tirebusiness.com TIRE BUSINESS, February 26, 2018 • 3 Highway to nowhere? Infrastructure bill draws mixed reviews from stakeholders By Miles Moore Half of the federal funds would be structure projects, with 80 percent of form federal education and workforce for not including a provision to buy Senior Washington Reporter used to create an Incentives Program the money coming from state and lo- development programs. materials and equipment from domes- to spur dedicated infrastructure funds cal governments instead of the federal “The growing U.S. tire manufac- tic sources for infrastructure projects. WASHINGTON — The Trump adminis- from states, localities and the private government. turing industry also relies on a highly “The ‘Donald’ made infrastructure tration’s infrastructure funding pro- sector, according to the fact sheet. It also would allow federal agencies skilled workplace to be successful, and investment a key part of his presiden- posal has elicited varying reactions Other projects earmarked are: to divest assets they judged would be USTMA is particularly encouraged by tial campaign platform,” AAM Digital from a full range of stakeholders, but • $20 billion for a Transformative better managed by state or local gov- the administration proposal’s attention Media Director Elizabeth Brother- the big question now is how far it can Projects Program to provide federal aid ernments or the private sector, such as to workforce development and appren- ton-Bunch wrote in a Feb.