News You Can Use

RTA NEWS YOU CAN USE
March 27, 2018

To all of our RTA Members and Associates:

We write articles that get published monthly, about the Retread Industry, about our issues and successes, and the roadblocks that are thrown in our way.

Of course, one of the largest problems that Retreaders have faced over the past ten years, has been the flood of new, imported Chinese tires, which has made it increasingly harder for retreaders to compete in the fair market, despite the equal, or superior quality of Retread Tire products that our Retreading Industry continues to produce daily.

Following is one of those articles.

Please feel free to give us your feedback or criticism.

Tires, Tariffs, and Truth

By Jeffrey Parks, Managing Director, Retread Tire Association

Truckers and retreaders have a symbiotic relationship. The Retread Industry works hard to supply the trucking industry with a viable, safe and state-of-the-art alternative to buying new tires. But not only that; retreaders work at improving the image and message of buying retreads at every opportunity. That’s part of our job here at RTA; to dispel myths about retreads and to promote the features and benefits in cost savings and environmental responsibility.

At odds with that goal, is the importation of cheaply made (and government subsidised) new truck tires from China, that may not be of the same quality and durability that is required to be reliable in the long run, and have the retreadability that ensures a renewable cycle of reusing these valuable resources, instead of wasting them by creating a single-use tire.

Not all Chinese tires are guilty of following these reckless standards of course. Some of our partner Chinese companies do indeed strive for the best quality standards that can be achieved for a new tire. However, the numbers are staggering when you look at the unabated import of new, inexpensive, unregulated Chinese tires in the US, and worldwide for that matter.

Over the last few years, retreaders large and small, have felt pressure not just from adherence to their own quality standards of creating next-to-new tires from recycled materials, and promoting the use of this environmentally responsible solution, but also the pressure of competing with inferior products that flood the market at lower than market price.

In 2015, the U.S. International Trade Commission voted to enforce tariffs on Chinese made truck and bus tires, giving manufacturers and retreaders a leg-up in quelling the unfair flow of these inferior tires being dumped on the market. These tariffs were designed to remain in place till 2020.

Well, guess what?  By February 2017, less than 2 years later, the tariffs were abandoned by the ITC, citing “no harm” to the new tire industry, and ignoring the very existence of harm to the retreading industry, again hitting both industries pretty hard. Among those protesting the lifting of these tariffs, was also the United Steel Workers Union, which supported these tire tariffs.

Why would the steel industry support tariffs on subsidized foreign tires? Let’s take a look at how much steel is used in a typical truck tire.

Among the many components of a tire, you’ll find steel belts which reinforce the tread area, providing flexibility and ride comfort and serve to keep the footprint of the tire in direct contact with the road, and also the tire bead which holds the tire firmly against the rim of the wheel. The steel component in a tire makes up around 15% of the total tire weight. In a truck tire weighing 120 pounds, you’ll find around 18 pounds of steel.

We’ve heard quite a bit of talk lately about new tariffs on steel and aluminum, and also an across the board threat of an (up to) 45% tariff against China in an effort to bring manufacturing jobs back to America. Whether this rhetoric will actually achieve its intended goal is suspect. Considering that enacting new tariffs is no new idea, let’s take a look what happened when President Obama tried it in 2009.

It seems to be forgotten now, but way back in 2009, then President Obama applied an across the board 35% tariff on Chinese tires in response to complaints from American companies about unfair competition, making it very hard to compete.

That round of tire tariffs lasted for 3 years, ended in 2012, and had the following result. Tire jobs, which had been in decline, showed a small upturn, which was of course praised as a move in the positive direction. 1,200 U.S. tire jobs were saved and U.S. tire production rose.

In the long run though, according to a study from the Peterson Institute, the 2009 tariffs created higher prices in general for tires, as many American manufacturers raised their prices reflecting the market trend. Who paid in the long run? Consumers bore the cost of course, as they always do, and the minimal number of new tire manufacturing jobs was hardly a fix for an industry that is continually in flux, and reverted once again to decline.

Currently, since January of 2018, manufacturing jobs have shown an increasing trend, but its significance in the tire sector is not a huge blip on the radar, despite the fact that YOU, and everyone you know, buys and drives on tires, or depends on them just about every day of their lives.

One truth about tariffs that is not in dispute; they don’t last forever. They are born of reactions by our leadership, and circumstances that change from year to year. We’ll see how this next round of dialogue shakes out, and we’ll keep you posted.

You can always reach Jeffrey Parks at RTA by phone at 831-620-5345

or email: jeffrey@retreadtire.org

•     •     •

THOUGHT FOR THE DAY

“Bullies may land a punch.
They might leave a mark.
But they have never, not once,
in the history of our United States,
managed to match the strength
and spirit of a people
united in defense of their future.”
~ Joe Kennedy III