 |
You wouldn't have one of those laying about, would you? I mean, an "across-the-spectrum numerical analysis?" Here is mine, suitably titled, "The Real Story on "Stagnant" Wages." Sorry you feel "misdirected." I'm hurt.
Posted on 08/09/2006 8:54:06 AM PDT by Incorrigible
|
China's Prices Undercut U.S. Tire Makers, Causing Plant ClosingsBY THOMAS W. GERDEL |
[Massillon, OH] -- Rapidly rising imports of tires, especially from China, are increasing pressure on American tire makers to close more plants and cut domestic production.
Passenger-tire imports, which have been steadily increasing every year this decade, topped the 100 million mark in 2005, with Chinese imports up 47 percent from 2004. And while imports have climbed 38 percent since 2000, U.S. tire output has been steadily decreasing year by year.
The trend is expected to continue, given the low cost of tires made in China and tire-making costs in the United States, said Saul Ludwig, an analyst at KeyBanc Capital Markets in Cleveland.
"Imported tires, particularly from China, are much lower cost than imports from any place else," Ludwig said.
Passenger tires imported from China last year had an average cost of $25.23, while a passenger tire from Canada cost $38.67, a tire from South Korea $37.58 and one from Japan $48.29.
Ludwig said that nearly all these imports are going to the replacement tire market, with very few sold to domestic automakers for equipping new cars.
This import trend hovers over contract negotiations between the United Steelworkers union and major domestic tire makers including Goodyear Tire & Rubber Co., Bridgestone-Firestone and B.F. Goodrich, which is part of Michelin of France. Companies want to cut costs, while the union seeks to preserve wages and benefits, and prevent further erosion of production and jobs.
Passenger tire production in the United States has fallen from 223 million tires in 2000 to 176 million in 2005, a drop of 21 percent, Ludwig said. The union is facing another round of plant shutdowns, due partly to the rising imports and a sluggish tire market.
While tire import levels held steady for the first six months of 2006, industry sales of passenger and light-truck tires fell about 7 percent. Industry observers said consumers are postponing replacing tires as they struggle to pay higher gasoline prices.
At the same time, Goodyear and other tire manufacturers have been raising prices to cover the soaring costs of oil and other raw materials.
The 7 percent drop is highly unusual for the North American replacement market. Robert Keegan, chairman and chief executive officer of Goodyear Tire & Rubber Co., said the market has been down by 3 percent or more only in four of the last 50 years. Keegan said consumers are buying fewer tires per store visit and driving fewer miles per vehicle. He also said technicians are noticing less tread depth remaining on tires being removed from cars.
Announced or potential closings include:
Continental Tire will halt production indefinitely at its plant in Charlotte, N.C., ending jobs for most of the 1,000 union workers there. The German company also said it was shutting down the remaining operations at its tire plant in Mayfield, Ky. -- a factory that once employed 2,400.
In June, B.F. Goodrich said it would cut output 30 percent to 40 percent at its Opelika, Ala., plant, which has the capacity to make 8 million tires a year.
Bridgestone-Firestone has said it will close its Oklahoma City tire plant by the end of this year. It said the plant, which employs about 1,200 hourly workers, is not competitive in the global marketplace and is suffering from substantial losses.
The industry is bracing for another potential shutdown as Goodyear follows up on its recently announced plans to reduce its private-label tire business in North America by a third, or by about 8 million tires annually.
Ludwig said he would not be surprised to see additional closings, "one for sure, maybe two," as the production cuts are made.
Private-label tires -- which are made in major tire plants such as Goodyear's but sold under a different name -- appeal to price-oriented consumers, and sellers are using low-cost imports to offer greater value to consumers than if they bought domestically produced tires.
In addition, Cooper Tire & Rubber Co. has shifted manufacture of medium truck tires from its Albany, Ga., plant to China. Cooper, which is the fourth-largest tire producer in North America, soon will start up a plant in China that will be owned by Cooper and Kenda Rubber Industrial Co. of Taiwan. The plant is expected to eventually produce 10 million to 12 million tires a year, all for export to other countries for the first five years it operates.
To keep jobs in this country, the United Steelworkers union is pinning its hopes on the growing consumer demand for larger and more specialty-type tires -- the higher-margin kind used in SUVs and other high-performance vehicles, as well as tires built from specialty materials for added safety, a more comfortable ride, increased vehicle stability, fuel economy and other features that help persuade consumers to pay more money.
"We don't want them to take this high-value work out of the country," said Wayne Ranick, a spokesman for the United Steelworkers.
The union is urging the tire companies to spend more on automated equipment for faster changeover of production, so plants can more efficiently produce a wider range of sizes and premium-priced tires.
When the old United Rubber Workers merged with the United Steelworkers of America a decade ago, the union had more than 98,000 rubber workers, but now it has less than a third of that number -- about 30,000 -- who work in tire and rubber plants in the United States.
With tire factory wages in the United States around $22 an hour, versus 73 cents an hour in China, KeyBanc Capital Markets' Ludwig does not see much chance that the rapid growth of tire imports from China will end soon.
The gap could be narrowed eventually if the pace of industrialization in China forces wages up there or if China raises the value of its currency. In the meantime, imports will continue to be a major challenge for domestic tire plants.
"The gap has to be closed," Ludwig said, "whether their costs go up or our costs go down."
Aug. 8, 2006(Thomas W. Gerdel is a reporter for The Plain Dealer of Cleveland. He can be contacted at tgerdel@plaind.com.)
Not for commercial use. For educational and discussion purposes only.
Nonsense. The U.S. has the world's biggest accumulation of savings and investments. The U.S. household sector is still the world's largest net creditor. Household net worth is a good measure of savings and now stands at $54 trillion - an all time record. On a per capita basis, counting mortgages but not houses, our net financial assets total more than $90,000 in the U.S. versus about $77,000 for Japan. That makes us the best savers in the world with Japan a distant second.
The personal savings rate, as measure by the government, doesn't really measure saving in the real sense and has little to do with the actual saving taking place in the economy. High personal savings rates as calculated by the government tend to coincide with economic downturns.
will hit the wall when we run out of national assets to mortgage.
Then how do you explain the rapid and continuous increase in our household assets and net worth? Our net worth has more than doubled since 1995. Since Reagan took office, we've increased our net worth by more than $30 trillion, which is more than the previous 200 years combined. We've run trade deficits since the mid-70's. You guys keep telling us that these trade deficits are going to hurt us someday but the opposite keeps occurring.
If we owe debts in dollars, we don't need to "scrape up foreign exchange", we just pay back the debt with dollars.
You just like to hear yourself talk, don't you? You never add any information to the discussion. At least no correct information.
You didn't post a link to your source.
Just out of curiousity, where would you open a rubber plantation in the U.S., and how would you propose to compete with Liberian rubber?
Explain again the link between a devalued dollar and rising exports?
You wouldn't have one of those laying about, would you? I mean, an "across-the-spectrum numerical analysis?" Here is mine, suitably titled, "The Real Story on "Stagnant" Wages." Sorry you feel "misdirected." I'm hurt.
And I forgot, how does providing data from 1991 onward deal only "with recovery from the [presumably 2001] recession?" Did I misdirect you that badly?
You missed my point. This will help China's ability to compete with the U.S., but not against the rest of the world. It's one thing to have cheap labor, but when you're dealing with a manufacturing sector that requires a lot of raw materials from other countries, a weak currency is not a good thing.
I would also suggest that China's policy of pegging their currency to the U.S. dollar is actually being done for a reason that is 180 degrees from what "conventional wisdom" seems to indicate. China isn't doing this to deliberately depress their currency against the dollar, but to prop it up. China's economy is so backward that the yuan is a worthless currency on the world market except for the fact that it has a defined relationship with a stable currency like the U.S. dollar. Most people believe that the yuan would rise in value against the dollar if it were de-linked from the dollar, but it would probably collapse instead.
Wrong. He was refuting your claim that high wage jobs were being replaced by lower wage jobs.
Adding the numbers together is a rational calculation of mean increase over time.
Maybe if you included the years his chart excluded.
Get it this time?
Still waiting for you to post anything that proves your assertion is correct.
If the dollar loses 20% of its value against a foreign currency (the Euro, for example), then the cost of producing goods in the U.S. instantly becomes 20% lower versus the cost of producing these goods in the foreign market in question (Europe, in this case).
If you really believe that, then you might need to brush up on some basic economics and commodity market principles.
Can you think of any commodity or product that is cheaper to extract or produce in the U.S. than anywhere else in the world?
Apparently economic ignorance. There is an especially rich vein on this thread.
You think that people will give up their big houses and move into cities? REALLY? And just WHERE are they going to find city housing? There is a dearth of empty places in just about every major city in this nation.
bttt
ROTFLMSO
Facts, facts....bury 'em with FACTS! :-)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.