Union officials, contrary to some opinions, understand business dynamics. They certainly can recognize the deeper meaning of the latest report on U.S. tire shipments.
The numbers on U.S. shipments for 2004, just released by the Rubber Manufacturers Association, are full of good news for the tire companies. Total shipments, both original equipment and passenger, grew about 2.2 percent to more than 325 million units. Aftermarket sales of passenger tires reached a record, in excess of 205 million; medium and wide-based truck tire shipments jumped 4.5 percent.
Not a bad year, especially for a mature industry.
But then there are the ``other factors'' revealed by the numbers. They add up to an industry in a state of change, change that promises to have a huge impact on the Steelworkers employed at U.S. tire plants.
The bottom line is that the increase in overall shipments this year came from tires not made in the U.S., according to the RMA. The boost in imports is not a one-year phenomenon-it's the plan.
The days when American tire plants produced all things for everyone are long gone. The U.S. tire factory is changing into a maker of high-performance passenger and other tires that have high profitability.
Large-volume, low-profit radials-they increasingly are coming from factories abroad, as this year's statistics show.
U.S. plants are the prime source of tires for American-based vehicle makers. But as much as a tire manufacturer wants to serve those customers, it has and always will be a low-margin business. Additionally, the auto makers are leading the way to build vehicles overseas, lessening the need for U.S.-sourced tires. OE auto tire shipments, in fact, were flat this year and expected to decline slightly in 2006.
Add the fact that General Motors Corp. and Ford Motor Co. are in financial disarray, and supplying U.S. OE customers, other than transplants, isn't such a hot prospect.
This sourcing change by tire companies in search of profitability means a tough time ahead for the United Steelworkers as they enter a new master contract negotiating season. Already Continental Tire North America Inc. is setting the tone, demanding 35-percent wage and benefit cuts from its Charlotte, N.C., workers.
Steelworkers negotiators have their work cut out for them.