Three cheers for Michelin. And Bridgestone/Firestone, Kumho, Goodyear and Toyo. And any other tire maker that repeatedly jammed through tire price increases in North America this year.
As much as economists fret about the effects of inflation-which, admittedly, are evil-tire makers can be self-congratulatory about boosting prices two, three, even five times (if you're Michelin) in 2006. And, apparently, getting away with it.
Why shouldn't they? For once-five times if you're Michelin-tire manufacturers ``got their's.'' Historically they've been near the bottom of the food chain, supplicants that accept the scraps tossed their way by the car companies, ultimately beholden to oil prices, even victimized by natural rubber speculators.
Moving production to low-cost regions, cutting labor expenses, improving processes, squeezing every dime out of costs only goes so far. To make higher profits, tire makers need higher prices. The long and strong increase in raw material costs has provided a critical reason to boost prices, and a good excuse to do so.
The rise in the cost of doing business is real and recognized by the general public. Rather than engage in a price-cutting bloodbath against their rivals, the tire manufacturers now march in the opposite direction, raising prices as often as possible.
Good for them. As long as they don't do it in concert-the rubber industry has seen the perils of price-fixing-the tire makers should boost prices whenever they can. The tire industry's profit margins never will rival, say, the computer, medical or entertainment industries, but it won't hurt if they grew a little beyond the ``pathetic'' level.
Tire shipments are off considerably this year compared with 2005. It's high gas prices, not rising tire prices, that have caused the slump. Tire dealers report the consumer hasn't cried ``uncle'' yet over tire price increases.
Tire makers should keep raising prices until they do.