QINGDAO, China—The Rubber Manufacturers Association has launched a pilot data-collection program aimed at giving its members a more accurate picture of U.S. tire shipments.
The program is in response to the growing number of tires exported to the U.S. from non-RMA member companies.
Charles Cannon, RMA president and CEO, said this means the data being collected from RMA member companies—which used to describe virtually all transactions or activity—is now missing a substantial chunk.
“Our goal is to restore the market visibility that we had in the past to allow our participating members, plus whoever contributes data, to mutually benefit,” said John Wu, RMA director of tire statistics.
Cannon announced the new Data Exchange Pilot Program March 16 at the Fifth China Rubber Conference & World Rubber Summit 2010 in Qingdao.
The RMA's board of directors made this issue a high priority, he said, “because they rely on the data” to supplement their own assumptions about the market. The association began working on the program 2½ years ago.
Through the data exchange program, the RMA has begun collecting data from six Chinese tire makers, which have signed a contract and paid a fee to be part of the program. They are: Aeolus Tyre Co. Ltd., Jiaozuo, China; Hangzhou Zhongce Rubber Co. Ltd., Hangzhou, China; GITI Tire Co. Ltd., Singapore, through its U.S. unit GITI Tire (USA) Ltd.; Double Coin Holdings Ltd., Shanghai, through its U.S. unit China Manufacturers Alliance L.L.C.; Shandong Linglong Rubber Co. Ltd., Shandong, China; and Triangle Group Co. Ltd., Shandong.
A seventh company, Taiwanese tire maker Cheng Shin/Maxxis International, is in the process of signing on.
The RMA, he said, has a long history of collecting “active data” in an accurate format that are used by the RMA's contributing tire members: Bridgestone Americas Inc., Michelin North America Inc., Goodyear, Cooper Tire & Rubber Co., Toyo Tire Holdings of America Inc., Yokohama Tire Corp., Pirelli Tire North America Inc. and Continental Tire the Americas L.L.C.
The group also has contributing data members Kumho Tire (U.S.A.) Inc., Hankook Tire America Corp. and Falken Tire Corp., which is part of Sumitomo Rubber Industries Ltd., Wu said.
New concept for some
Participating in the data-collection program is more complicated than simply providing the number of tires a company exports to the U.S., Cannon and Wu said.
First, companies have to overcome concerns about reporting their own data to a third party, which may be a foreign concept to some of them. In addition, firms may not have accounted for their products in terms of units but rather sales and may not have a system in place to track all of the details.
Wu has had a “cultural challenge to explain to manufacturers in places like China that this (information) is collected independently, it's proprietary and isn't available to the government and other entities,” Cannon said.
“And that runs counter to culture and existing practice so he's had to not only solicit their participation but convince them that they can do so safely and appropriately.”
The data exchange program members are in the process of going back to their 2008 data to try to report it in the right format to make it consistent with that of the other reporting companies, Cannon said.
“They've basically overcome their challenge to provide us some kind of product coding for all their products being sold in the U.S.,” Wu said. “I view that as a major commitment because they basically spend all those resources just to comply with our reporting program.”
Wu said the RMA is going slow with the data to avoid errors and putting “garbage” into the system.
“We want to provide everyone with the most accurate possible data,” he said. “So we want to take very slow steps initially and validate all the coding to make sure everyone does the tires the same.”
This focus on detail is one way of distinguishing the RMA reporting program from similar data collection entities “because we don't really care about the number itself,” he said. “What we can offer is the quality behind the number.”
While the RMA is open to other tire companies participating in the program, the association cannot necessarily take in newcomers at the time they request to join. The trade group does open a window on an annual basis and will consider doing so if three or more applicants, offering similar products, want to join.
For antitrust reasons, three or more companies need to join at the same time, Cannon said.
The RMA has not started releasing data yet from the data exchange program members.
“We consider the validation exercise to be started in that we're dealing with historical data, in the sense that it's a year old, to establish the basis,” Cannon said. “But it will already be useful to the extent that it meets the criteria that (Wu) has been talking about.”
While in China, Cannon and Wu scheduled meetings with many of the data exchange contributing companies “to make sure their senior management understands what we're doing and that they understand the seriousness of our commitment, as well,” Cannon said.
“We see this as the first step in a long relationship, and hopefully it will yield the kind of benefits to both parties that we believe are there. The proof, obviously, is in the pudding, as usual, but our expectations are high.”