With the overall economy—along with the rubber industry—starting to show some signs of recovery, it can be easy to forget just how bad 2009 was for the industry.
A look at the Rubber & Plastics News ranking of the top 50 North American rubber product makers—based on 2009 revenues—is a quick reminder of why many in the industry would just as soon forget the year.
Of the 50 companies, 39 showed declines in rubber product sales for the year in North America, many by staggering percentages.
To put the freefall in perspective, the top 10 companies in the ranking combined for an aggregate of $29.8 billion in sales on the continent for 2009, a decline of 16.1 percent from the $35.5 billion in revenue for the top 10 in 2008. During 2008, 13 companies posted rubber goods sales of $1 billion or more in North America; last year just nine firms belonged to the exclusive club.
Considering that the overwhelming majority of the rubber industry is tied to automotive, the decline obviously is not surprising.
In addition, Michelin noted in its annual report that many global tire markets—including North America—show-ed record declines. Its data showed a drop of 32.3 percent in car and light truck original equipment tire shipments in North America, with replacement shipments for the sector off 2.3 percent. The radial truck tire market was even worse, with OE down 37.9 percent and replacements off 11.6 percent on the continent.
Taking a global perspective doesn't make things look any prettier. In RPN's ranking of the world's top 50 non-tire rubber product makers, just four firms showed sales increases for 2009 with a fourth having stagnant revenues.
A new top dog
For the record, Michelin North America Inc. took the No. 1 spot in North America for the first time in RPN's annual ranking, with sales on the continent of $7 billion. It moved up two slots to lead the pack, largely because its sales dropped less than the other top players.
Michelin's sales fell 3.2 percent in North America when calculated in euros—the currency of its French parent company—while the decline was roughly 8 percent in U.S. dollars after the difference in currency exchange rates is taken into account.
Like many firms last year, Michelin North America went through its own share of reorganization and cutbacks. It closed its tire plant in Opelika, Ala., on Oct. 31 and also announced plans to shutter a truck tread pressing factory in Queretaro, Mexico. Total employment in North America dropped by 900 during the year, a figure that actually was much lower than many of its competitors though its parent did shed roughly 7,500 jobs worldwide.
Following close behind in the No. 2 position was Goodyear, with 2009 North American sales of $6.98 billion. Last year Goodyear tied for the top spot with Bridgestone Americas Inc. with $8 billion in 2008 sales. Bridgestone's sales for the region dropped 25 percent to $6 billion in 2009, according to information provided by the company, leaving it in the No. 3 position.
Despite its declines during 2009, Good- year pointed to several positive initiatives for the tire maker. The company introduced 62 tires worldwide during the year, products that will fuel future growth, Chairman Robert Keegan said in a letter to shareholders in the firm's annual report.
Goodyear also generated a net benefit of $322 million when combining an improved price/mix of $207 million with lower raw material costs. Its four-point cost savings plan led to $730 million in savings during 2009, with another $1 billion in lower gross costs expected over the next three years.
In the rest of the top 10, Cooper Tire & Rubber Co. and Continental A.G.'s North American businesses switched spots, with Cooper moving up to No. 4 with $2 billion in revenue and Conti dropping to No. 5 with $1.88 billion.
Once again, Tomkins P.L.C. was the top purely non-tire firm in the ranking, coming in at No. 6 with $1.55 billion in North American sales from its Gates, Trico and Tridon businesses.
Parker-Hannifin Corp. and Carlisle Companies Inc. held steady at Nos. 7 and 8, with respective sales of $1.22 billion and $1.11 billion.
New Balance Athletic Shoe Inc. moved up three slots to No. 9 with $1.07 billion in North American sales. The shoe maker—one of the few firms to boost sales on the year—still operates several plants in New England, manufacturing about one-fourth of its goods in the U.S.
Yokohama Tire Corp. rounded out the top 10 with $975 million in sales, moving up three positions even though its revenue fell $38.7 million during 2009.
Three new companies entered the top 50. AirBoss of America Corp. came in at No. 48, Longwood Elastomers Inc. 49th and Jasper Rubber Products Inc. at No. 50.
Those dropping out included Fluid Routing Solutions, formerly part of Mark IV Industries Inc. Fluid Routing earlier in 2009 filed for Chapter 11 protection but that later was transferred to a Chapter 7 liquidation case, according to a law firm that follows bankruptcy filings.
Also falling from the Top 50 was Zodiac of North America Inc., which sold its marine unit, and ZF Boge Elastmetall, which didn't have enough revenue to qualify.
Given the state of the automotive business in 2009, firms with businesses dependent on the sector mostly showed declining sales for the year.
For example, Cooper-Standard Automotive Inc. saw its North American sales plunge 26.7 percent in 2009 to $914.3 million. The firm filed for Chapter 11 bankruptcy protection in August of last year, but completed the process this past May.
Other big-name automotive suppliers showing drops in sales last year included Hutchinson North America, Trelleborg North America, Freudenberg-NOK G.P., Henniges Automotive and Toyoda Gosei North America Corp.
A look at some other numbers also shows what type of economic year 2009 was.
Among 21 publicly held firms tracked by RPN—some of which have significant non-rubber business and five of which didn't qualify for the top 50—just12 posted operating income and nine net earnings for the year, down from 13 and 11 a year earlier.
More telling, though, 19 of the 21 companies made work force cuts, slashing more than 38,000 jobs combined worldwide. Only West Pharmaceutical Services Inc. added jobs, with its staff 108 higher than 2008. Tenneco's work force remained even on the year.
In addition, 17 of the 21 firms cut capital expenditures—many by double-digit percentages—while 11 of the 16 that report research and development spending chopped those costs as well.
That's not to say there weren't a couple of good stories to be found in 2009, two of which involve firms that supply military rubber products.
Avon Rubber & Plastics Inc.'s rubber product revenues jumped 54.3 percent on the year to $123.2 million, allowing it to jump 13 spots in the ranking to No. 35. In February 2009, Avon received a second award from the U.S. government for 100,000 M50 protective masks and then in September won a new five-year contract to supply the M53 protective mask.
AirBoss, which also is a major rubber compounder, saw its rubber product business qualify for the top 50 for the first time based on gains in its defense division, which makes chemical, biological, radiological and nuclear protective boots and gloves. The company even invested $2 million in 2009 to establish a new plant for the division in Milton, Vt.
World non-tire top 50
The top 11 companies in the global ranking of non-tire rubber product companies remained the same, although a number of positions changed.
Hutchinson S.A. of France moved up from No. 2 to No. 1 with $3.17 billion in sales, dropping Trelleborg A.G. of Sweden to second at $3.15 billion.
Continental A.G. remained No. 3 at $3 billion, with Bridgestone Corp. also holding steady at No. 4 with $2.9 billion.
Japan's NOK Inc. jumped five spots to No. 5 with $2.38 billion followed by another Japanese firm, Tokai Rubber Industries Ltd., with slightly below $2.38 billion.
Parker-Hannifin Corp. was the highest ranking U.S.-based firm, coming in ninth with $2.06 billion, followed in order by Cooper-Standard Automotive Inc. with $1.95 billion and Veyance Technologies Inc. with $1.56 billion.