Rubber's Global Footprint is the title of a section in this issue that focuses on three hot-spot regions of the world's rubber industry. Eastern Europe and Russia, and Latin America fit the bill—fast-growing in demand and production, strong future prospects.
But the other region, Asia and, particularly, China and India? Compared to everywhere else, it's Bigfoot.
It isn't news that China today is the world's largest producer and consumer of rubber goods. Twenty-five years ago it was far below North American and European levels; today it's far ahead of both geographical regions.
China's rubber industry expansion continues, and even the worldwide recession only slowed, didn't reverse, that growth spurt. All the major companies and many smaller rubber manufacturers and suppliers see a nation with a middle class that exceeds the U.S.'s in numbers, yet is only one-third of the total population, and want in on that opportunity.
China as the low-wage, low-regulatory cost destination for manufacturing already is changing, albeit slowly. It's still a long way from reaching equilibrium with North America and Europe, in that regard.
India's rubber industry is behind China in terms of size and impact on the world market, but it, too, is growing at a phenomenal pace. According to some experts, India in 10 years will be second only to China in tire production.
So where will the North American rubber industry be in a decade, given the growth of these competitors?
Well, not dead. And perhaps much healthier than it is today.
There are some factors that can't be overcome by foreign competition. Shipping costs, for example.
The huge distance from Asia to the U.S. and Canada isn't changing, and the cost of transporting rubber goods will only get higher. If anything, that should bring more Asian companies into North America as producers someday, following the lead of Japanese manufacturers.
Labor costs naturally will rise as the standard of living improves in these nations. So will the expense of health and safety issues, and environmental regulations, which are bound to come. That will lessen the cost advantage of China and India, and cause the migration of lesser-value rubber goods to less-developed nations. Actually, that's already happening.
I'll go out on a limb and predict that in 10 years most rubber products in North America will be either big, heavy items that aren't worth shipping here; goods that require high precision, and get that from sophisticated domestic companies; and products that require strong local service.
Rubber still will have a footprint in North America. It just won't be as pronounced as it is today.
Noga is the editor of Rubber & Plastics News.