Asian tire makers, petitioners offer conflicting views

WASHINGTON—Manufacturers of off-the-road tires from China, India and Sri Lanka are dumping their products in the U.S. market, fueled in part by government subsidies, stealing market share from U.S. OTR tire producers and jobs from U.S. tire workers in the process.

Or else lower raw materials costs, cyclical downturns in the OTR tire market and business miscalculations by Titan Tire Corp. are behind sagging prices and soft demand for U.S. OTR tires.

These were the vastly different pictures painted by petitioners and respondents at an International Trade Commission hearing Jan. 29 on the petition by Titan and the United Steelworkers union seeking antidumping and countervailing duties against mounted and unmounted OTR tires from the three Asian countries.

In 2008, Titan and the USW won their case for antidumping and countervailing duties against unmounted Chinese OTR tires. The current situation with mounted and unmounted tires from China, India and Sri Lanka is very much the same, they said in their Jan. 8 ITC petition.

“OTR tires from all three countries and the U.S. are fungible and compete across the market,” said the petitioners' presentation document at the Jan. 29 hearing.

Imports from China, India and Sri Lanka were the only source of volume increase in OTR tires during 2012-15, the period of the investigation, while imports from other countries declined, according to the document. From 2012-15, the subject imports increased their market share from 35.5 to 44 percent, it said.

“The significant increase in subject imports during a period of declining demand allowed imports to seize market share largely from domestic producers,” the document said.

Meanwhile, Titan's confidential data regarding distributor prices for Titan tires and comparable Indian OTR tires showed the Indian tires underselling Titan by as much as 70 percent, it said.

“As Titan has lost sales to rising volumes of low-priced imports, our plant has seen production fall dramatically, much more than what the cyclical downturn in demand would warrant,” said Lester Brewer, general manager of Titan's OTR tire plant in Des Moines, Iowa.

“The OTR tire industry provides high-paying, high-skilled jobs with family-supporting benefits,” said Stan Johnson, USW International secretary-treasurer. “All of this is now at risk because of these dumped and subsidized imports from China, India and Sri Lanka.”

However, representatives for the OTR tire importers said the petition misrepresents the U.S. OTR tire market.

“Whereas Titan tends to focus on the OE segment of the market, nearly 80 percent of our sales are made to aftermarket customers,” said Domenic Mazzola, vice president of engineering and original equipment sales at Alliance Tire Americas Inc.

“As a consequence, now that demand from its principal OE customers has declined, Titan has fewer commercial opportunities to fall back on,” Mazzola said.

Nor are OTR tires as interchangeable as Titan and the USW insist, he said. “The market is far more segmented than that,” he said. In agricultural tires alone, he said, there are three different segments, and tires in each segment are uniquely designed to meet the requirements of that segment.

Raw materials costs played a far greater role in recent OTR tire pricing trends than imports, according to Mazzola.

“The vast majority of the cost of any OTR tire consists of just a few raw material inputs,” he said. “The overall cost of these inputs has trended down by nearly 60 percent since January 2012.”

Titan also misjudged the market by emphasizing low sidewall tires, Mazzola said.

“LSW technology is fairly old, but Titan has decided to push this technology as a distinguishing figure for its agricultural tire line, where the purported benefits of LSW technology are still questionable,” he said. “But these tires have not been widely accepted in the marketplace, as LSW initially required special wheels, and purchasers have not experienced the benefits claimed by Titan.”

A few of the importers suggested Titan filed the petition to cover up its own errors of judgment.

“There should be an SEC investigation of Titan, rather than an ITC investigation of us,” said Brian Hubbard, marketing consultant to Speedway Rubber Co.

The importers noted that no other domestic OTR tire manufacturer had joined Titan in its petition. But Elizabeth Drake, an attorney representing the petitioners, said importers were ignoring the USW's support of Titan.

“The respondents have not raised a single substantive issue from the previous case that would differentiate it from this one,” Drake said.

The ITC is scheduled to meet on Feb. 19 and decide whether to proceed with the OTR tire investigation. On the same day, the agency is scheduled to hold a preliminary conference on the USW's petition seeking antidumping and countervailing duties against truck and bus tire imports from China.