Tire makers: Labor shortage impacting operational costs, production

LONDON—Tire companies are finding it increasingly difficult to fill job vacancies at their production facilities, leading to negative impacts on operational costs and productivity, recent reports from manufacturers, suppliers and analysts suggest.

In its 2021 financial results reporting, Michelin said last year was in part "shaped" by labor shortages that impacted the manufacturing operations of both the group and its suppliers.

Michelin's specialty tires segment, for example, was "severely disrupted" by difficulties arising from labor shortages, preventing it from "fully meeting robust customer demand," the company stated in its fiscal 2021 financial results release.

And, it suggested, while government financial support may have slowed a return-to-work, "in a more structural way, these hiring difficulties (might) arise from certain COVID-related social changes that have created a new relationship to work."

The issue seems to be at its most acute in the U.S., according to Darren Wells, Goodyear's chief financial officer. 

"When it comes to the labor situation, I think that the challenge in the U.S. has been greater than it has been in other parts of the world," he said.

"And while we've had absenteeism in our EMEA factories, we haven't had the level of turnover and the training demands that we've had in the U.S.," Wells added in comments about Goodyear 2021 results.

In its fiscal 2021 results summary, Bridgestone Corp. noted: "…in North America, pressure on tire supply accompanying a marketwide labor shortage against robust demand for replacement tires laid bare issues about supply measures."

According to market analysts at Smithers Group, in the near term, "a lack of trained labor in U.S. tire manufacturing and distribution facilities is creating a further impediment even as OEMs react to the latest omicron-driven fluctuations in sales."

In the longer term, skills shortages might "spur greater investment in automation in tire manufacturing and warehousing," Smithers suggested in a study, titled The Impact of Supply Chain Disruption on Tire Manufacturing.

These themes were echoed in an online article by Jordan Konst, global industry consultant, automotive and tire, for Rockwell Automation, who listed skills issues among the biggest current difficulties being experienced by tire makers.

"If you're like many tire producers I've met with recently, you're also facing a labor shortage with no end in sight," Konst said.

"Workers you've depended on for decades are leaving the workforce in record numbers. And despite higher wages and other incentives, replacements are difficult to find," he explained.

These issues, he noted, will contribute to a momentum-swing "from automation in the traditional sense to autonomous operations, enabled by advancements in artificial intelligence and machine learning technology."