There are moments that change the rubber industry—acquisitions that reshape the landscape, leaders who paved the way forward and trends that redefined how the entire world does business. And it was in the wake of the unexpected and unprecedented 2020 that 2021 took shape. It was a year that marked a slow return to normalcy and it was one filled with optimism, despite some of the challenges that still remain.
Here are the 10 biggest stories of 2021, selected by the Rubber News staff.
If there is one thing that rubber industry executives can blame their lack of sleep on this year, it's the shipping and logistics nightmare that resulted from last year's pandemic-induced slowdowns and shutdowns.
During the COVID-19 crisis, U.S. ports were backlogged as economies ground to a halt and the spread of the virus left ports—particularly in hard-hit California—short-handed. That bottleneck was compounded by the imbalance of trade, which left empty shipping containers in locations that aren't exporting as much as they need to import.
So far, the backlog hasn't cleared, leaving cargo ships sitting for days—and in many cases weeks—at ports as they wait to be unloaded.
This makes any available space on container ships precious, setting off a bidding war that pits companies against one another as they battle to get their goods on ships.
The container location issue is at the heart of many shipping delays, and for the North American rubber industry in particular, that's problematic because North America is reliant on Asia for raw materials and chemicals. When a small blip turns into a larger logistical headache, the North American rubber industry doesn't have much wiggle room.
And it's not just the rubber industry—it's other industries, too. The auto industry's microchip shortage was exacerbated by the industry's reliance on a single region to produce the chips and the efficiency of shipping to get the products to North American plants on time.
Likewise, much-needed personal protective equipment—gloves and face masks, for instance—saw shortages globally.
During Michelin's Movin'On Summit, held virtually in June, Francois-Philippe Champagne, Canada's minister of innovation science and industry, said these shipping issues rise to levels of national security. The remedy, he said, is to onshore production of some goods—microchips, PPE and vaccines, for instance.
"I think we are going from global to regional. And I can tell you, from a government perspective, we are putting more emphasis on (supply chain) resiliency than (supply chain) efficiency," Champagne said. "That is true of Canada, but I can tell you it is true of the G7, it is true in the Five Eyes, it is true between Canada and North America and our U.S. friends.
"And you will see a number of investments to be more resilient when it comes to microchips, when it comes to batteries, when it comes to bio-manufacturing," he said. " 'Never again' is what we are saying as a government. 'Never again will we be in the same position.' "
The shipping industry wasn't the only one impacted by the pandemic. Air freight and trucking had problems of their own.
Auto suppliers, in particular, fought for air freight—precious cargo space on commercial airlines whose flights have been grounded and scaled back amidst the COVID-19 pandemic. The squeeze on available air freight space—both through commercial airlines and air freight companies—is causing costs to skyrocket.
Trucking also has faced significant delays and soaring prices, in part because of bottlenecks at the ports, but also because of driver shortages.
Industrywide these issues have resulted in product shortages, shipping delays and sky-high prices that are pushed from supplier to manufacturer, and ultimately, the consumer.
Bipartisan legislation is rare these days, particularly at the federal level. So any legislation that garners significant approval from both sides of the aisle is likely to get attention.
The good news for the rubber industry is that when Congress agreed on a bill, it agreed on infrastructure, an area where many rubber industry companies could gain.
The Infrastructure Investment and Jobs Act passed the House Nov. 5 with a 228-206 vote after previous approval from the Senate (69-30 vote) in August.
President Biden signed the bill Nov. 15.
The IIJA is a $1 trillion investment that has its roots in a $2 trillion infrastructure proposal put forth by the White House March 31. The version signed by Biden echoes many of the priorities he laid out in his proposal—dubbed the American Jobs Plan—earlier this year, but with fewer dollars designated to many of the areas.
By far the largest amount of IIJA funding ($110 billion) is earmarked for improving roads and bridges. Money also is designated for railroads ($66 billion), broadband internet expansion and electrical grid modernization ($65 billion each), public transit ($39 billion), airports ($25 billion), and ports and waterways ($17 billion).
Additionally, $7.5 billion has been designated for upgrading infrastructure for electric vehicles.
IIJA has been applauded by a number of rubber industry organizations and associations including the U.S. Tire Manufacturers Association, NAHAD, the Motor & Equipment Manufacturers Association and the United Steelworkers union.
When Goodyear announced Feb. 22 that it had reached an agreement to purchase Cooper Tire & Rubber Co. in a $2.5 billion cash-and-stock purchase, it sent shock waves through the tire industry. The deal would bring together Goodyear, the world's third-largest tire maker—with annual global sales of $13.7 billion—with the 13th-largest tire maker in Cooper Tire, which has annual global sales of around $2.8 billion.
The acquisition was finalized June 7, overcoming a few hurdles along the way—including a trio of legal challenges from Cooper shareholders.
In addition to helping Goodyear solidify its place as the No. 3 tire maker worldwide, the deal brought two of the few remaining U.S.-based tire makers together under one umbrella and helped to set the course for what Richard Kramer, Goodyear chairman, CEO and president, emphasized would be a technology-driven, new-mobility company.
"We are excited to officially bring Goodyear and Cooper together and unite our shared focus on customers, innovation and high-quality products and solutions," Kramer said. "This combination strengthens Goodyear's ability to serve more consumers globally and provides increased scale to support greater investments in new mobility and fleet solutions."
With the deal, Goodyear also expanded its footprint in China, a rapidly growing space in the automotive sphere, where Cooper Tire had established a presence. Combined, the Goodyear-Cooper tire company operates more than 50 manufacturing sites worldwide and has a global annual capacity for more than 200 million tires.
According to financial reports, Goodyear may already be seeing the impact of the Cooper deal. Shortly after the acquisition, Goodyear rolled out a strong second-quarter financial report, echoing a first-quarter showing that Goodyear called its best Q1 in three years. Things continued to improve for Goodyear even as headwinds set in during the third quarter. The company reported that Q3 sales improved by 42 percent year-over-year, an achievement it credited to the addition of Cooper Tire.
It's been a devilish year for auto suppliers, which previously managed to make it through the 2020 slowdowns and shutdowns. And while a number of factors contributed to stresses experienced, one overarching factor has loomed all year long: microchip shortages.
The shortage has its roots in the pandemic's effects. Worldwide, when stay-at-home/shelter-in-place orders were instated to help slow the spread of COVID-19, consumers continued to spend. Among the items that saw jumps in purchases were consumer electronics, which helped to increase the demand for and redirect the usage of microchips.
When auto makers again resumed manufacturing, they found the supply of semiconductors to be short, and the situation never really righted itself. As a result, auto makers throughout 2021 were forced to slow or halt production of certain vehicles to help manage inventory.
As of Thanksgiving, the auto industry saw more than 10.1 million vehicles affected by the slowdowns.
In its most recent forecast, AlixPartners estimates that the semiconductor shortage is likely to cost the global auto industry $210 billion this year—that's nearly double that of a May forecast issued by the same organization.
Texas isn't used to prolonged deep freezes. So when an extended cold snap gripped the southern state in mid-February, residents and companies were left to manage the winter weather without electricity.
The state's power grid was strained under the power demands caused by the cold temperatures, causing widespread power outages across the state.
"We had about five days of misery," Bill Hyde, executive director of olefins and elastomers for IHS Markit, told Rubber News. "The damage during that brief period of time, it's almost apocalyptic."
It also added up to a major headache for the petrochemicals industry, which was forced to shut down operations in the wake of the cold-induced concerns. The delays in production trickled through a rubber industry supply chain already strained by shipping and logistics problems lingering from the COVID-19 pandemic.
"The petrochemical assets along the Gulf Coast are just not designed to operate reliably in subfreezing temperatures," Hyde said. "Most of our design parameters are around let's shed as much heat as we can during the summertime. But they are not about protecting sensitive equipment from extreme cold in the winter.
"We can go several years between freezes and a typical freeze here is for a few hours overnight. It's not for four days, so the impact to the industry can be significant," he said.
Later in the year, Hyde noted that it took some petrochemicals facilities about six weeks to resume production. It was quite a hit for the industry, which already was battling shortages and price hikes—lingering pandemic effects.
It didn't take long for President Biden to establish priorities for his administration. Within a week of taking office, he signed a pair of executive orders aimed at climate change, infrastructure and jobs.
With the Made in America executive order signed Jan. 25, he called on the U.S. government to lean into green automotive technology and prioritize purchases of American-made cars with U.S.-made components—and prioritize vehicles assembled at union shops.
The move put some muscle behind the EV transition, as Biden pledged to purchase EVs for the federal government's 650,000 fleet vehicles.
In March, when the Biden administration rolled out its vision for infrastructure with the $2 trillion American Jobs Plan, the proposal featured $174 billion for electric vehicle infrastructure, including 500,000 charging stations nationwide (though that part of the proposal was drastically trimmed down in the final version that was signed into law in November).
The funding also was intended to help auto makers spur domestic supply chains, retool factories and shore up domestic supplies of materials needed for next-generation batteries.
Combined, the efforts signaled the administration's vision for the future of the auto industry and the kind of steps it was willing to take to help achieve that.
It also was well-timed news for the U.S. auto industry, which is positioned for a swift transition from internal combustion engine vehicles to electrified powertrains. According to the Center for Automotive Research, North American consumers had a choice of 67 EV models available across all segments. But by 2024, more than 200 electric vehicle models will be in showrooms across the continent.
The U.S. Customs and Border Patrol in March began seizing imports of nitrile rubber gloves made by Malaysia-based Top Glove Corp., saying that the manufacturer had used forced labor in the production of those gloves.
Impactt Ltd., an independent consultancy dedicated to identifying and promoting ethical trade practices, identified a total of 11 indicators of forced labor during an investigation of Top Glove completed in August 2020. Among the concerns it noted were abuse of vulnerability, retention of identity documents, restriction of movement, excessive overtime, abusive working and living conditions and deception. Other indicators included isolation, debt bondage, withholding of wages, physical and sexual violence, and intimidation.
In a May statement, Top Glove claimed to have resolved all of the issues in the report and claimed that Impactt could confirm the steps it had taken to address any issues of concern.
Among the measures taken by Top Glove was a remuneration package of $33 million to affected workers.
Imports of Top Glove products were cleared to enter the U.S. again as of Sept. 10.
In October, another glove maker faced a similar issue as the U.S. placed a "withhold release order" on disposable gloves produced by Malaysian manufacturer Supermax Corp. and its subsidiaries for alleged forced labor.
Bridgestone Americas Inc. is focused on new technology and tire development. And the sale of its Firestone Building Products unit is proof of where the company sees its future.
In a $3.4 billion deal that took about three months to close, Bridgestone Corp. sold its flat roofing systems unit to LafargeHolcim Ltd., a company grounded in the cement, concrete and aggregates space.
With the purchase of Firestone Building Products, LafargeHolcim added 1,900 employees and a business that had sales of about $1.8 billion in 2020. Firestone Building Products also held about a 4-percent share of the world's flat-roof market at the time of the sale.
It took 19 months for Danfoss Co. to officially acquire Eaton Corp.'s hydraulics unit, but the finalization of the $3.3 billion deal on Aug. 2 marked the marriage of the two largest power management companies.
With the move, 10,000 former Eaton employees were added to the Danfoss team. Moreover, with the Eaton Hydraulics addition, Nordborg, Denmark-based Danfoss increased its annual revenue by about $1.8 billion and roughly doubled the size of its Danfoss Power Solutions segment.
Overall, the hydraulics business represented about 10 percent of Eaton's operations, including a substantial hydraulic and industrial hose business.
The transaction, first announced early in 2020, was contingent upon U.S. Department of Justice and European regulatory agency approval and the subsequent divestment of Danfoss and Eaton facilities in the orbital motor and hydraulics steering unit spaces.
It took three years, a whole host of allegations by both parties and about a dozen disputed ballots, but full-time and part-time employees at Kumho Tire USA Inc.'s Macon, Ga., plant officially unionized—by way of a single vote.
A total of 311 workers at the plant were eligible to cast a ballot with the ultimate outcome being 145 to 144 in favor of union representation. The final vote total took months to determine as 13 ballots were contested and the NLRB had to vote on their legitimacy.
And it wasn't until a Jan. 20 ruling by Lisa Y. Henderson, acting director for Region 10 of the National Labor Relations Board in Atlanta, that the United Steelworkers union was certified as "the representative of the appropriate bargaining unit."
Since the plant opened in 2017, workers there mulled the idea of joining the United Steelworkers union. During the three-plus years that followed, the employees, union and tire maker were embroiled in a heated back-and-forth, accusing one another of unfair practices to garner or deter unionization votes.
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