There's always uncertainty when a new administration takes over in Washington. Add in the fact that the Democrats will control both houses of Congress—albeit by razor-thin margins—and that makes the art of forecasting that much more difficult for the associations and companies that play an integral role in the domestic tire and rubber industries.
But given the way the Trump administration spiraled out of control with its insistence on trying to overturn the results of the November election, leading to the insurrection at the Capitol Building on Jan. 6 that resulted in five deaths, there undoubtedly are many who will welcome a return to calm and—dare we say it—normalcy, to the nation.
A Biden administration will have markedly different goals than that of a second Trump term, and the manner in which he and his team will go about pursuing those goals will no doubt bear little resemblance to what has transpired over the past four years. President Biden has been clear about his vision for the country and the policies he will pursue in areas such as infrastructure, climate, sustainability and foreign relations—all spaces with the potential for major impacts on the tire, rubber and related sectors.
Many of those in the industry won't agree with the policies the new administration will pursue, but association leaders see the potential to build new relationships with those in charge, which in turn could lead to progress in programs that are important to them. And with one party in control, they believe it may be easier to get substantive legislation passed.
Despite this hint of optimism, however, industry leaders will proceed with caution. As Biden and Kamala Harris took their oaths of office on Jan. 20 and did their best to hit the ground running, there remain many variables and hurdles in the way of real progress.
Chief among those is the continuing impact of the coronavirus on the nation and the world. The U.S. is almost exactly one year into the pandemic, and the numbers remain staggering. The number of new cases of COVID-19 remain at record levels, as do deaths and hospitalizations. This continues to put tremendous pressure on businesses of all sizes, making the future unsure at best for untold numbers of companies.
That is why those in the tire and rubber sectors see vaccine rollout and pandemic management as paramount to getting the nation back on track. They also see continued stimulus programs—particularly to aid businesses—as vital. Thomas Donohue, CEO of the U.S. Chamber of Commerce, said that despite some rebound, 10 million people who had jobs at the beginning of 2020 don't have jobs today.
"We won't restore the jobs growth and prosperity that were lost in 2020 until we eradicate this pandemic and get our economy firing on all cylinders," he said.
Areas of concentration
Infrastructure is one area that could provide a major boost to many areas of the economy, including tire and rubber. There has been talk for a number of years of moving forward with wide-ranging infrastructure investments, but they have stalled for one reason or another.
The Tire Industry Association, which serves independent tire dealers and retreaders, sees infrastructure as a key priority to start off the first 100 days of the Biden administration. Roy Littlefield III, CEO of TIA, wants to make sure that the priorities remain focused on traditional infrastructure projects, such as those related to roads and bridges. These are the areas he sees most benefiting the tire industry, rather than mass transit projects that have been the recipient of money diverted from the Highway Trust Fund. His association also will try to keep the tire industry from bearing the brunt of raising some funding for infrastructure projects in the form of higher and new federal tire taxes.
The U.S. Tire Manufacturers Association, meanwhile, has been readying itself to deal with a Democratic regime. Its CEO, Anne Forristall Luke, said the USTMA viewed a Biden presidency along with a Democratic-controlled Congress as the most likely outcome of the November elections, and the group directed much of its planning for that contingency.
They knew that scenario would mean a greater focus on climate, surface transportation, infrastructure, economic recovery and sustainability. "We feel good about the work we have done to position the tire manufacturing industry well in those discussions," Luke said.
USTMA member companies, she said, know that the first two quarters of 2021 will be challenging despite the hopes of an economic rebound. They expect a lot will ride on successful vaccine distribution and cooperation between the administration and Congress to get a comprehensive economic stimulus plan approved in quick order.
Such areas as modernizing the regulatory framework for tire performance and safety to reflect the technology changes in transportation will be challenging, Luke said, but also can bring opportunity because of the different tire needs of electric and autonomous vehicles, compared with today's transportation fleet.
It also is key for the tire industry to take a long-term approach in dealing with environmental stewardship and sustainability, given the positive impact the industry has had in that area with low rolling resistance, which has helped boost fuel economy and reduce carbon dioxide emissions.
Looking at the non-tire side of the business, the Association for Rubber Products Manufacturers said uncertainty brought by the COVID-19 pandemic remains a primary concern for processors. Those tied to the automotive market, in particular, took a big hit during 2020.
"However, after comparing the state of the rubber industry from March 2020 to December 2020, every industry has made a significant if not complete recovery," said Tony Robinson, analytics director for ARPM.
Optimism entering the new year also was on the rise, he said. While realizing changes can occur at any time, the number of member companies looking to hire rose significantly from September to December, while those looking to lay off staff dropped drastically. If things continue trending upward, the association looks for 90 percent of its members to be back to full operations by mid-2021.
And such a return to "normalcy" would be widely welcome, given the way 2020 went and 2021 began.