What have you learned most from dealers through the forums? What has the response been?
Overall, the biggest lesson for us is that the dealers wanted to know if they were the only ones going through a rough time, or if they were having a more difficult time than others. When they began to hear that all of us, large and small, are going through a similarly challenging time, they felt much better about their particular situation.
Do you expect any supply difficulties in the second half of the year?
From an industry standpoint, I would expect there to be some inventory imbalances caused by the plant shutdowns. No matter how hard we all try to forecast the future, we rarely predict it perfectly.
From an SRNA standpoint, we will emerge out of this situation with slightly better inventory in key product lines, but it will largely depend on when the market returns to normal levels, and how consumers shift buying preferences between the different price positions in the market.
What are some of the pleasant surprises you are seeing in the industry?
Market recovery has been quicker than we have anticipated, and fewer dealers have gone under than we feared.
The USW has petitioned for antidumping and countervailing duties on passenger and light truck tires made in Thailand, South Korea, Taiwan and Vietnam. What is your company's reaction to that?
Despite the fact that we do have a U.S. factory, we are very disappointed to hear of the USW's actions. The reality is that we all need a global production base in order to effectively build the enormous amount of sizes and tire types required to satisfy the market.
Our reaction will be to obviously fight back against their actions, but what we do after that we'll have to talk about at a later date. I do believe, however, that this will, in the long term, impact the USW membership negatively.
How might additional duties impact the industry?
Tire prices will go up accordingly, and the American consumer will lose out. And if history is any lesson, very few, if any, new American jobs will be added. I believe that is what is called a lose-lose proposition.
Where do you see the industry markets heading during the second half of 2020?
Shipments eventually will return to a sense of normalcy, but it is largely dependent on when states begin to fully open up and Americans get back to work. With 40 million Americans losing their jobs because of COVID-19, my suspicion is it will take a while to get back to normal levels.
What kind of trends are you seeing? How is Sumitomo/Falken reacting to them?
We have seen a fairly robust improvement in shipments, which is positive, but there also has been a shift from the higher price levels to the lower price levels, which is fairly typical after economic problems occur. Being a Tier 2 supplier, that has been positive for us.
What sectors look strong? Are they sustainable?
Light truck and CUV have been the strongest, and based on new vehicle sales, we would expect that to continue for quite some time.
What sectors are struggling? How soon do you expect them to rebound?
The touring segment appears to be the most negatively impacted.
Do you expect to roll out any additional products in 2020? What will they be and what sector will they serve?
We do not plan on launching any new products in 2020.
In February, SRNA announced price hikes by up to 5%. Do you foresee any more hikes in the second half?
The combined volatility of rapidly changing raw material costs and fluctuating demand make that a nearly impossible question to answer.
Do you expect any major investments in the next six months?
We will continue to invest in our Buffalo production facility, but that is all we see for North America at this time.
What are some of the challenges of the industry? What keeps you up at night?
My concerns are on more of a macro level. From what the data shows us, our younger generation is less interested in vehicle ownership and on obtaining a driver's license than previous generations. How will that effect the number and types of vehicles on the road in the future?
The next is the continuing consolidation of tire retailers and tire wholesalers.
Our industry has been incredibly fragmented for such a mature industry, but as the consolidation continues, what will the landscape look like in the next five to 10 years?
Finally, there are far too many different tire manufacturers globally. If we look at what has happened in other mature industries and apply those lessons to ours, it would be natural that there will have to be consolidation and business closure on the manufacturing side.