ERJ Review of 2019

As this year draws to an end, ERJ reviews the main trends and developments that defined the international rubber industry in 2019.

While the global automotive slowdown linked to market declines in China was clearly a dominant theme, it was the ‘S’ word that actually took centre stage.

Driven by regulators, public opinion and major customers – particularly automotive OEs – almost every player within the tire & rubber sector focused most heavily on sustainability.

Industry efforts to improve performance in terms of environmental and social responsibility in 2019 were perhaps most evident the natural rubber (NR) value chain.

In particular, the Global Platform Sustainable Natural Rubber (GPSNR), which was founded in late 2018, took shape throughout the course of this year.

The platform, which brings together rubber producers, tire makers, automotive OEs and NGOs, stepped up its activities with particular focus on improving the lot of smallholders and their communities. 

Amongst other initiatives, the platform partnered with the International Rubber Study Group (IRSG) to further sustainable cooperation between the two groups (Read more). 

The high-level turnout and discussions at ERJ’s sustainability-focused Future Tire Conference in June was further evidence that the industry is waking up to such challenges.

Among the topics explored at Future Tire, was the increasing importance of tire recycling and the role of various process technologies in this field.

Pyrolysis companies were particularly active in 2019, with for instance Pyrolyx finalising a five-year deal to supply recovered carbon black (rCB) to Continental. (Read more).

Dutch recycler Black Bear Carbon also advanced its ambitious scale-up plan of building 1,000 pyrolysis plants globally, by selecting Port of Rotterdam for its next tire-carbonisation unit. (Read more)   

In terms of tire technology, significant advances included Bridgestone’s Enliten technology. Unveiled during Future Tire, this is designed to reduce tire weight without compromising the wear-life performance. (Read more)

Just days before that, Michelin unveiled its multiple-award-winning airless tire Uptis, developed in partnership with GM. (Read more).

Business front

On the business front, however, 2019 was marked by a sharp decline in global automotive markets. This impacted the financial results of most tire and rubber companies, in some cases leading to plant closures and job cuts.

As of 19 Dec, ERJ’s most-read story of the year was the Trelleborg’s announcement of 700 job cuts, which mainly affected the company’s tire and industrial solutions segments. (Read more)

Michelin also disclosed two plant shutdowns in Europe – Germany and France – having already announced another closure in Dundee, Scotland in December 2018 (Read more).

Goodyear, too, launched a restructuring bid within its German operations in March, involving 1,000 job cuts. It later disclosed similar plans for its US operations. (Read more)

Continental Corp. also announced in September a major strategic turnaround, involving 20,000 job cuts over a 10-year period across all activities, group-wide. 

The German group, however, said it would increase its focus on the rubber industry, and particularly the replacement market both for its tires and its technical rubber parts. (Read more)

On a non-tire front, automotive supplier Cooper Standard announced the closure of 10 plants in response to market declines in November. (Read more)

But not all was bad news this year. Having carried out a major restructuring programme earlier in the year, Toyo Tire announced in July that it was investing €400m in a “sophisticated smart tire production factory” in Serbia. 

The Japanese group later revealed that the European investment would play a key role in its mid-term growth strategy. (Read more)

The EU’s announcement of definitive antidumping duties on Chinese truck and bus tires in late 2018 along with the existing US duties prompted new investments by Chinese players. 

In what has been described as one of the fastest ever tire-plant projects, Sailun and Cooper Tire inaugurated in November a 2-million unit/year truck & bus tire facility in Vietnam – having only broken ground at the site in March. (Read more)

Also in November, Doublestar signed an agreement with Pakistani partners to build a 7 million unit/year plant, producing both PCR and TBR tires in Pakistan. (Read more)

And staying in Pakistan, China’s LongMarch signed an agreement, again in November, with tire maker Service Industries Ltd to set up a joint venture truck and bus tire production plant. (Read more) 

In the US, the €3.3 billion of Lord Corp. by Parker Hannifin also stood out a non-tire front this year (read moer), followed by the relatively smaller acquisition of Preferred Compounding by Hexpol AB (Read more).