Opinion: Open & shut case

There are many pitfalls on the road to recovery from the lockdowns and other measures – now being tentatively lifted – to combat the global spread of Covid-19.

For individual tire and rubber product makers, the task of restarting operations presents a daunting set of challenges, in circumstances which no one has experienced before.

In particular, strict protocols must now be introduced to minimise the risk of employees becoming infected at work and to ensure a rapid response when any such cases are identified. 

So, for the foreseeable future, our factories will typically require: measures to screen for symptoms & exposure; regular deep-cleaning of facilities; and adjustments to procedures and equipment to ensure social-distancing and minimise points of transmission. 

Indeed, armed with such a programme, Bridgestone Americas managers felt able to keep running the company's Des Moines, Iowa, farm tire plant, even after eight of the 1,050 employees tested positive within two weeks of its mid-April restart.

That said, the risk of returning workers contracting the potentially fatal infection in the industrial environment has raised the spectre of legal actions. 

In response, a US manufacturers' coalition, including automotive and tire industry associations, is lobbying for protection from coronavirus-related lawsuits which, they argue, could lead to the shutdown of vital industries.

Another emerging battleground concerns the need to ensure that the restart of manufacturing industries happens in an environmentally sustainable way. 

In May, a grouping of automotive sector associations, including the European Tyre and Rubber Manufacturers' Association (ETRMA), launched a recovery plan for their hard-hit industries. This calls for "targeted measures", such as vehicle renewal schemes to rekindle market demand and spur industrial activity and investment across the EU. 

The kickstart plan, however, quickly drew fire from environmental groups, who argued that an EU-funded vehicle renewal scheme would put more cars on Europe's roads, at the expense of investment in public transport.

As Mighty Earth senior campaign director Julian Oram argued: "Any policy incentives or financial assistance directed towards auto, tire, and rubber companies cannot simply seek to resuscitate the industry as it was but must instead help stimulate a green transformation." 

Industry, however, insists that by encouraging the replacement of older vehicles with newer, low-emissions ones, its plan supports transition to a circular, carbon-neutral economy and the European Green Deal.

Indeed, the ETRMA has separately called for a 'green' post-Covid economic recovery, backed by a regulatory framework that supports smart mobility, digital transport services and the use of tire-data systems. 

The EU, it urged, should also offer incentives to encourage the take-up of more "environmentally sound" tires as well as the recycling of end-of-life tires into secondary materials for high-value applications.

This tug-of-war between 'restarters' – keen to get the economy and industry rolling again – and environmentalists – some keen to see square wheels fitted on every car – is, at least, a sign that things might be starting to get back to normal.

In a survey conducted 27-30 April by European automotive-supplier trade group CLEPA, 90% of respondents expected revenues to fall in 2020, while more than half expected to end the year in the red. 

Some 75% of suppliers said it would take more than a year, and a third two-to-three years, to return to normal business, reported CLEPA, whose members include Continental, Eaton, Gates and Toyoda Gosei.

Demand-volatility was the most pressing issue for respondents – a viewpoint expressed by 90% of suppliers, who are also concerned that fixed costs would increase much faster than turnover due to very low production levels on restart. 

Among other findings: 84% of suppliers said they would cut investment; 74% will reduce their workforce; and nearly 40% had already started to cut R&D budgets.