Tire Makers Take Unprecedented Temporary Shutdown Action
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Leading tire makers serving the North American commercial vehicle market reported, separately, they have paused production, while warehouse and distribution operations continue. All manufacturers cited the COVID-19 crisis and a steep decline in demand.
Bridgestone Americas Inc., Cooper Tire & Rubber Co. and Goodyear Tire & Rubber Co., announced temporary shutdowns at their respective plants. Michelin announced partial shutdowns at some plants based on different situations.
Shutdowns began in late March and were expected to last into April, the companies reported.
“Because of the complexity involved, we are not sharing detailed information on how each individual plant will be affected. Michelin North America has never been involved in a widespread shutdown like this in the past,” a company spokesman told Transport Topics.
The shutdowns come after the tire industry in 2019 faced falling original equipment demand in the second half as the North American truck cycle flipped into a retreat.
It has worsened.
Michelin reported mid-February data showed demand for original equipment truck and bus tires in North America was down 21% and replacement demand fell 6% compared with a year earlier.
Goodyear had expressed an optimism about the future during its latest earnings call in February before the novel coronavirus had spread across the U.S.
“As we enter the new decade, it’s clear that the inflection point in new mobility is here,” Goodyear Chairman and CEO Richard Kramer said during the call. “Tire technology is rapidly advancing to meet the needs of electric vehicles including range, ride and handling, and durability improvements. Intelligent tires will be integrated into autonomous driving systems.”
Kramer
Meanwhile, Cooper is assessing plans for its Europe operations. Plants in China, which reopened several weeks ago and have continued to ramp up production, remain in operation.
The company put in place — as have the other tire manufacturers — measures to protect employees. These include travel restrictions, remote working, social distancing, additional cleaning and disinfecting of facilities and limited visitor access.
In related news, congressional leaders of both parties agreed March 25 to a $2 trillion stimulus package that included $367 billion in aid for small business. The president was expected to sign it into law.
The Tire Industry Association was among the groups seeking aid for members.
TIA Director of Government Relations Roy Littlefield IV said, “TIA represents small businesses that cannot switch their core functions to remote operation during this disaster,” he said. “Tire dealers are staying open under these conditions to especially service trucks, emergency vehicles and vehicles of medical personnel. Tires and tire dealers are essential to keeping the flow of supplies to stores and hospitals.”
TIA asked Congress to, among other provisions:
- Allow 100% deduction of business losses in 2020 for all non-remote-function-capable small businesses (NRFCSB).
- Allow NRFCSB employees to qualify for federal-state unemployment insurance benefits without impacting the employers’ insurance rates.
- Provide federal child care subsidies for NRFCSB employers and employees.
- Provide mortgage assistance plans for the same employers and employees.
- Provide federal assistance for COVID-19-related health care costs, and/or a mandate that private insurers must cover COVID-19-related health care either for free or at most the actual cost of the care.
- Include tax-exempt entities such as associations and nonprofits in temporary aid to address the harm caused by event cancellations and reduced attendance.
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