SIC 3011 Tires and Inner Tubes
SIC 3011
This category covers establishments primarily engaged in manufacturing pneumatic casings, inner tubes, and solid and cushion tires for all types of vehicles, airplanes, farm equipment, and children's vehicles; tiring; camelback; and tire repair and retreading materials. Establishments primarily engaged in retreading tires are classified in SIC 7534: Tire Retreading and Repair Shops.
326211
Tire Manufacturing (except Retreading)
After years of intense price wars, consolidation, and layoffs, the tire and inner tube industry was highly concentrated. In 2004, Automotive News reported the tire manufacturing industry was valued at $80 billion worldwide, a 12 percent increase over the previous year. Total shipments for the industry in 2005 were valued at $14.33 billion, up from $12.79 billion in 2002. The top three firms—Bridgestone, Michelin, and Goodyear—controlled roughly two-thirds of the global market in the mid-2000s; the capital-intensive nature of the industry lends itself to such patterns. While raw materials prices were relatively stable and assured, since most manufacturers maintained their own rubber plantations (most of them in southeast Asia), the cost of manufacturing operations was particularly high, making it difficult for smaller firms to generate economies of scale.
The tire industry developed in the twentieth century as a major supplier to the manufacturers of automobiles and other vehicles, and to consumers seeking replacement tires. The tire and rubber industries have traditionally been based in Akron, Ohio, where most tire and rubber companies' headquarters were located.
The tire business is reasonably assured of stable sales. While the demand for vehicles can fluctuate with changing economic conditions, the purchase of replacement tires cannot be long deferred, giving a relative evenness to the rate of tire purchases. Unfortunately for industry players, however, the increased durability of tires (because of technical improvements) has decreased the rate of replacement purchases, forcing manufacturers to compete along lines of durability, innovation, and style.
Most tires are manufactured by relatively large companies that produce a wide range of types and sizes; smaller tire producers tend to limit output to specialized product groups. While a major portion of sales in the industry are to vehicle manufacturers for installation as original equipment, a much larger share are sold as replacements through various distribution channels. Although manufacturers have made substantial inroads into the retail distribution market, this area is still dominated by independent dealerships.
The tire and inner tube industry depends chiefly on rubber suppliers for raw materials and automobile manufacturers for sales. More than 50 percent of the world's production of rubber goes into the manufacture of automobile tires. The tire and inner tube industry is the largest element of the rubber industry group as a whole, constituting more than 40 percent of that group's product sales. The rubber industry group is represented by the Rubber Manufacturers Association (RMA). RMA members make up more than three-fourths of the dollar sales of the rubber industry group as a whole.
The industry's strength and stability belies an undercurrent of competition and economic issues that have changed the industry's structure and led to the abandonment of plants, employee reductions, and limited profitability.
In the late 1980s, the U.S. tire and inner tube industry's ownership concentration was shifted overseas. Whereas U.S. tire manufacturers once dominated the world industry, by the 1990s the four largest companies were owned by French, Japanese, and Italian nationals. British interests have attempted, unsuccessfully, to acquire control of remaining leading U.S. tire producers. Competition has become more severe and more international in scope. These ownership changes have been a part of a trend toward mergers of many of the major companies, resulting in larger but fewer independent companies in the top structure of the industry. Within the United States, production is concentrated in southern states like North Carolina, Oklahoma, and Alabama.
Though a small number of tires sold consist of solid rubber, practically all are pneumatic, or inflated with air. The pneumatic tire was developed in the late 1800s for use in bicycles, just prior to the onset of the automobile industry. Later, thousands of sizes and types of pneumatic tires were made available for passenger cars and other vehicles, including trucks, buses, tractors, motorcycles, airplanes, and construction vehicles. Tire sizes range from less than two pounds to more than three tons for earth-moving equipment.
Tire casings are made from layers of rubber compounds and synthetic fibers or steel wire. The design and arrangement of these layers, or plies, affect qualities like cornering ability, vibration absorption, and durability.
The tire and inner tube industry has always been heavily dependent upon the automobile industry. Competition among the tire manufacturers has been fierce, particularly competition for status as original equipment for automakers. Since car buyers tend to purchase replacement tires of the same brand originally sold on the car, it behooves a tire producer to cut prices and induce auto producers to select its brand. For each tire included as original equipment, an average of three replacement tires will be bought.
Christopher Columbus noted the existence of rubber on his second voyage to the New World when he observed indigenous groups playing with balls they had made from a liquid obtained from a tree. Practical uses of rubber products began in earnest in the early 1800s, particularly with the use of rubber in clothing as a means for waterproofing. However, widespread applications were limited because the rubber material was somewhat sticky, odorous, and easily affected by shifts in temperature.
American inventor Charles Goodyear developed the vulcanization process of rubber in 1839. By incorporating lead and sulfur with rubber and applying heat, Goodyear created qualities of durability and stability, which facilitated the use of rubber in many practical and beneficial products, particularly tires.
In 1876, Sir Henry Wickham planted some rubber trees in Kew Gardens of London, England, from rubber tree seeds he brought from Brazil. These trees were transferred to Sri Lanka and the Malay Peninsula, where a rubber plantation industry developed that produced almost 3 million tons a year. Some of the larger tire producers later acquired and managed their own rubber plantations.
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