Record shipments predicted for OE, replacement tires.

Annual shipments of original equipment and replacement tires for passenger cars should top previous industry highs during 1994, according to the Tire Market Analysis Committee of the Rubber Manufacturers Association (RMA).

"If current economic conditions continue, it is anticipated that original equipment passenger tires shipped in 1994 should see a 10% increase over 1993's total of 52.3 million tires," said Thomas E. Cole, President of RMA. He added, "This would mark a new high if the level of 57.9 million units is reached, exceeding the old record of 57.8 million units posted in 1977. The increasing use of passenger tires in light truck applications has helped fuel this market."

Since 1991, demand for original equipment passenger tires has risen over 35%. Indications are that the demand for original equipment passenger tires will remain at the 57 million level through 1996.

Cole remarked that TMAC industry analysts are forecasting that the replacement passenger tire market in 1994 should surpass the industry high of 165.8 million units set in 1992. It is anticipated that growth in the replacement market, although modest, will help the industry to set a new shipment level of 167 million units in 1994 with the potential to reach 170 million units by 1996.

While new levels of shipments are being reached, TMAC cautioned that this market is not expected to grow at this rate indefinitely. Increased tire wear and general economic trends are just two of the factors which may temper the growth in passenger tire shipments. Performance and speed-rated tires continue to be viewed as the stronger segments of the passenger tire market.

On the trade front, exports of passenger tires are also expected to set a new high in 1994 reaching 20 million units. TMAC representatives cite the high import demand levels in both the original equipment and replacement markets (coupled with the current strikes several companies are experiencing) as reasons why imports can be expected to reach 44 million units, matching the all-time high set in 1989. It is expected that imports will decline to 41 million units by 1996.

In the area of light truck tire demand, TMAC anticipates original equipment shipments will rise to 5.3 million units in 1994 which would exceed the high of 4.8 million units set in 1988. By 1996, this market should experience a decline to approximately 4.5 million units. The picture for 1994 light truck tire replacement activity is just as bright. TMAC is forecasting 25.2 million tires shipped which will surpass the 1990 high of 22.7 million units. Indicators point to this market remaining at the 25 million level through 1996.

Exports of light truck tires seem headed for a new high of 3.3 million units in 1994 compared to the old high of 2.9 million set in 1991 and should climb slightly to 3.5 million units in 1996. Imports should reach 4.4 million units by the end of 1994.

TMAC's analysis of the economic factors affecting the medium truck tire market foresee some mixed results for the years 1994 to 1996. The original equipment market should experience some growth in 1994 to nearly 4.2 million units, up from 3.8 million in 1993. However, overall original equipment tire demand through 1996 should see a decline to 3.6 million units. This decline in shipments should also hit the replacement market. The 1994 projected level of 11.5 million units is slightly higher than the 11.4 million units shipped in 1993. A decline to 11.3 million units by 1996 is likely.

TMAC is composed of forecast professionals from over twenty major tire producers active in the U. S. marketplace. Their analysis of industry activity, both current and future, entails a review of RMA tire industry aggregate reports and other economic data

IRP segment healthy

Analysts at The Freedonia Group predict a healthy outlook for industrial rubber products in the U.S., with sales of such goods rising 6.2% annually to $12.8 billion in 1998 (inflation-adjusted growth of 3.5% per year). Project director Paul Ita determines that gains in these products (belts, hoses, elastomeric roofing, sheeting/film, geomembranes and others) will result primarily from robust increases in industrial machinery and equipment. According to Ita, the industry will also benefit from healthy growth in new plant and equipment expenditures, particularly in the process industries segments. The study includes analysis of market environment, elastomeric materials, supply and demand, mechanical rubber goods, rubber hose, belts and belting, and industry structure.

The study pinpoints rubber mechanical goods as the fastest growing product segment, comprising nearly 60% of the market in 1998. Such growth will stem partly from excellent prospects for two major products - roofing and geomembranes. In addition, says Ita, mechanical rubber goods shipments will exceed hose and belts in part because these products are largely more specialized and thus have greater pricing flexibility.

The markets which account for the majority of U.S. industrial rubber product demand are transportation equipment and industrial machinery/equipment (85% of total demand). In the latter segment, for instance, U.S. companies will enhance competitiveness via the installation of labor and time saving systems (e.g., material handling systems which incorporate conveyor belting). The industrial market will also benefit from demand for geomembranes spurred by environmental legislation. As a result, sales of rubber goods to the industrial market are forecast to increase over 7% per year to $5.6 billion in 1998.