Roy Cokayne
TYRE imports are threatening the sustainability and future existence of the South African tyre manufacturing industry, which provided direct employment to an estimated 5 540 people last year.
In 2007, SA Tyre Manufacturing Conference (SATMC) member companies employed about 6 900 people directly. The members are Apollo, Bridgestone, Continental, Goodyear and Sumitomo.
Dries Lottering, the operations director at Bridgestone South Africa, said that over the past two decades, the local tyre manufacturing sector had been transformed into a more globally integrated industry supplying high-quality products to the domestic and world markets.
However, tyre production volumes had not shown any remarkable increase during this period. In fact, there had been a downward trend in production of tyres for passenger vehicles, but an increase in the output of light commercial vehicle tyres, Lottering told a Japan External Trade Organisation seminar last week.
He attributed the increased production of the latter type of tyre to the growth in production by original equipment manufacturers of light commercial vehicles within the country. Tyre imports into South Africa had grown immensely, he added.
Imports of passenger car tyres had grown by 156 percent since 2008, light commercial vehicle tyres by 154 percent, and truck tyres by 191 percent in the same period.
Lottering said there had been a sharp increase in tyre imports during 2010 largely because the US imposed tariff sanctions on tyre imports from China, and South Africa became a replacement market.
Since then, tyre imports into South Africa had continued to increase.
In contrast to the figures on imports, tyre exports of all three tyre product categories from South Africa had decreased, he said.
The share of imported tyres in the total passenger car tyre market rose to 45 percent last year from 35 percent in 2007, despite total demand remaining constant for the past four years.
Lottering said although local manufacturers still had the majority share of the passenger car tyre market, the trend was of a reducing share year on year. “This is a real threat to passenger car tyre manufacturing in South Africa.”
Lottering’s comments follow the application last week by Apollo Tyres South Africa, formerly Dunlop Tyres SA, to be placed in voluntary business rescue proceedings.
Lottering said the trend with truck tyres was “even more concerning”.
Imported truck tyres had surpassed the market share of tyres from SATMC members at 53 percent in 2010. It had grown to 55 percent last year and was expected to grow even further.
The increase of imported tyres into the local market also continued to suppress the retreading business, he said, and had affected SATMC’s attempts to preserve the environment through recycling initiatives.
He said the continued increase in all classes of imported tyres created a number of challenges, including quality control of these tyres, regulation, taxation, infrastructure and labour matters.
Actions by the local tyre manufacturing industry to counter these challenges included the creation of demand for higher added value products, such as run-flat tyres and eco-friendly products, the promotion of the use of retreads for commercial vehicles, and the optimisation of local production capacity.
Lottering questioned whether current tyre import trends predicted the future.