Deterioration of the automotive industry affects tires and accessories suppliers

Although General Motors Corp. and Chrysler L.LC received a $17.4 million emergency bailout approved by the Bush administration in December, suppliers in the automotive industry know that the difficult days are far from over.

Despite the specific measures disclosed by some companies, the tire and auto parts industries are taking austerity measures, including reducing production and reducing staff as an emergency response to the economic crisis since the Great Depression.

A Goodyear spokesperson said that the current economic downturn affects the entire tire industry (including Goodyear), and the market demand for both original and replacement tires has fallen. The spokesperson particularly emphasized the impact of the economic crisis on the entire tire industry.

A Goodyear spokesperson continued saying that we are taking measures to cope with the current difficulties and to prepare for the economic rebound in the future. However, he refused to discuss more details. At the end of December last year, Goodyear announced the cancellation of 150 jobs at the Goodyear’s Dunlop North America facility in Tonawanda, New York. The main method was to buy out seniority and fire.

The U.S. Manufacturing Alliance (representing U.S. manufacturers and the UTU) announced that US manufacturing lost at least 4 million jobs between December 2000 and December 2008.

On the same day that Goodyear issued its statement, Cooper Tire & Rubber Co. announced that it will close the Albany Tyre Plant in Georgia and dismiss 1400 employees.

Another company that is most affected by the financial turmoil is Bridgestone/Firestone. In early December of last year, Bridgestone announced the dismissal of 158 employees (10 of them timed workers) at the La Vergne plant in Tennessee, and the dismissal of 60 members of Bridgestone Bento tires, including the closure of the St. Louis Oncor .

According to a company spokesperson, Bridgestone began adjusting its tire production in North America to meet demand declines a few months ago. We have tried our best to reduce production without reducing the number of employees. The company said that the inventory has reached an abnormal level and we need to take more measures as the demand declines.

Various remedial measures

According to Mr. Sarah O'Hare, deputy manager of the company's human resources and communications department, Freudenberg-NOKG.P., an auto parts manufacturer, has cut about 1,000 employees including payrolls and temporary workers. The 20% is slightly lower. In October last year, the company announced the closure of the Laconia Automotive Seals Plant in New Hampshire, resulting in the loss of 120 jobs. Mr O'Hare said that Freiitberger was not overly worried about the slump in the auto industry because the company is diversifying its market.

We already have a considerable amount of investment. In the past year, we have become less dependent on the auto industry. The spokesman said that in recent years, our market has expanded considerably, especially in the oil and gas markets.

For example, she said that the seals that apply to automotive generators can be changed to oil field pumps.

According to Michelle Chief Financial Officer Eric LeCorre, Michelin North America has already survived without relying on Detroit's original tire market.

Our combined sales of the three largest auto giants in Detroit are less than 5% of the Michelin North American market. Mr. Eric LeCorre continued, “We expressed our support for the auto company’s efforts to recover, and we are negotiating with companies on payment and ordering. Michelin tires are mainly used in Ford, GM, and Chrysler high-end automotive products, and their recovery is relatively easier.

Informal observers believe that the dramatic decline in the prices of petroleum, synthetic and natural rubber, butadiene, and other raw materials will benefit the tires and automobile industry, but those who truly understand the industry believe that this view is wrong at least for now.

The decline in raw material prices will only show up after a certain period of time. A Bridgestone spokesman said that the raw materials currently in use are pre-purchased, which is not good for us. For the future, of course, the low price of raw materials will help us weather the storm.

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