Manufacturing in Asia: A Perfect Storm
by Alex H Stone
When it comes to tire manufacturing, we may be looking at a perfect storm for 2018. With the supply of natural resources being restricted and factories being held to higher standards, expect to see a sharp increase in the cost of manufacturing. Depending on the severity of these changes, we may even see a move toward alternative suppliers in the coming years.
Let’s look first at China: It’s no secret that pollution has been a big issue for a long time—particularly in the winter months when homes need to be heated. 2015 brought a devastating wave of pollution to Northern China—dubbed the Airpocolpse—causing the government to issue a red alert on the smog. Schools were closed and hundreds of flights were cancelled.
Since then reducing smog in China has become a top priority for the country. Technologies and innovations dedicated to tracking and reducing toxic emissions are in high demand. Strict regulations are being placed on many of the factories in China; and while the country is seeing a reduction in the toxicity of their air, these regulations are having a devastating effect on smaller factories and also on industries on an international level. These factories are being hit by frequent inspections and being forced to upgrade to more environmentally friendly machines that require shutdowns and high costs to implement. As a result many factories lay vacant—many more have had to shut down entirely.
Effective in late 2017, amid concerns of oversupply, the governments of Malaysia, Thailand, and Indonesia implemented an artificial supply cap on natural rubbers. Between them, these three countries produce 70% of the world’s supply of natural rubber. With the prices of rubber reaching all time lows, many rubber farmers are finding it nearly impossible to make ends meet. The International Rubber Consortium aims to counteract this with their Agreed Export Tonnage Scheme (AETS), which went into effect December 15th, 2017. And while this move may provide better quality of life for the farmers in these countries, the rising cost of materials coupled with the rising cost (and in some cases, the elongated timelines associated with) of manufacturing will certainly have a noticeable effect.
It remains to be seen how drastic the effect of these regulations will be, however the problems created by the regulations could very well spell opportunity for other countries. Countries with more relaxed environmental regulations may prove attractive enough for industries to invest in new factories. In general, clothing companies are the first in and first out of manufacturing countries. In recent years, we’ve been seeing more and more clothing coming out of Vietnam, this could be where the industry is heading. Regardless of what the future holds, these regulations spell change for the way tires are manufactured and that change will affect everyone in the industry.
Inside the Smart Factory
By Alex H Stone
By now, you’ve probably heard about GRI’s new specialty tire factory in Sri Lanka—a 40 million dollar, state of the art smart factory to be exact. But what exactly is a smart factory? GRI says their new factory—in addition to using solar power and environmentally-friendly waste management systems—incorporates IoT and AI technologies. But what exactly does that mean?
IoT stands for “Internet of Things” and it’s considered to be the driving force behind Industry 4.0 (also known as the 4th industrial revolution). The idea behind IoT is to have data shared across a whole network of machines so that tasks can be accomplished more precisely and efficiently.
By creating an interconnected network among all aspects of manufacturing, companies can monitor, analyze, and react to data gathered throughout the manufacturing process. Imagine a sprinkler system that knows when its going to rain, so that it can conserve water based on weather patterns. Or a factory that keeps track of the inventory of a certain part and automatically orders more of that part when supply gets low. Smart factories can even identify potential machine failures before they happen—minimizing shutdown time.
As the standards of living rise in countries that were previously known for low-wage labor, these technologies are becoming more and more attractive—despite the sizable capital investments required to get started with them. And though these machines can replace certain labor jobs, they also create new opportunities for skilled workers to oversee the operations of them.
However, putting an entire factory on a network does come at a considerable cost to cyber security. If a smart factory’s network is not adequately protected, a hacker could potentially gather a wealth of information about the products being produced and the resources and processes being used to produce them—they could even shut down the production of a factory entirely. Cyber security will definitely become invaluable to the manufacturing industry as smart factory technology spreads into industries outside of the tech world.
On the consumer end of things, smart factories are creating more opportunities for customization and flexibility. These integrated systems can easily adapt to changes in a customers order or easily accommodate customized products—all while keeping track of materials used and materials required. Smart factories are paving the way for a more personal and much faster manufacturing culture.
As these technologies trickle down from the tech world into other industries—ours included—we’ll begin to see big changes in the speed and efficiency in which things are produced. Getting exactly what you want will soon become a fast and easy process.
Chinese Tires: An Unlikely Story
by Alex H Stone
Have you ever wondered why so many of the products we use—tires included—are manufactured in China? It’s an interesting story that goes back almost 20 years, to the Clinton presidency. One of the big issues at the time—that’s 1999—was whether or not the United States should back China in attempting to join the World Trade Organization (WTO).
Critics of this move warned that the low costs of labor in China would cost many US workers their jobs—which turned out to be true. But experts agree, no one could have predicted the extent of China’s manufacturing prowess. In addition to low labor costs, the Chinese government lowered tariffs to make it easier for companies to import the materials they needed. Not to mention China’s more relaxed environmental regulations.
But, almost twenty years later, China’s tight hold on the tire industry may soon be coming to an end—and it seems to be a product of both the United States government’s interests and China’s own interests. It started in 2009, when President Obama placed a tariff on certain Chinese products—including tires. This move was partly to support the US manufacturing industry but specific considerations were made toward Chinese tires on account of safety concerns in regards to the quality of cheaper tires. And though the US tire market did see some improvement under these tariffs, other Asian manufacturing countries, such as South Korea, Thailand, and Indonesia saw their shipments double in value.
In June of 2016, the Chinese government announced plans to try and reduce their tire market by 40%. This is largely aimed at solving the problem of overpopulation within the tire manufacturing sector. They hope that through enforcing stricter factory and environmental standards, they’ll be able to eliminate some of the smaller producers. These smaller producers are the ones whose quality—and safety—are suspect.
There will always be manufacturers—of tires and and more—in China. But as China makes moves to protect and revitalize their air quality and hold factories more accountable for environmental safety, we will begin to see some of those manufacturers popping up in other countries.
What’s Going On With Nexen?
by Alex H Stone
One of Countrywide’s longtime suppliers, Nexen, has some big things going on to start the year off.
First, we’re excited to congratulate Nexen on receiving an award in the transportation category at the prestigious ‘Good Design Awards’ in 2017. The tire which received the award was their ’N’FERA AU7, which is an Ultra High Performance tire geared toward high end sedans. Also new for this year, Nexen’s Roadian HTX RH5 will be the OEM tire for the 2019 Ram 1500 Pick-up truck. And Nexen will be one of the official tire suppliers for the Pro 2 Formula Drift Championship this year.
Countrywide has been working with Nexen since the 80’s. Their factories produced some of the very first RubberMaster inner tubes and they continue to produce many of our RubberMaster products today. We’re excited to see their brand grow and prosper.
Guayule: Is It Finally Time?
By Alex H Stone
It’s no secret that almost all of our natural rubber comes from the same place: Southeast Asia. Given the importance of natural rubber—especially in its military applications—our government has long had an interest in finding a way to produce natural rubber domestically. What might surprise you, though, is that the tire industry and a few other parties have been working on it for close to a century now.
The guayule (pronounced why-YOU-lee) plant doesn’t look like much more than your typical desert shrub, but inside of its roots, there’s something very special: a sap that can be turned into natural rubber. It grows in desert climates—Arizona in particular—and the United States government has had its eye on it for a long time now.
During World War 2, the United States government launched what was called the Emergency Rubber Project. Given that our supply of natural rubber was in jeopardy, we planted guayule all across the deserts of Arizona and California. Once diplomatic relations stabilized, we abandoned the project. Why?
Well, the simple answer is convenience. Importing natural rubber is relatively easy and the prices for doing so are usually quite low. And guayule plants simply don’t yield much natural rubber. Though they take far less time than Hevea trees to grow, guayule bushes need to be destroyed to be harvested. And the rest of the plant—so far—isn’t good for much.
However, guayule may soon finally have its day in the sun. This year Bridgestone tires has teamed up with a company called Versalis to attempt to finally crack the case on this peculiar shrub. And they’re not the only ones. Coopertire and a company called Yulex are both looking at guayule as a source of domestically produced natural rubber. The government has provided these companies with a handful of grants—clearly excited by the prospect of a successful guayule genome.
The name of the game here is genetic modification. Scientists in all of these organizations believe that, using the same process we use with other crops, we’ll be able to grow larger more viable guayule crops—crops with yields large enough to justify the use of guayule-born natural rubber. They may even be able to alter other traits of the plant to make it more useful. It’s a time consuming process but the carrot at the end of the stick is quite bountiful: an end to the natural rubber monopoly.