Akron, USA (Rubber & Plastics) - Here, in a few words, is a summation of the rubber industry’s 2007: China, contracts, price-fixing, oil, buying and selling.

China continued to be at the forefront of much of the news. U.S. rubber companies felt the heat of competition from China, which also sucked up much of the world’s raw materials and helped cause shortages and higher prices in the West.

Speaking of words, the names Foreign Tire Sales and Hangzhou Zhongce became household names—at least in tire industry households—because of a huge tire recall.

Private equity companies tossed money at the rubber industry, hoping for bargains. About $1.5 billion of that went to the purchase of the Goodyear Engineered Products division.

Bridgestone/Firestone and the United Steelworkers settled on a contract, and Goodyear’s unionized employees got back to work after ratifying a new agreement at the end of December 2006 following an 86-day strike. Yokohama Tire Corp. got a new union contract, too.

Despite the firings, jailings and huge fines resulting from the price-fixing scandals of the past few years on the supply side of the rubber industry, the lesson went unlearned at some marine hose companies. Employees at several manufacturers were arrested after being accused of price-fixing on three continents.

The cost of doing business in the industry continued to trend upward. With oil hitting the $100-a-barrel stratosphere, the oil-dependent rubber industry experienced seemingly never-ending price increases for rubber, chemicals and just about everything else. Natural rubber prices skyrocketed.

The following are some of the events in the rubber industry that defined 2007.

Goodyear trades division for dollars

Private equity firm Carlyle Group wins the long-awaited auction of Goodyear’s Engineered Products division, for $1.5 billion. After a new contract with the United Steelworkers union is completed, Carlyle backs up its pledge to build, rather than break up, the newly named Veyance Technologies Inc. by earmarking as much as $20 million to upgrade, automate and add machinery at the firm’s North American operations. Veyance also turns an eye to China and its neighbors, as a region in which to expand its conveyor belt, rubber track and hose businesses.

Chinese-made tires subject of recall

The biggest tire recall since the Firestone/Ford Explorer event takes place, but there’s few similarities in the episodes. Union, N.J.-based Foreign Tire Sales Inc. gets into an ugly fight with its Chinese supplier, Hangzhou Zhongce Rubber Co. Ltd., and tells the National Highway Traffic Safety Administration it believes about 450,000 defective light truck tires have entered the market. The number later is cut to 255,000, but ultimately only 7,000 are recovered. FTS and Hangzhou continue to fight it out in court.

Senators seek speedier recalls

Foreign Tire Sales Inc.’s struggle to meet its government-ordered recall of 450,000 Chinese-made light truck tires prompts several U.S. senators to call for a faster recall and more oversight on Chinese imports. Experts in both Chinese trade and the tire industry see politics at work and don’t expect government scrutiny of either tires or Chinese goods to increase long term.

And speaking of reàer, customer satisfaction campaigns

Goodyear follows the positive news of a solid financial report for three quarters with the announcement of a ôcustomer satisfactionö campaign, in which it will replace 400,000 tires.
The company reports tread separation with a small number of the tires, used on older pickups and mini-vans, has caused some accidents, with one fatality. Goodyear takes pains to say the action is not a recall, because it declares there is nothing wrong with the tires being replaced.

Price-fixing scandal erupts in marine hose

Eight men are arrested and a number of marine hose manufacturers tainted over a scheme to rig bids, fix prices and allocate market shares in the marine hose business in the U.S. Two senior executives at a Trelleborg A.B. subsidiary plead guilty and are sentenced to 14 months in jail, and others are indicted. Besides Trelleborg, those charged worked for PW Consulting (Oil and Marine) Ltd.; Dunlop Oil & Marine Ltd., Parker ITR S.r.l., Bridgestone Corp. and Manuli Rubber Industries S.p.A.

Trade groups say ôuh-uhö to state tire reg

Three major tire and auto aftermarket associations turned thumbs down on a move by Maryland legislators to create a program and rating system to promote the sale of fuel-efficient replacement tires in the state. The bill would mislead consumers, argues the Tire Industry Association and the Specialty Equipment Market Association. The Rubber Manufacturers Association declares a national consumer education program on tire rolling resistance would be far more useful to motorists than a patchwork of state fuel efficiency laws.

Strange bedfellows—Titan and the USW

Titan International Inc. and the United Steelworkers union together ask the U.S. government to impose duties on imported Chinese off-the-road tires, and the request gets traction.
The company and union’s antidumping and countervailing duty petition with the U.S. International Trade Commission and the U.S. Department of Commerce claims OTR tires from China are being subsidized and dumped in the U.S. They ask the government for duties to offset the imports, and the ITC commissioners pave the way for an investigation.

N.C. shows them the money

North Carolina offers largesse to Goodyear in the form of a bill tailored to encourage investment in the company’s Fayetteville, N.C., plant, which doesn’t sit well with the governor, nor Bridgestone/Firestone, which also operates a factory in the state. In a fast two-step, the governor and General Assembly negotiate and approve a compromise bill that makes both tire makers happy.

Act puts recyclers in foul mood

A federal appeals court ruling on Clean Air Act rules governing industrial boilers and incinerators put recyclers and supporters in a tizzy. The court rejects the U.S. Environmental Protection Agency’s regulations concerning the use of tire-derived fuel, meaning more stringent standards must be followed. Environmental groups love the decision. TDF and recycling proponents cry that it will destroy the industry.

The perfect ruling: Nobody likes it

NHTSA issues a final rule on the confidentiality of early warning data but, funny, it looks just like the last one a federal court tossed back to the agency to change. Nevertheless, the regulation succeeds in getting consumer advocate Public Citizen and the RMA to agree on something—neither think much of it. Onto more court fights.

Goodbye Lancaster Colony

First Lancaster Colony Corp. sells its Koneta automotive rubber accessory plant. Then it divests two automotive floor mat operations. The end result: Lancaster Colony’s departure from the rubber business.
A private equity company, KN Rubber L.L.C., which itself buys the former NRI Industries rubber business in Canada a month earlier, takes on the Koneta operation. Pretty Products L.L.C. is the new owner of the other business.

Everyone wants a piece of Metzeler

Wynnchurch Capital, Metzeler and Cooper-Standard Automotive Inc. rub shoulders in some major automotive-related deals. Chicago-based private equity firm Wynnchurch Capital buys automotive sealing systems maker Metzeler’s North American division, while Cooper-Standard acquires most of the firm’s European business.
Not finished yet, Wynnchurch in October announces it is acquiring GDX International Holdings Ltd., the former vehicle sealing products arm of GenCorp Inc.

Goodbye Chapter 11

Foamex International Inc. exits Chapter 11 bankruptcy court protection, and Federal-Mogul Corp. isn’t far behind. Foamex and its primary operating subsidiary emerge with a promise to pay off creditors. Federal-Mogul, which filed for protection in 2001 to separate its asbestos liabilities from its operating costs, gets court confirmation of its reorganization plan.

Putting experience to work

Brendan Cahill, a veteran of the silicone, thermoplastics and plastics industries, and his wife, Amy, launch a liquid silicone rubber molding business aimed primarily at the health care market but with the capability to serve other sectors. PTG Silicones Inc. opens an automated molding operation at a facility in New Albany, Ind.

BRC finds a friend in Sacred

Rubber goods makers BRC Rubber & Plastics Inc. of the U.S. and Sacred S.A. of France share a lot of similarities, and add one by forming an alliance. The companies start by studying each other’s best practices in technical and manufacturing areas and then get together on their first cooperative project. They hope this could be the start of something big.

Cooper gets partner in Mexico

Cooper Tire & Rubber Co. forms a sales and distribution joint venture and signs an off-take production pact with a Mexican tire maker covering broadline passenger and light truck radials.
The venture, Cooper Tire & Rubber Co. de Mexico S.A. de C.V. in Queretaro, Mexico, brings Cooper and Corporacion de Occidente S.A. de C.V. together as equal partners.

G&E, ITI expand on long relationship

After years of doing business together, Goldsmith & Eggleton Inc. and Industrial Transportation Inc. join together to form a polymer reprocessing company, Reliable Polymer Services L.P. The venture, owned equally by the partners, operates a plant in an industrial park in Port Arthur, Texas, in the heart of SR-production country.