Cost advantage of Chinese tyres has ‘narrowed’, says Cooper
Although the United States tariff on imported Chinese consumer tyres is scheduled to end next year and import duties will thus drop from 29 to four per cent, Chinese manufactured tyres are not expected to regain the massive competitive advantage they once held over their US-made counterparts. During a quarter results conference call, Cooper Tire & Rubber chairman, chief executive officer and president Roy Armes commented that tyres produced in China held a 15 to 20 per cent cost advantage over locally produced tyres in the US market in early 2009. “Now it is in that 10 per cent to 15 per cent range,” he shared. Chief financial officer Brad Hughes added that the cost advantage for a landed tyre from China in the US was “moving towards” 10 per cent.
“The cost advantage of tyres produced in China has narrowed as both a result of US manufacturing becoming more efficient and Chinese production costs rising,” Hughes explained. “The costs include labour inflation, exchange-rate changes, ocean freight costs and other factors. Cooper has specifically added to our low-cost manufacturing in Mexico and improved our US plant efficiencies and we now have a more competitive and flexible manufacturing footprint.”