Plastics and rubber - Industry Overview

US Industrial Outlook, Annual, 1994 by Raimundo M. Prat

Foreign trade is significant in the SR industry: total trade turnover exports plus imports) accounted for more than one-third of industry shipments in 1993. The favorable U.S. trade balance in synthetic rubber grew steadily during four consecutive years starting in 1989. Recession in major world markets, however, tended to depress export levels during most of 1992. Canada remains both the largest supplier and export market. Other major suppliers in 1992 were Belgium and Mexico.

Outlook for 1994

Industry shipments of synthetic rubber are expected to grow by 3 percent in 1994, largely as a result of expected increases in tire production and new applications in non-tire uses. Growth in demand for then-noplastic elastomers is expected to exceed 7 percent in 1994.

Long-Term Prospects

Growth prospects for the domestic synthetic rubber industry remain mixed, reflecting the industry's dependence on tire manufacturing. Demand for tire-related uses is expected to remain uncertain. Declines, however, will be partially offset by increased use of synthetic rubber as a plastic additive, as well as higher rates of material substitution (rubber compounds for plastic) in the auto industry. Exceptionally high growth rates for high value elastomers are expected through the end of the decade.

[TABULAR DATA OMITTED]

RUBBER PRODUCTS

This section includes SIC 3011 (Tires and Inner Tubes) and SIC 3069 (Fabricated Rubber Products).

Tires

The tire industry includes companies whose main line of business consists of the production of pneumatic casings, inner tubes, and solid and cushion tires for a variety of vehicles (passenger cars, buses, trucks, bicycles, farm equipment, and airplanes). Also included are tiring, camelback, tire repair, and retreading materials. The primary production elements are natural and synthetic rubber materials, and carbon black.

The industry shows signs of stabilizing after undergoing a period characterized by massive restructuring, the effects of recession in the domestic market, and consistently high levels of imports. With tire durability virtually pushed to what many consider the practical limit, industry strategy has shifted to servicing the fast-growing emerging markets for high-performance, light truck, and recreational vehicle (RV) tires.

INTERNATIONAL COMPETITIVENESS

International restructuring of the industry in recent years has brought about the formation of multinational companies, particularly in Europe and Japan. Among the advantages to be realized by the surviving companies are the reallocation of global resources to spread out R&D costs, and economies of scale across procurement, manufacturing, distribution and service.

Imports continued to outpace exports at a nearly 2:1 ratio in 1993. But a steady growth of exports, starting in 1989, has slowly cut into this negative net trade position since then.

The foreign trade sector of the industry is stable, as evidenced by several consecutive years when the ratio of combined exports and imports to overall industry shipments remained relatively constant. Trade turnover remains at about 30 percent of total industry shipments. Canada is now the United States' largest trading partner, absorbing 40 percent of total U.S. exports, while supplying about 30 percent of imports in 1992.