By Gerald R Potts:
The last five decades of the US Tire Industry was quite eventful and marked by a series of mergers and acquisitions involving mostly foreign players who were far ahead in adopting advanced tyre manufacturing technologies. Today, the tire industry in USA is the largest of any in the world and its future will be similar to what will be seen in the rest of the world, since world tires are now similar in construction and operation and depend more upon vehicle use than nationality.
For me the US Tire Industry became a reality in June, 1970, when I graduated with a newly minted Ph.D. degree in mechanical engineering that emphasized vehicle and tire dynamics, and reporting for work at Firestone Central Research Laboratories to determine the dynamic response properties of radial tires when impacting road discontinuities. The US Tire Industry was the largest of any in the world and radial ply tires were on-the-horizon for the US tire markets, verging upon acceptance by both the OEM and replacement tire customers.
Little did we know that, since the US tire industry was 20 years behind the rest of the world in seeking and adopting more modern tire technologies such as the radial ply tire, the US Tire Industry, the largest in the world, would soon be roiled by mergers and acquisitions involving mostly foreign tire makers who were far ahead in adopting such advancements in tire technology, thus transforming the US Tire Industry into the Tire Industry in the US.
In 1970, the US Tire Industry produced almost 100% bias ply tires for US consumption, as dictated by the US Auto Industry. Auto makers stressed the importance of a smooth ride for their vehicles rather than superior handling, low rolling resistance, and long tread life offered by the radial tire construction. But even more important for the auto companies was a low cost for their purchase of OEM tires. Price competition and the maintenance of several (then five) US OEM tire suppliers were most important to assure continued supply in case of labour disputes or other interruptions in supply from any single tire company.
For tire companies, it was most important to maintain market share in supplying OEM tires to maintain supply volume, with coincident low production costs for such high volume, and to later generate replacement opportunities when the original tires wore thin. The latter was most important for profits since replacement sale margins to individual customers were greater than for high volume OEM customers. Postponement of higher profits until the original tires wore out was a disadvantage that tire companies were obliged to endure in, but after one cycle of OEM supply and replacement sale,the dual sale process seemed instant and continuous.
One consequence of the continued emphasis upon bias tire fitment on US automobiles was technology stagnation within the tire industry. Whereas USA tire companies’ R&D programs consisted of chemists and compounders “cooking-up” new rubber compounds then testing them on wear tests with a fleet of vehicles, the Europeans and Japanese were analyzing and experimenting with radial tire constructions in a variety of tests including endurance, wear, force & movement and rolling resistance, thus realizing gains in whole new tire production and test technologies that turned out to be necessary for the achievement of radial tire endurance and wear properties that they developed then and that we enjoy today.
During the mid 1960’s, B.F. Goodrich decided to break into the production and sale of radial tires and made the investment into two-stage building equipment required for making radial tires, looking for first-to-market advantage over the other US tire companies. In 1965, they advertised and produced such radial tires claiming, “It’s the radial age,” pushing for replacement as well as OEM sales. But, auto companies were not ready for radials at that early time and individual consumers hesitated to make the jump to radials since auto companies did not recommend them and the price was significantly higher than the OEM replacement. This move to radials eventually cost Goodrich its OEM sales market, which further cut its replacement sales and Goodrich began to look for a buyer of its tire company.
Auto companies objected to the harsh ride of radial tires at city driving speeds and claimed that they would need to design and build new suspensions for radial tires to be acceptable to their customers, although no such suspension had yet been demonstrated to eliminate the harshness problem.
After Goodrich’s failure to succeed with its lone entry into radial tire production, the other US tire makers were hesitant to make a similar move. Instead they invented the belted-bias tire, which approximated the radial in that it consisted of a two-ply organic cord body and a high modulus two-ply fiber glass belt with both the body and belt plies laid at the same bias angle, which was essentially the same as other bias ply tires of that time. Thus, it was still a bias ply tire, but with a belt. Features of this construction were good ride and longer tread life (improving from 12,000 miles to 20,000). From the tire companies’ point of view, the belted-bias tire was only a little higher in cost to build, mostly due to the material costs, because the same tire building equipment as was in use for making bias ply tires could then be used to build belted-bias tires.
Goodyear made-out very well in the belted-bias market with their PolyGlas tire, even building significantly increased OEM market share over their competitors. This turned out to be important later for it allowed Goodyear to build their cash resources for buying radial tire building equipment. This was most difficult for the tire companies with the slim profit margins dictated by OEM auto company customers, for price competition is really just a race to the bottom resulting in barely any profit or cash build-up. The danger of price competition is that whoever offers the lowest price makes the least money, meaning he has the least for investing in future products.
Since Fred Donner in 1958, GM’s leadership had been dominated by financial managers that ran the company “by-the-numbers,” so success was measured exclusively by profits and returns-on- investments rather than product performance or quality. Both financial and product considerations are important together; either at the expense of the other is unsustainable in the business world. This was demonstrated at GM by both Billy Durant (car guy & founder) in 1920 and Fred Donner – Roger Smith in the 60s – 90s. Now GM’s Chairman and CEO, Mary Barra, is educated both as an engineer and numbers manager and is paying attention to running New GM with both in mind.
“By-the-numbers” produced, the GM-10 car (Olds Cutlass Supreme, Buick Regal, Pontiac Grand Prix, Chevy Lumina) was run year after year into the mid 1990’s to minimize capital spending for new assembly line equipment. Cutting costs was recognized as the principal way to improve profits in the auto industry since price increases are difficult to impose without some corresponding improvement in value and running the same car year after year does not improve value.
In contrast to this management method, European and Japanese auto companies were being run by engineers with financial back-up, and emphasized vehicle performance as well as quality. Radial tires had become the norm in Europe from the late 1950’s due to improved handling as well as low rolling resistance necessary for improved fuel economy in response to high gasoline prices. In fact, low gasoline prices in the US was the single most important reason for stagnation in vehicle and tire development. Cheap gas required no change in vehicle form, so the old formula was run over and over, until foreign auto companies introduced the “world car” concept that offered the same vehicle frame and running gear with different body shapes for various countries. That idea was necessitated to economize on vehicle design and to realize economies of scale in parts procurement. But, eventually, high gasoline prices drove these changes. The price of crude oil on the world market was about $3.00/bbl in 1972, increased to over $12/bbl in 1973, and has never gone back to the 1972 level since then. In fact, it has gone to a high of $146/bbl, but has fluctuated in a range of $40 – 100/bbl with today’s price in the mid $50/bbl. These increased prices required attention to fuel economy; light weight cars and radial tires became the continuing prescription.
During that same time period, in the mid 1950’s and all through the 1960’s, Mr. Jacques Bajer, himself a European import from France with knowledge of the Michelin Tire Co., was a Ford Motor Co. employee in Dearborn, MI, and took it upon himself to set-up a “skunk-works” within Ford to study how tires affect vehicle ride and handling. He found that tires needed to be more uniform and should be of radial construction to provide superior handling and long life. His experimental tire uniformity machine was the first in the industry to measure both radial and fore/aft force variations (rather than geometric run-out) and became the forerunner of every TUG and TUO machine that are routinely found in tire factories today.
Conversion of Ford to use radial tires proved more difficult due to the need to equip the vehicle with a suspension that was tuned to conform to the unique dynamic response requirements of the radial ply tire. He was eventually successful in promoting an offering of rebranded Michelin X tires by Sears Roebuck Co. for the replacement market in 1966 and as original equipment on the 1969 (and later) Lincoln Continental MK32. It was a hard sell, but there was no turning back. In hindsight, while, at the time, the US tire industry was unsympathetic and actively campaigned against both Jacques and his work, today they might wish that he could have broken through sooner and brought the tire industry kicking and screaming into the modern world.
Help soon arrived in the early 70’s in the form of newly mandated US C.A.F.E (Corporate Average Fuel Economy) laws favouring the use of radial ply tires in a big way, especially in 1974 and 75, with OEM fitment of radials on most American cars. Of course, the fuel shortage of 1973 also played a part as an added incentive in the sudden change-over to radials.
Foreign cars that were being imported into the US, later being assembled in the US, were smaller, lighter, and of better quality and performance than those being offered by US-based auto companies, and they were equipped with foreign-made radial tires. They were quickly appreciated and adopted by discriminating the US customers, thus cutting into market share and profits of both the US auto and tire makers. This forced the US auto companies to follow suit and produce their own world-cars sporting uni-body construction and, of course, radial tires. Foreign cars imported into the US gave foreign tire companies incentive to locate tire store offerings and, eventually, tire plants in the US to service the eventual need for replacement tires on such foreign cars, cutting further into the US tire company finances. The US auto makers had finally begun to take foreign competition seriously.
This rapid change to radial ply OEM tires led to difficult financial times for the US tire companies, since the existing plants were equipped for only bias and belted-bias tire production. Large investments in new tire building equipment were required and many plants were closed by the US tire makers to reduce expenses, seeing that reduced demand for bias tire production would be required. But further than that, OEM prices to auto makers were still set at low profit margins, as required by the auto makers. Thus, auto customers received the benefit of better tires, but the tire companies paid the bill. And tire companies received another lash in that the radial OEM tires would not need to be replaced until 40,000 miles rather than the 20,000 for belted-bias tires — a further financial blow.
In fact, the OEM radials generally did not run the full 40,000 miles, as expected, since, although the US tire companies had general knowledge of how to build radial tires, the first several years of output suffered endurance problems and many required replacement well before wear out due to separation of the steel belt within the tire structure producing a raft of warranty claims and lawsuits in the case of accident causation by the belt separation.
After six years of such warranty claims, Firestone stopped honouring warranty claims and tire failure complaints began to pile-up at NHTSA (National Highway Traffic Safety Administration) and although other companies also had tread separation problems, Firestone’s complaint pile was much higher than any other company, which prompted a recall of the Firestone 500 radial tire in 1978. Such problems were very costly to Firestone and they began to look for aggressive cost savings. In 1979, John Nevin was hired as Firestone’s CEO, purposely as an outsider to make difficult decisions in slimming the company by closing many plants, cutting staff, reorganizing the company, and finally selling Firestone to Bridgestone in 1988.
Other smaller OEM tire companies were in a similar situation. Goodrich had quit the OEM market and needed to sell the tire company. Uniroyal was looking for cost savings and wanted to increase OEM production to cut unit costs. Uniroyal and Goodrich merged in 1986 becoming Uniroyal Goodrich Tire Company, which was subsequently purchased by Michelin in 1990. General Tire was the smallest, wanted to stay in the tire market, but could not afford to compete and was purchased by Continental Tire in 1987. Nearly every year from 1986 – 1990 brought news of another US tire company being purchased by a more modern foreign tire company. Goodyear was the only major US OEM tire company to weather the financial storm and succeed in remaining a US-owned tire company, even supporting and expanding its overseas operations and R&D center in Luxembourg. Cooper Tire is the lone survivor in the smaller tire companies serving the replacement-only market.
The US tire companies were caught in a vice between low OEM prices yielding almost no profit and long waits and low volumes of radial tire replacements causing long stretches of low income, meaning scarce cash for plant modernization or product improvements. So, most of the US tire companies were gobbled up by better prepared foreign tire companies within a four-year period at the end of the 1980’s. The new foreign owners pumped billions of dollars into the US plants to modernize and update radial tire production to meet new world standards, which had advanced far beyond what was in play in the US at that time. Since then, there is not only the world car but also world tires.
US tire production has been mostly stable since 1990, with one exception occurring in 2000 with the spurt of Firestone ATX tire failures on the Ford Explorers resulting in Firestone recalling over six million tires. Most of these tires had been manufactured in the early 1990’s and would fail near the end of tread life under conditions of low inflation pressure, heavy loads, hot climates, and highway speeds. Ford was seemingly complicit in these problems since they specified 26 psi inflation pressure for ride comfort while the prevailing tire pressure had moved to 35 psi for fuel economy and load support in other cars of that period. These tire failures were particularly noteworthy since violent car crashes with loss of life resulted in some cases. For instance, when a rear tire failed, the vehicle could be pulled sideways, the rim could dig into the road surface and flip the vehicle into a roll-over crash and occupants could be expelled and rolled-over.
At the time of the recall, Bridgestone owned Firestone and withstood the financial costs of settlement of these cases. NHTSA has since created FMVSS 139 for more rigorous endurance testing of radial tires, Ford has improved the stability of the Explorer SUV, and specifies 32 — 35 psi inflation pressure, and the failure problems have abated. Ironically, the Firestone tires that were failing on Ford Explorers in the late 1990’s would have passed the new FMVSS 139 tests, but a long tread life requires a long structural life as well and operating conditions for the Ford Explorer with 26 psi inflation pressure might not produce such a long structural life. Said another way, Firestone simply made tires with too much tread life, for if they had worn out sooner, they would have been replaced, unnoticed, prior to structural failure.
With all this troubled background in the US tire industry, one may wonder what happened that was good for tires during this time. Most improvements have been in decreases in rolling resistance. In 1982, improved high vinyl S-SBR, called “Cariflex,” was introduced by Shell in Dunlop’s Elite European tire line. In the same year tin-coupled polymer S-SBR was developed by Bridgestone in Japan. In 1992–95 green tire silica-silane rubber reinforcement was advanced by DeGussa/Rhone – Poulene/Michelin in Europe. No such major breakthroughs have occurred in the 2000’s. Plus-sized tires with very low aspect ratios of 25 – 40 have come to the market, but these are automobile styling changes and tire performance and fuel economy degrade with such tires. Winter time chuck-holes also break or bend many plus-sized rims when low aspect ratio tires bottom-out when striking the edge of a chuck hole.
Future Tire Industry Work
The future of the US tire industry is similar to what will be seen in the rest of the world, since world tires are now similar in construction and operation and depend more upon vehicle use than nationality. Electric cars can impose harsh operating conditions as drivers run the cars harder than internal combustion engine (ICE) cars. Electric cars can out-accelerate ICE cars and are frequently driven in a more aggressive style to enjoy such performance. High-performance tires are typically fit on these cars with hi-grip tread compounds resulting in rapid wear.
As autonomous vehicles (AV’s) become a reality, smart tires will become essential to detect changes in a tire’s “tactile-feel” of the road since human sensitivity of traction loss will be absent from the control-loop.
AV’s present a larger disruption to the auto industry than to the tire industry. Since passenger cars currently sit idle about 80% of the time, a fleet of AV’s could be in constant circulation providing rides on demand and making car ownership unnecessary; however, miles travelled may remain constant, thus requiring the same number of tires as are used today. So, it is not to fear. Tire company jobs will still be required, even if we only need 20 – 40% of the number of cars that auto companies make and sell today.
It is an interesting aside that commercial parking lots will be quite negatively affected, especially airport parking structures, many of which have been recently built. People will arrive in their AV’s, which will then be dispatched to other travels instead of heading for the parking garage. Uber and Lyft are already performing this service for passengers, and this is only the beginning.
Perhaps the biggest problem for the tire industry will be filling jobs, for what new graduate wants to work for a tire company that is very hot and makes round rubber objects that have been around forever and (seemingly) never change, when you could go to work for a high-tech company like SpaceX, Google, Apple, or NVidia and enjoy many work comforts as well as high monetary and personal rewards in creating new technologies. That is a tough problem to solve, except that it may have a simple solution in requiring high salaries to attract highly trained employees to work jobs ranging from R&D scientist to plant technician assuring tire production machine operation. There certainly will be no scarcity of jobs and opportunities, only a scarcity of willing applicants. It is an interesting time and the lowly, down-to-earth tire will still be the basis for society’s continued progress. New problems will emerge requiring new solutions in the operating characteristics, structures, and materials that go into tire productions.
1. Keller, Maryann, Rude Awakening, William Morrow & Co., New York 1989
2. Walter, Joseph D. “French Revolution,” Tire Technology International, Show Issue 2010
3. Personal conversations with Joseph D. Walter 2017
4. Personal conversations with Jacques Bajer 1972 — 2017
5. Kaplan, Steven N., Mergers and Productivity, University of Chicago Press 2000 / Rajan, Raghuram, Volpin, Paolo, and Zingales, Luigi, “Eclipse of the US Tire Industry,” Chapter 2 of the Volume Mergers and Productivity
Footnote with the author’s photo
A world renowned tire technologist Dr. Geralad P Potts has authored a number of technical papers and patents and has participated in numerous technical committees within the Society of Automotive Engineers (SAE) and the American Society of Testing and Materials (ASTM). He now serves as Principal in GRP Consulting, specializing in tire and vehicle dynamics. Dr. Potts received a Lifetime Achievement Award at the Tire Technology Exposition and Conference, Cologne Germany in 2014.