Truck and Bus Tires from China - USITC | United States ...Truck and Bus Tires from China Inv. No....
Transcript of Truck and Bus Tires from China - USITC | United States ...Truck and Bus Tires from China Inv. No....
Truck and Bus Tires from China Inv. No. 701-TA-556 and 731-TA-1311 (Final)
January 24, 2017 Presentation at the
United States International Trade Commission
Andrew Szamosszegi
202-955-6817
Themes
Key Themes of Injury Analysis
• The domestic industry is at f u l l capacity.
• Subject imports compete largely with each other, third country providers of lower priced tires, and retreaders.
• There is very limited substitutability between the vast majority of domestic TBT and the vast majority of subject imports.
• The domestic industry sells differentiated products and bundled services that are fundamentally different f rom the subject tires.
• The domestic industry is in a strong financial position and expanding.
• There are significant differences between the TBT market and the PVLT tire market.
2
Conditions
Imports Are Necessary to Meet Demand
80 i Thousands of Tires
70
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
—Domestic Capacity —Total U.S.Market Shipments
Source: Modern Tire Dealer Fact Sections (various issues).
Conditions
TBT Capacity is Increasing while PVLT Capacity is Flat
140
120
100
80
60 \
40
20
0
Daily Capacity 2001 = 100
•Passenger and Light Truck Tire Capacity
•TBT Tire Capacty
~i r i r t 1 1 r
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Modern Tire Dealer Fact Issues 2001-2017.
Conditions
Imports Were Required to Meet Rising Demand over the POI
0 Thousands of Tires
2013 2014 2015 2016
• Domestic Capacity • Total U.S. Market Shipments Source: Modern Tire Dealer Fact Section. Data on 2016 shipments are not yet available. Note: M T D calculates nameplate capacity on a daily basis, while the Commission collects average production capacity on an annual basis. A comparison between the two is therefore inappropriate.
Conditions
80
Imports Are Necessary to Meet Demand Thousands of Tires
(Daily) Imports
(Millions of Tires)
16
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
• Imports —Domestic Capacity —Total U.S.Market Shipments
Source: Daily capacity and shipments from Modern Tire Dealer Fact Issues. Import data, on an annual basis, from USITC DataWeb for commodity codes 4011.20.1015 and 4011.20.5020.
Conditions
Subject Share of Imports Was Flat over the POI
\Share of Import Quantity
2013
62% 58%
2014 2015
• Subject • Nonsubject
2015 2016 Jan - Sep
Source: Prehearing Report Table C - l . 7
Conditions
Declining Rubber Prices Drove TBT Price Declines
Rubber Price (Cents per Pound)
300
250
200
150
100
50
0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Source: Singapore Commodity Exchange via Index Mundi. Rubber, No. 3 Smoked Sheet (RSS3), Singapore Commodity Exchange, 1 s t contract.
Jan-15 Jan-16
Conditions
Producers Pass Through Increases in Raw Material Costs
Margins: Our Confidence
Price vs Raw Materials *"< Trailing 4 Quarters
Note: This is
price only;
excludes the
benefits of mix
Q2 2016
GOODfYEAR
History has shown that we are able to protect absolute margin dollars during periods of rising & falling raw material costs
(a) Raw Materials are changes w n u i prior year and ecrJudea raw material coit iavlrwj; i l l data excludes Venetuela. 67
Source: Goodyear 2016 Investor Day Final Presentation, September 15 2016, at 67.
Conditions
Trucking Tonnage Increased over the POI 2000=100 Index of Trucking For-Hire Tonnage
142.4
125.9 133.5
1 1 5 7 113.6 i n . 9 113.3
Source:: ATA American Trucking Trends 2016 (Figure 3-3) and ATA Press Release, "ATA Truck Tonnage Index Jumped 8.2% in November" (Dec. 20, 2016).
Conditions
Heavy Truck Sales Increased over the POI
0 n I 1 1 1 1 1 f 1
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Federal Reserve Bank of St. Louis. Motor Vehicle Retail Sales: Heavy Weight Trucks, Monthly, Seasonally Adjusted Annual Rate. September 2016 is a preliminary estimate.
Impact
The Overall Tire Industry is Healthier Now than during the PVLT Investigation
Thousands
59.7 59.1
Employees in the Tire Industry
59.3 P V L T Investigation
(Full Years)
53.9 ^ n 53.6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bureau of Labor Statistics. Employment in Nondurable goods: Tires (NAICS 32621), seasonally adjusted. Values shown are the annual averages of the monthly data.
2016
12
Impact
Stock Prices of TBT Firms Have Risen
\j n i 1 1 i r
1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/20
Bridgestone Michelin Continental Goodyear Titan's Index Source: NASDAQ, daily close/last price. Labels at right are the percent change from 1/2/2013 to 1/12/2017. (Bridgestone and Continental adjusted for stock splits on 10/17/2013 and 12/24/2013, respectively.) Dow Jones Automobiles & Parts Titans 30 Index (via Google Finance). This index includes at least Bridgestone and likely other tire producers.
Impact
The TBT Industry is Even Healthier than the PVLT Industry was
25%
20%
15%
10%
5%
0%
Operating Income /Net Sales
12.9%
9.2% 10.1%
2012 2013 2014 2015 PVLT
Source: USITC Inv. No. 701-TA-522 and 731-TA-1258: Certain Passenger Vehicle and Light Truck Tires from China
(Final), Publication, Table C - l . 14
Impact
TBT Profits Exceeded Those in Other Industries
20%
15%
10%
5%
0%
Operating Income /Net Sales
2013 Truck & Bus Tires — Computers & Electronics — Furniture — • Motor Vehicles Wood Products
Source: Bureau of the Census, Quarterly Financial Reports.
2014 •All Manufacturing •Electrical Equipment Machinery
-Nonmetallic Minerals
2015 Aerospace Fabricated Metals
•Miscellaneous •Primary Metals
15
Volume Effects
Imports Are Necessary to Meet Demand 80 Thousands of Tires
(Daily ) Imports
(Millions of Tires)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Imports -Domestic Capacity -Total U.S.Market Shipments
Source: Daily capacity and shipments from Modern Tire Dealer Fact Issues. Import data, on an annual basis, from USITC DataWeb for commodity codes 4011.20.1015 and 4011.20.5020.
16
16
Volume Effects
Subject Share of Imports Was Flat over the POI
100% ~\Share of Import Quantity
90%
2013
Source: Prehearing Report Table C - l .
62% 58%
2014 2015
• Subject • Nonsubject
2015 2016 Jan - Sep
17
Volume Effects
PVLT Imports since the Orders
16
14
12
10
8
6
2
Millions of Tires
U.S. Monthly PVLT Imports Preliminary & Final Determinations
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
—China — R O W
Source: USITC DataWeb, monthly 2006 through November 2016, using codes identified in USITC Publication 4545, "Certain Passenger Vehicle and Light Truck Tires from China," at 1-14. 18
Price Effects
Rubber Prices Decreased More than Tire Prices over the POI
120 i index, Jan 2013 = 100
100
80
60
40
20
0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
—Tires (includes OTH) —Rubber Source: Tire price: Bureau of Labor Statistics Producer Price Index: Tire manufacturing, except retreading, Truck and bus (including off-the-highway). This price series is representative of domestic producers' quarterly shipments AUVs found in the confidential pricing data. Rubber price: Singapore Commodity Exchange via Index Mundi. Rubber, No. 3 Smoked Sheet (RSS3), Singapore Commodity Exchange, 1 s t contract.
Price Effects
Rubber Prices Decreased More than Tire Prices over the POI
Domestic Tires Subject tires Nonsubject tires Rubber Oil
Source: Tire price: Bureau of Labor Statistics Producer Price Index: Tire manufacturing, except retreading, Truck and bus (including off-the-highway). Import AUVs: USITC DataWeb for commodity codes 4011.20.1015 and 4011.20.5020. Rubber price: Singapore Commodity Exchange via Index Mundi. Rubber, No. 3 Smoked Sheet (RSS3), Singapore Commodity Exchange, 1 s t contract. Oil price (daily): Brent crude, Intercontinental Exchange (using prices from 1/4/2013 and 9/30/2016).
Attribution
Declining Raw Material Prices Cause Tire Prices To Decrease
Margins: Our Confidence GOOD/YEAR
History has shown that we are able to protect absolute margin dollars during periods of rising & falling raw material costs
(a) Raw Materials are changes versus prior year and excludes raw material COR swtnfs; all data excludes Venetuela. 67
Source: Goodyear 2016 Investor Day Final Presentation, September 15 2016, at 67.
Attribution
Heavy Truck Sales Declined in 2016
Thousands, SAAR
500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Federal Reserve Bank of St. Louis. Motor Vehicle Retail Sales: Heavy Weight Trucks, Monthly, Seasonally
Adjusted Annual Rate. September 2016 is a preliminary estimate.
Threat
No Vulnerability: TBT Industry is Even Healthier than the PVLT Industry was
25%
20%
15%
10%
5%
0%
Operating Income /Net Sales
12.9%
9.2%
2012 2013 2014 2015 PVLT
Source: USITC Inv. No. 701-TA-522 and 73 l-TA-1258: Certain Passenger Vehicle and Light Truck Tires from China (Final), Publication, Table C - l .
Threat
250 Index 1/2/2013 = 100
200 ]
150
100
50
No Vulnerability: Stock Prices of TBT Firms Are High
POI
0 1/1/2012
+ 118%
+73%
1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/20
•Bridgestone Michelin Continental Goodyear Titan's Index Source: NASDAQ, daily close/last price. Labels at right are the percent change from 1/2/2013 to 1/12/2017. (Bridgestone and Continental adjusted for stock splits on 10/17/2013 and 12/24/2013, respectively.) Dow Jones Automobiles & Parts Titans 30 Index (via Google Finance). This index includes at least Bridgestone and likely other tire producers. 2 4
Threat
120%
100%
80%
60%
40%
20%
-20%
-40%
-60%
TBT Demand in China: Truck Production in China is Growing
Medium and Heavy Truck Production in China
Year on year change (of 3-month moving average)
li I,I
'"I I •
i i .i
II 1
II
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: China Association of Automobile Manufacturers, via Haver Analytics.