The year 2020 will go down in history as one of the, if not the, worst for the automotive industry – and by extension the tire & rubber sectors.
The year started with a downward outlook, as manufacturing and demand started to decline by mid-2019.
But things took a turn for worst with the outbreak of the Covid-19 pandemic early in the year, first in China and then globally.
As the year draws to a close, ERJ takes a look at the top 20 news stories of the year, many of which directly reflect the enormous impact of the pandemic on business.
Pole position goes to Michelin, which took over as the largest tire company in the world in 2019, ending Bridgestone’s 11-year reign at the top of the table. Propelled by a sales improvement of nearly 10%, Groupe Michelin reached the top of the annual ranking of tire makers with a revenue of $25 billion, sufficient to edge past Bridgestone, which slid to No. 2 at $24.3 billion. (Read more)
The year 2020 was a significant year for Continental, which is currently undergoing a major turnaround to respond to future mobility trends. The German group, which had already announced a 10-year restructuring measure in 2019 to save costs, had to further tighten the purse strings by doubling savings targets to €1 billion. Under the leadership of Nikolai Setzer since December, the group has signalled ambitious plans for its rubber technology group – including tire and ContiTech divisions. (Read more)
And Continental was by far not alone in the move to streamline and adapt its offerings. Facing an annual loss for the first time in about 70 years, Bridgestone has launched a so-called ‘mid-long term strategy’, which will see the Japanese corporation further focusing on ‘sustainable mobility and advanced solutions’. As part of this, the group has closed down two tire production plants this year and is looking to shed its Firestone Building Products subsidiary. (Read more)
Similarly, Pirelli is targeting savings of more than €510 million with a cost competitiveness initiative, launched as part of its 2020-2022 industrial plan earlier in the year. As part of the initiative, Pirelli is consolidating its production footprint by reorganising its Brazilian operations and converting production in Bollate, Italy, to high performance Velo bicycle tires. (Read more)
Sweden’s Trelleborg was another major rubber group to announce Covid-induced restructuring in anticipation of the long-term effects of the pandemic in certain markets. The group expects the costs of the reorganisation to amount to SEK700 million (€68 million) for the full year 2020, more than twice the SEK300 million announced earlier in the year. (Read more)
All in all, as the ETRMA put it in an October report, the European tire industry was hit by the Covid crisis “quite heavily and the situation is not improving.” (Read more)
The extent of Covid impact was also felt by key suppliers such as Trinseo and Arlanxeo.
Having underperformed over the past few quarters, and significantly hit by the outbreak of Covid, Trinseo is currently studying the divestment of its synthetic rubber business, which mainly supplies to the tire industry. (Read more)
Dutch-based Arlanxeo is also closing its 140 kilotonnes-per-annum (ktpa) neodymium polybutadiene rubber plant in Singapore by the yearend as part of efforts to “optimise resources and capabilities in its global NdBR production network.” The decision, according to Arlanxeo, is part of a broader global strategy in response to changes in the synthetic rubber industry. (Read more)
While the first half of 2020 was a real-life doomsday scenario for many players, particularly SMEs, markets did register a noticeable rebound particularly in the third quarter, before a second wave of Covid hit many markets in the final months of the year.
China, where the Covid crisis started in early days of the year, has in particular bounced back strongly with pent-up demand driving the automotive sector. (Read more)
Chinese tire maker Linglong even went as far announcing plans to build a fifth local tire factory in Changchun, Jilin, with a €628-million investment in March. The plant, to be completed in three phases, is set for full operation in 2025. (Read more)
In addition, the country has also set out an ambitious five-year plan for the rubber industry, which eyes, among other targets, an annual tire production of 704 million units and the recovery of 5 million tonnes of reclaimed rubber. (Read more)
Another major Covid-related development in the world of rubber was the staggering demand for rubber gloves, amid increased health and safety measures. Gloves makers, such as Top Glove and Hartalega reported record high profits, while Semperit hit pause on plans to sell its medical gloves business, at least for now. (Read more)
And Covid aside, the industry had other ongoing battles to fight, such as a looming ban on the use of rubber granules in synthetic turf.
The European Chemicals Agency (ECHA) and its two specialist committees are expected to propose a potential ban on the infill materials in their microplastics proposal to the European Commission early next year. The ban has been termed by ETRMA as ‘costly and disproportionate’. (Read more)
On a positive legislative note, the European Parliament approved a revision of the EU tire labelling regulation in May, a move that is expected to prompt innovation and increase consumer awareness. The new version, according to ETRMA, addresses the shortcomings of the existing regulation: the lack of market uptake of high-graded tires and low market surveillance by EU members. (Read more)
This list could go on, but for the sake of brevity, we close with two ERJ initiatives this year, which amid all the Covid headwinds, proved to be highly successful.
In August this year, ERJ introduced its first list of Top 10 Elastomers for Sustainability (E4S) projects. Warmly received by major industry players, the list was updated in November, with ExxonMobil’s speciality elastomers for tire innerliners topping the table. (Read more)
And last but least, ERJ’s Journey to Automation (J2A) Awards in September, shone a light on the great work going on around the digital transformation of tire-technology, manufacture, logistics and sustainability in the global tire industry. As the Overall Winner, Continental best encapsulated the spirit of the inaugural J2A Awards with its Conti C.A.R.E. (Connected, Autonomous, Reliable, Electrification) programme. (Read more)