An apparent shortage of tires, due to tire plant closings as well as rising demand for low volume specialty tires exists, resulting in automakers paying higher prices while tire
makers gain pricing power.

Continental Tire’s Vice President of original equipment in the Americas, David O’Donnell,
admits they can’t keep up and are “at maximum capacity…all shifts are maxed out.”
To meet the demand, plants in Brazil and Illinois will be expanded and a new factory
built somewhere in North America. The expansions will help, but are not expected to be
in full production until 2013.
Automakers in the U.S. and Canada will buy 62 million tires for new vehicles this year,
forecasted by the consulting firm IHS Automotive. That’s an increase from 55 million tires
in 2010 (almost 12%) – by 2016, that number could rise to more than 79 million units.
Why the decline in tire factories? Before the recession, in 2006 and 2007, four U.S. tire
plants closed. More tire sizes and low-volume specialty lines reduced a standard tire
plant’s capacity and factories. This eliminated close to 71 million units in the U.S.

Now, the increasing costs of rubber, steel and other materials used in the process of
manufacturing the tires have tightened the supplies and driven the costs higher.
Meanwhile, tire manufacturers such as Continental, Michelin North America, Goodyear
Tire & Rubber Co. and others, have raised prices several times over the years to offset
these supply costs. This is a good indicator of what’s going on in the original-equipment
market.

History was made recently when the independent auto recycling industry and SGI
Salvage formed the Saskatchewan Automotive Recyclers Association (SARA). SGI,
established in 1945, has two distinct operations: 1) The Saskatchewan Auto Fund, the
province’s compulsory auto insurance program, driver’s licensing and vehicle
registration system. It does not receive money from, nor pay dividends to, the
government; and 2) SGI CANADA, whose business is that of selling property and
casualty insurance products, such as home, farm, business and extension auto. SGI has
a network of almost 300 independent insurance brokers and approximately 420 licenseissuing
sites in Saskatchewan.
At the organizational meeting, with the assistance of Steve Fletcher from the
Automotive Recyclers of Canada (ARC), a draft of the bylaws was reviewed and
approved, membership criteria established and an interim Board of Directors elected.
The goal is to have the corporation up and operating within one month, at which time
membership applications can be processed. SARA is utilizing the National Code of
Practice for Auto Recycling for their membership criteria.
Fletcher informed the gathering on activities of the national association, all of which will
be made available to SARA and its members. He added, “We expect that SARA will
make a formal application to join ARC in the (Summer), at which time SGI Salvage, one
of the founding Members of ARC, will step aside and allow the new association to
represent all Saskatchewan auto recyclers.”

Last week, ARA letters of support for the Massachusetts Right to Repair legislation were
presented to members of the Massachusetts Joint Committee on Consumer Protection
and Professional Licensure during a hearing for the legislation.
In the letters, ARA CEO Michael Wilson said: ” We strongly support the establishment of
an Act guaranteeing consumers ownership and access to information for the
diagnostic, service, and repair of their vehicles. This legislation will allow consumers and
independent repair facilities to access vital information to accurately repair or upgrade
a vehicle. The adoption of this Act will allow independent repair facilities to compete
on a level playing field, which would foster healthy and fair competition.”
Today, in order to diagnose, service and repair automobiles independent repair facilities
need information, tools and software from the original equipment manufacturers. In
many cases, repair facilities don’t have access to this information and consumers are
forced to have dealers service or repair their vehicles. As a result, consumers are too
often faced with longer wait times and significantly higher prices. This situation not only
impedes the consumers’ ability to access the repair facility of their choice in a timely
manner but also limits the opportunity of independent repair shops and automobile
recyclers to operate fairly in the marketplace.
“The Massachusetts Right to Repair legislation will give consumers in Massachusetts
alternatives to repair their vehicles and guarantee access to recycled automobile
parts,” said Wilson.

ARA members Andrew Chuckran of Chuckran Auto Parts, Tom Andrade from Everett’s
Auto Parts, Jeff Kantor of Car World and ARA At-Large Director, Bob Phelps attended
the hearing. “The hearing had to be moved to a larger room because there were so
many attendees, between 300 to 400, most of whom were proponents”, said Bob
Phelps. “The best statement of the day was from a legislator who said, if you are making
all the data available for a fee why are you spending millions of dollars to defeat the
legislation? Testimony put forth by both sides was interesting but the opponents did a
good job of confusing the issue”, said Phelps.

The coalition supporting the bill was happy with the show of support and outcome of
the first hearing.