Big Tires in Short Supply

[fbrdphreak]

http://www.nytimes.com/2006/04/20/business/20tire.html

Mining companies are complaining about a shortfall in the supply of the giant tires that go on large dump trucks and other heavy equipment. These outsize tires stand as tall as 12 feet tall and can spread 4 feet wide.

They are used prominently everywhere from the Canadian tar sands to open-air coal mines in the United States and China, but lately they have become almost as precious as gold and silver: prices have quadrupled for some of them in the last year to more than $40,000 a tire.
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The outsize tires have historically been a specialty business, so there was rarely an abundance of production capacity. Making a large tire requires a curing process in which the tire is cooled in a mold, and that can take as long as 24 hours. Factories normally produce just two to three large tires a day.

And with existing factories already running flat out, there is little hope for much increase in the supply of new tires anytime soon. At Michelin, the French tire company, its large-tire manufacturing plants have been "saturated," according to Prashant Prabhu, its president for earthmover tires. He said all of the plants were operating at full capacity 24 hours a day, or near that level in countries where labor laws restricted flat-out production.

"Our customers are very upset," Mr. Prabhu said. "We cannot accommodate them at the rate they want."

Michelin, together with Goodyear of Akron, Ohio, and Bridgestone and Yokohama, both of Japan, rank among the largest manufacturers of heavy tires.

In many ways, the tire shortage both reflects the soaring commodities prices and contributes to it. The price of copper, which is used in electrical wiring and pipes, has climbed 45 percent this year, closing at $2.9595 a pound on Wednesday. Nickel, used to make stainless steel, is up 37 percent during the same period, while gold is up 23 percent and zinc is up 65 percent.
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Michelin is investing $85 million to expand its tire factory in Lexington, S.C., a move that will eventually expand production there by 50 percent. It is also building a new $550 million plant in Campo Grande, Brazil.

These moves and plant expansions by other tire manufacturers, however, will do little to ease the tire shortage until late 2008 or thereafter. The heavy equipment used to make the tires is relatively difficult to procure, which means that the earliest any new plants could be operating is more than two years from now.
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Tire companies complain they are also squeezed by rising prices for raw materials, with natural rubber prices rising nearly sixfold, to about $2 a pound since 2002, the last weak period for heavy tire sales. High crude oil and natural gas prices are also adding a burden to tire companies, which use petroleum in large amounts to produce the carbon black needed for tire carcasses and threads.

See what you SUV drivers did!!!! :|