Singapore Rubber Plant a Warning for Price Hikes

The fact that the world’s leading synthetic rubber company Lanxess (Australia) has brought forward its plans to build a new butyl rubber facility in Singapore is a strong message for all Australian companies relying on rubber components to maximise this premium.

More so, it is the planet’s worst kept secret that construction of this US$575m plant is being hastened to help serve the rising demand for tyres. This demand is being fuelled by rapid economic growth in countries such as China and India, so the astute companies in Australia will understand how strongly such changes will impact on their economy.

Every single industry is affected by tyre prices, so the importance of maintaining every single tyre has never been clearer.
And the recognised tyre dealerships around Australia serving the transport, logistics, courier, construction and mining sectors and are now under greater pressure to provide more than just a simple tyre changeover service.

Australia’s only tyre lifecycle management specialist company, Bear’s Tyres, says it is no great surprise that tyres are about to go through a massive price hike - especially considering how much oil, rubber and steel goes into every single wheel.

"New-world Asian demand has now hit the global tyre sector and far too many tyre users -- particularly those that run sizeable fleets -- hadn’t considered how this hitherto throwaway commodity can suddenly become a serious economic issue to their operations," said Managing Director of Bear’s Tyres, Mr Brad Bearman.

"China has bought up a lot of the rubber plants in Asia, and now that a European powerhouse like Lanxess made this investment in Singapore it looks very much like the beginnings of what the steel industry has just gone through; where strong demand in Asia and the Middle East tripled or quadrupled what were for a long time nice, comfortable prices.

“The amount of rubber, oil and steel that goes into the manufacture of a tyre is enormous and with such strong demand the price of tyres could become really high and many fleet operators and large machinery owners will have to think twice about spending big on well-known brands and consider China-made generic options.

“This is actually a leveller that is long overdue. For some time now the established brand names have lived off an over-inflated perception of their quality because the very manufacturers of these hyped up brands have also been going overseas to source their product. “That is why now, more than ever before, it is economically important to get the most out of every single tyre.

"Lanxess’ comments are now prompting managers of companies to undertake a level of understanding of tyres like never before. They have always understood how to service trucks but never spared a thought as to how to service tyres."

By spending most of its long-standing existence as an independent tyre dealership which trades with and across all brand-name tyres as well as the generics, Bear’s Tyres has been tracking market shifts in the tyre industry.

This prompted the company into a unique tangent to develop a lifecycle management system that provides one key asset to fleet operators.

Software driving the Bear’s Tyre Tracker gives quantifiable data that puts power of tyre management into the hands of the actual fleet operator’s hands and out of the grip of the tyre dealerships.

"Tyre Tracker began as a means to compiling distances travelled by every single tyre and axle to increase the lifespan of each unit," says Mr Bearman. "But we have developed it a massive step further and now the whole idea of the Tyre Tracker is for it to alert. “It is used to detect and report potential maintenance failures and allow instant action before any small problem becomes a large problem, therefore greatly expanding the lifecycle of each tyre.

“The Australian industrial market has to bear in mind that tyre dealerships are finding it increasingly difficult to get hold of new stock, so we are on the cusp of a situation where demand can easily outstrip supply and force tyre prices to escalate unpredictably. “Lanxess publicly stated it expects global tyre sales to return to pre-crisis levels in 2011 as the tyre replacement market and new vehicle production levels gradually recover.

"A smart fleet operator will be the one that gets in first and with an independent system to properly analyse what its requirements are and then puts in place a totally transparent system that alerts and instructs what to do and when to do it.

"The steel fabrication sector in Australia has already seen how profits can be eaten away overnight when global demand for its raw material dramatically spikes in price.

"Tyre Tracker is giving fleet operators something the fabricators never had; that is a level of total control to completely wipe out potential wastage from every single tyre."

Bear’s Tyre Tracker is a simple-to-use system which logs distances and advises rotations and retreading at optimised moments of each tyre’s lifespan.