sustainability in the tire industry - iom3 | the institute ... shaw.pdfsustainability in the tire...

R E S E A R C HIOM3-London - April 2016http://Sustainabletires.com Slide no 1 of 23Sustainability in the Tire & Rubber Industry by David Shaw

Sustainability in the Tire Industry

David ShawCEO

TireIndustryResearch.com

[email protected]+44 208 647 1185+44 797 128 2336


AgendaOverview

What is Sustainability?How the Tire industry performs

NR industryPricesSupply and demandTire industry exposure to NR

Tire IndustrySpeciality - Commodity splitPricing & brands - comparison with ChinaImpact of labels

De-risking from NRChanging tread compoundsBio-sourcing & Circular economies

Conclusions


Tire Industry Research News

Twitter @TireIndustry

Opinion, Commentary, Analysishttps://www.linkedin.com/today/author/7706927

Market ResearchSustainability in the Tire Industry 2016China Tire Industry 2015-2018China Tire Newsletter (Weekly)More coming in 2016

Conference planningTire technology -Hanover 2016VDI EuroTyre - Brussels Nov 2016


What is Sustainability?

Financial Social

Environment


What is Sustainability Ch

ange

& c

ompl

exity

Secu

rity

of s

uppl

y D

iffer

entia

tion

Dam

age

Lim

itatio

n

Pre-compliance Compliance Beyond compliance Integrated strategy Purpose & passion

Unilever, Kraft, Hersheys ,

Leading tire makers include Pirelli, Bridgestone, Nokian

Commitment

Few metrics if any, low transparency , use of issue specific standards/indexes e.g. Sedex, ILO, ETI

Mix of external best practice standards & ‘own’ standards and data to evidence achievements e.g. GRI + LeafTc

Quantitative

Qualitative

Extensive, company speci�c metrics integrated with financial reporting to international standards, audited

Bob Willard, The Next Sustainability Wave - 5 stages of sustainability

Source: AB Sustain, Tire Industry ResearchLess advanced tire makers


What is Sustainability?

Social

Environment

Financial


$1.0

$1.5

$2.0

$2.5

NMCE (India)SHFE (China)SGX (Singapore)TOCOM (Japan)

Mar AprMay 8 2015

June Jul Aug Sep Oct Nov Dec Jan2016

Feb

NR price to April 2016

$0

$1

$2

$3

$4

$5

$6

$7

$8

DNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDN

20042005

20062007

20082009

20102011

20122013

20142015

Sour

ce:

Tire

Indu

stry

Rese

arch


0

1000

2000

3000

4000

5000

6000

7000

8000 MEA

Korea

Japan

India

USA

Other Asia

EU-27

China2013 2014 2015 2016 2017 2018

15.11m tonnes

15.85m tonnes

16.45m tonnes

17.25m tonnes

18.07m tonnes

18.78m tonnes

Global tire production - growth


0kt500kt

1000kt1500kt2000kt2500kt3000kt3500kt4000kt

Other

Amer

icas

BrazilUSA

Other

EMEA

Russia

EU-27

Other

Asia

Pacif

ic

Thaila

nd

Malays

ia

Indon

esia

Korea

India

Japan

China

Rubber consumption (NR) 2015

Sour

ce: I

RSG

and

Tire

Indu

stry

Rese

arch


0kt

500kt

1000kt

1500kt

2000kt

2500kt

3000kt

Other

Amer

icas

Brazil

USA

Other

EMEA

Russia

EU-27

Other

Asia

Pacif

ic

Thaila

nd

Malays

ia

Indon

esia

Korea

India

Japan

China

Rubber consumption (SR) 2015

Sour

ce:

IRSG

s an

d Ti

reIn

dust

ryRe

sear

ch


Normal production

Projected demand

Actual production

Actual demand

2027

NR supply-demand projection


Other

Sales/Mktg

R&D

Depreciation

Capex

Labour

Other Ingredients

Fabric

Chemicals

Fillers

SR

NR

China

India

Developed

Exposure to rubber price

Sour

ce:

Tire

Indu

stry

Rese

arch

2012 data


Things that don’t workIntervention in the markets

Traders are always faster and smarterintervention is usually signalled

Promises to restrict tappingindividual smallholders ignore policy

Restricting exportsSmuggling is always possible

Subsidising farmersDepends on the implementationTends to subsidise traders

Price ‘stabilisation’ agreementsToo much international administration

Things that might workConsumers agree to pay more

Brave move by consumersRisks competitive disadvantageHow about price cuts when prices rise?

New applications(eg) road construction to restrict supply

‘Industrial’ pricingWill agreements hold at price extremes?

Direct, long-term agreementsIf supplier has something unique to offerrequires courage on both sides

Cut costs; improve efficiencyAutomation; better clones; Genomics

NR interventions - What to do?


Around 150m CV tires made each yearEach contains up to 20 kg of NRPrice of NR is around $1/kg below cost of productionEach tyre represents a subsidy of $20 from producers to consumersTotal subsidy is $3000m per year at current prices

Tire makers want NR to be sustainableDiscussions of ‘Industrial Pricing’Tire makers want transparency and stability

De-Risking strategiesUsing SR tread technologyDeveloping alternatives - Guayule ; TKSDeveloping bio-sourced monomersDeveloping cicular economy - recycling

Effect of volatile NR prices on tires


China now a good example of this Extreme segmentation between international and domestic players

Gives strength to international playersReinforced by OE fitments on major brand vehicles

Local players compete mainly on priceCustomers have little information on which to base buying deci-sions

Started in developed world with Price-mixWas a strategy to compete against greater imports of low-value tires

Now becoming significant strategic factorespecially in the high-end & foriegn-branded vehicles

Commodity - speciality split


Carbon Disclosure Project

The Global Reporting Initiative

Dow Jones Sustainability Index

World Business Council for Sustainable Development

UN Global Compact

International Integrated Reporting Council

Sustainability Accounting Standards Board

Forest Stewardship Council

Sustainable Natural Rubber Initiative

Fair Rubber Association

ISO Standards ISO 9000:2015 Quality Management system

ISO 19011:2011 Audit standards

ISO 14001:2015 Environmental Management

ISO 14046:2014 Environmental Management –

Water Footprint – Principles, Requirements

and Guidelines

ISO 50001:2011 Energy Management

ISO 26000:2010 corporate social responsibility

Standards & Accreditations


Germany - Label development

0

20

40

60

80

100

120 G

F

E

C

B€0

€20

€40

€60

€80

€100

€120G

F

E

C

B

A

0

20

40

60

80

100

120 G

F

E

C

B€0

€20

€40

€60

€80

€100

€120G

F

E

C

B

A

0

20

40

60

80

100

120 G

F

E

C

B€0

€20

€40

€60

€80

€100

€120G

F

E

C

B

A

0

20

40

60

80

100

120 G

F

E

C

B€0

€20

€40

€60

€80

€100

€120G

F

E

C

B

�

185/60R15Dec 2015RR

185/60R15Dec 2015WG

185/60R15Jan 2013RR

185/60R15Jan 2013WG


Car tires (SR):Michelin’s Green X in 1995S-SBR, Silica - SilaneSR suppliers are very responsiveLife, wet grip and rolling resist-anceFunctionalisation chemistryDistributed supply base

Truck tiresMostly NR treadsStrong need for long lifeRolling resistance more impor-tantRetreadability?Overloading?NR risks

De-Risking from NR-1Switching to SR treads


Alternatives to NR

GuayuleDesert shrubGrown from seedsIntense genetic developmentlwhole plant converted to latex, biomass, resinsGrown & harvested on 18-month cycle

TKS (Kazakh Dandelion)Related to common dandelion, but less vigorous

- Issues with cross-contaminationGrown from seedsIntense genetic developmentRoots harvested for latexGrown & harvested on 6 - 12 month cycle


Synthetic polyisopreneGoodyear-DuPontBridgestone-AjinomotoChina, Russia developing polyisoprene from synthetic sources

Bio-sourced butadieneGenomatica - VersalisLanzatechGlobal Bio-Energies

A range of different projects

Bio-monomers


Recycling old tires into new tiresGranulation & De-vulcanisationMicro-grinding (Micronisation)Reclaim, high-tensile reclaimAim is to find a source for rubber if/when NR price accelerates

Biological processing of old tiresBio Butterfly (Michelin)

De-Risking from NR-4; Recycling


NRPrices are not sustainableTire industry is taking pro-active action to de-riskNR community needs to listen to customers and respond to their needs

Global tire industryIncreasingly moving to commodity/speciality segmentationMarket insight is the key to mid-term profitChina dominates in volume, but not in profitability

Tire industry seeking to de-risk from NRDeveloping alternatives such as Guayule, TKSUsing car tire tech to develop SR-based truck tire tread compoundsCircular economy becoming high priority in consuming marketsUse of recycled materials likely to increase

Conclusions & Take-Aways


Thank you for your attentionDavid Shaw

CEO, [email protected]

+44 208 647 1185+44 797 128 2336

R E S E A R C H

sustainability in the tire industry - iom3 | the institute ... shaw.pdfsustainability in the tire...

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