Rubber Industry

Finding Flexible Solutions in the Rubber Industry

Most automobiles have hundreds of rubber-based parts, and automotive tires alone constitute the majority of both synthetic and natural rubber consumption. Rubber is a highly effective material for tire production because it is elastic, air-tight, wear resistant, water resistant, and able to absorb a relatively large degree of shock. These characteristics also make rubber useful for manufacturing sealers, insulators, hoses, tubes, gloves, and many other products.

Like most industries, rubber manufacturing is not a static business, but is often developing new methods, products, and technologies to meet changing consumer needs. Whether evaluating and redesigning economic practices, developing new methods of rubber processing and fabrication, or addressing environmental concerns, rubber manufacturers are reacting to changing circumstances in anticipation of marketplace demands.

Economic Restructuring

Raw material prices in the synthetic rubber industry tend to climb when oil prices are high. Since the U.S. relies heavily on synthetic rubber, American manufacturers may be subject to increasing expenses due to higher energy costs, particularly in the tire industry. Similarly, raw natural rubber may become more expensive due to changing environmental conditions or from a shortage of synthetic rubber supplies. When coupled with a general slowdown in consumer demand or production rates, these factors can cause dropping stock prices and mounting debt.

During periods of uncertainty in the rubber market, many companies develop strategies to stimulate growth, expansion, or to preserve their market share. Some common practices used by manufacturers involved in the rubber business include:

* Shifting focus to international trade: With emerging markets in Asia and Latin America, some major companies attempt to offset domestic losses by staking capital on foreign investments. These investments can be used to modernize and...