Tyre sector woes trigger top study

Rubber and tyre producers in the UK will be the subject of a government competitiveness study, following recent job losses in the sector.

The three-month study, announced by trade minister Richard Caborn, will consider cuts in production and how manufacturers have been hit by global consolidation.Earlier this month Goodyear announced it would axe 500 jobs at its Wolverhampton plant, which was said to be struggling against a strong pound and cheap imports from the Far East.

Nick Matthews, senior research fellow at the Warwick Manufacturing Group, said volume tyre production in the UK has been hit by exchange rate fluctuations and rises in costs. He doubted the government-backed study into new technology would change the sector’s fortunes. ‘In this market, whatever technology you’ve got, there is nothing to stop anyone else gaining access to the same expertise,’ he said.

More than £1bn worth of tyres were manufactured during 1999 in the UK, of which £800m worth were for export. Matthews predicts that in 10 years’ time volume tyre production would have moved from the UK, northern Europe and the US to the Far East, where costs are lower.

But he saw a glimmer of hope for UK tyre producers in the growth in popularity of higher-end, niche cars. These design-led products have higher margins, which means small fluctuations in production costs are unlikely to deter customers. The study’s findings are due to be released in summer.