May 4, 2009

Pushing back

USW combats China’s role in tire industry’s turmoil

By Brad Dawson

Rubber & Plastics News Staff

WASHINGTON—The United Steelworkers union’s petition to limit the surging number of Chinese consumer tires imported into the U.S. is the latest example of the domestic tire industry’s troubles.

The purpose of the filing with the

U.S. International Trade Commission is to combat plant closings and job losses in the U.S. market affected by huge increases in Chinese tire imports during the past five years.

While the case itself and the outcome will generate varied reactions, the players and observers in this drama agree that there are problems in the industry that need to be examined.

The question the ITC—and the Obama administration—eventually will answer is if capping the number

of imports from China is a viable solution.

Seeking a quota

In its petition filed April 20, the USW claims the flood of imported tires from China—nearly 46 million consumer tires last year—has led to more than 4,400

job losses and four plant closings in the past five years, plus two more closures and 2,400 job reductions announced in the last four months.

The union said China’s consumer tire exports to the U.S. last year—up from 14 million in 2004—were valued at in excess of $1.7 billion. That’s $453 million more than in 2004, based on information from the Global Trade Information Services World Trade Atlas. At the same time, domestic consumer tire production fell by more than 25 percent.

Industry officials, politicians
react to USW filing. Page 22.

See USW, page 23

Alatech fate dims
as appeal denied
USAID sticks to offshore condoms

A Century

Rubber Division

A special section devoted to the ACS Rubber Division’s 100th anniversary begins on page 9.

1909-2009

By Mike McNulty

Rubber & Plastics News Staff

EUFAULA, Ala.—Alatech Healthcare L.L.C. is not in a complete shutdown mode yet, but it’s close, because of a federal agency’s decision.

The firm’s slim hopes of continuing to supply the U.S. Agency for International Development with condoms for Third World countries were dashed when agency officials rejected the company’s appeal in April to reinstate Alatech as its prime supplier.

The USAID will buy all condoms from offshore producers. Alatech’s contract with the agency was 90 percent of its business.

Alatech may be able to hang on for another year or longer, depending on the amount of new business it can generate, but that will have to be done with a small crew, according to President and CEO Larry Povlacs.

The rubber latex product maker has cut its work force to about 20 from the 190 employees it had in mid-2008 and between 300 and 400 in 2006, he said. The primary reason for the layoffs was the USAID’s decision to drop Alatech, its only U.S. supplier, and buy cheaper rubber latex condoms from manufacturers in China, South Korea and Malaysia, Povlacs said.

He still hasn’t given up. Povlacs said the company is working on several relatively small glove and some condom orders. “The orders we have can sustain 15-20 people.”

Alatech is looking at possible opportunities in the medical products industry, including some that require a high level of government scrutiny. “That’s really all that’s left,” he said. “If that doesn’t work, we’ll have to wind up our business. We’re not waiting for the USAID to make a new decision next year.”

Planned move

The move offshore has been in the works by USAID for some time, Povlacs believes, possibly as early as 2006. He said the agency slowly has cut Alatech out of the picture during the last two years.