The tire business is one of the most lucrative in the country, with the industry seeing record sales in 2016, the National Tire & Rubber Association said Wednesday.
The tire industry employs more than 13 million people in the U.S. alone and has seen record profits in recent years, said Mark Grosz, president of the trade group.
That’s thanks to several factors, including increased fuel efficiency, new technology and a growing number of vehicles on the road.
Tire manufacturers have been making a strong comeback over the last two decades.
Sales of new tires in 2016 surpassed sales of all other consumer goods in the same year, according to the trade association.
But the growth of the industry has come at a cost.
The industry’s stock price is down more than 60% over the past five years, making it harder for companies to earn profits.
That means companies are now looking for ways to cut costs or scale back production.
Some are trying to keep prices low by focusing on specific markets like vehicles and the aerospace industry, while others are making more efficient tires that can help fuel the economy of the country.
But they’re finding the competition for those tires tougher to navigate, and it’s becoming more difficult to grow the industry without spending a lot of money.
“The tire business has grown very slowly in the last 15 to 20 years,” said Chris Toth, president and CEO of The Tire Institute, a trade group that represents the tire industry.
Toth is also a tire-manufacturing consultant.
Tires are used in everything from cars to motorcycles and planes, but they’re especially important for trucks and SUVs.
T&R’s Groszz said that in the coming years, the demand for the tires will be much higher than it was 15 to 15.5 years ago.
“We are going to be seeing a lot more trucks on the roads than we are in the past,” Groszi said.
Tough competition is pushing the industry to cut corners, he said.
“In order to compete, the tire business will have to focus more on the cost of materials and lower the quality of the products,” Giosz said.
But that could mean making more tires that don’t make a good value for consumers.
Grosz said the industry should be able to meet its needs with a variety of tires, which are often made with lower-quality materials and with lower tread depths.
He also said companies should focus on making better-quality tires that offer more value to the customer, as opposed to trying to build a market for low-quality, cheaper tires.
“There is a lot to be gained by finding better, higher-quality products,” he said, adding that it could take a while for tires to become more affordable.