Are Tire Companies Interested in Saving Money?

By: Kedar Murthy

Yes they are, but there is a hard and harder way of achieving those savings. The hard way is to look at the materials you are currently buying and ask your supplier for a lower price. I am sure the polymer and carbon black suppliers know this routine quite well, but this only works when there is excess supply. When raw material supplies are tight – as they are today – the supplier has the upper hand. What’s so hard about asking for a few pennies in cost reduction on millions purchased? The problem is that this is a short-term strategy that pays off every once in a while but is not sustainable. 

The harder way is to fundamentally change the cost structure of what you are producing by using a performance additive to lower raw material costs. This can be achieved by taking materials from end-of-life tires and re-incorporating them back into new tires. Of all the components going into a tire only two can be recycled in their original form – the rubber itself and the steel from the wires that reinforce the tire. The rubber can be transformed into many forms; reclaimed rubber, micronized rubber powder (MRP), various forms of devulcanized rubber, and recycled carbon black. While that sounds easy enough, we all know nothing is easy in the tire industry. A tire company told me it takes about ten years to approve a new material for use in a tire. Nonetheless, several tire companies have been successful in recycling rubber from old tires into raw materials for new tires, including Lehigh Technologies, a Michelin Group Company. We are already selling MRP to seven of the top ten global companies on four continents in fifteen countries and in forty-five tire plants.   

While closing the loop on tires is difficult work, it is worth it from a cost and sustainability perspective, and the cost savings are tremendous. Take for instance, an actual example of a tire plant in North America that manufactures five million tires a year using ~51,000 MT of rubber compound. Replacing that rubber compound with 5% MRP at lower cost in the tread results in cost savings of about 470,000 USD. The table below will guide you through this example.

 

Tire Assumptions

Passenger Car (PC) Tire 265/70R16       kg                11.34

total rubber in the tire                               kg                10.20

tread rubber per new tire                          kg                3.74

 

Cost Assumptions

Cost of  Carbon Black Compound            $/MT           1543

Cost of PolyDyne 80                                 $/MT            992

 

Tire Plant Assumptions

PC Tires per Year                                     #                  5,000,000

Rubber in Tires                                         MT               51,020

Tread Compound Required                      MT               16,837

 

PolyDyne use per Tire Tread

PolyDyne Required in Tread @                5%                842 MT

 

Savings

Tread Compound Cost                              $                   25,978,491

PolyDyne Cost                                          $                    835,264

Compound Cost Saved                             $                    463,942

 

The above example is real and has allowed this tire company to fundamentally change their cost structure annually by saving about 470,000 USD. Doubling the amount which is technically feasible doubles the saving to almost a million dollars. Now these savings depend on the cost of raw materials, but in times like these where the market is tight this is a mission accomplished. When raw material costs are low, there are still benefits to be reaped. Tire companies need to be committed to the “hard” part of cost reduction by having a long-term focus and the ability to challenge the status quo.