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 expand existing plants abroad, or to increase production rates in regions where demand for rubber products continues to grow. Much of the current growth is driven by expanding automotive industries in countries like China and India, and several tire manufacturers have responded to this increasing consumption by developing operations in international markets.

•  Corporate restructuring: Some companies see beneficial results from streamlining or scaling back their operations. Reorganizing the business model may involve workforce reductions, changes in management, or the elimination of non-essential practices. These measures are intended to offset costs and improve a company’s open market valuation by maximizing its revenue.

• Changing production methods or materials: If a particular type of raw rubber material has become prohibitively expensive to process, it may be useful to shift resources toward a different type of rubber that is more cost-effective to obtain. Also, reducing travel time for components between manufacturing stages and introducing dedicated assembly-specific cells into a machining operation can increase production efficiency.

Product Innovations

Economic restructuring is not the only method for remaining competitive in the rubber industry. While it may seem counterintuitive to direct money toward research and development during financially challenging times, a new rubber product or processing technique can revitalize a manufacturer’s business. Although revolutionary advances like vulcanization or the development of synthetic rubber technology are relatively rare, more modest innovations can still be a significant source of income and market share.

For example, some biological growths target rubber gaskets, seals, and stoppers. These corrosive elements can severely undermine the integrity of certain machines and goods, particularly in the food industry. To address this concern, researchers developed an anti-microbial rubber coating product to reduce and regulate the growth of bacteria in processing equipment. This new rubber is thermally stable, migration resistant, non-toxic, and requires no special handling skills. The cost of developing such innovations can be offset by the income generated from a wide range of applications in products like wheels, O-rings, bladders, packaging, tubing, liners, and conveyor belts.

Processing Innovations

In addition to creating new products, research and development can lead to innovative processes for deriving rubber stock. Since energy prices or ecological changes can negatively affect the rubber industry, some scientists and engineers have experimented with alternative methods for synthesizing rubber. For example, researchers have found that a type of elastic protein found in insect legs has potential for industrial rubber fabrication. This substance, known as “Resilin,” is an elastomeric compound with properties remarkably similar to those of synthetic rubber, and may have long-term industrial applications as a form of rubber stock derived independently of oil or plant sources.

Environmental Awareness

As environmental issues increasingly influence consumer demand, some manufacturers have developed more eco-friendly technologies to meet changing market needs. The desire for more efficient fuel economy and reduced environmental impact from automobiles has led several companies to introduce “green” tires. These tires use specially designed materials, such as silica-treated rubber, to improve wheel traction and tread resilience, reduce fuel usage by as much as 5 percent, and lower carbon dioxide emissions. While there are certain downsides to the new technology (such as higher manufacturing costs), the reduction in fuel consumption and pollution can generate greater consumer demand for rubber products.

Recycling rubber goods is another environmental concern that can affect manufacturing industries. Vulcanized rubber has traditionally been very difficult to recycle, and often ends up in landfills or incineration plants. To combat this problem, some companies employ de-vulcanization techniques that break apart the cross-linked sulfur bonds in vulcanized material. This allows recycled rubber to be mixed into virgin rubber compounds or reused as raw stock. De-vulcanization can recover almost a third of the rubber in a discarded tire, reducing the need for purchasing new material and providing an environmentally friendly disposal method for manufacturers. Flexible solutions such as this can provide advantages for companies competing in the rubber market.