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Raw Material Implications of Opelika Closure

On April 13, Michelin North America announced that it would close its BFGoodrich Tire Manufacturing plant in Opelika, Alabama by October 31, 2009, citing an unprecedented drop in market demand.

The decision comes in the wake of the continuing economic crisis as consumers are driving fewer miles, purchasing fewer vehicles and delaying tire replacement purchases. The dramatic drop in market demand has created significant overcapacity in the North American tire markets that Michelin does not expect to rebound in the near term. According to the Rubber Manufacturers Association, North American tire sales volume is expected to decline for the second year in a row in 2009.

Opened in 1963, Opelika produces BFGoodrich and Uniroyal brand passenger car tires with a capacity of 25,000 units/day. It currently employs approximately 1,000 wage and salaried workers. Michelin plans to consolidate production at BFGoodrich tire plants in Tuscaloosa, Alabama and Fort Wayne, Indiana.

According to Rubber & Plastics News (subscription required), Michelin cut production at the Opelika plant beginning of February 14, laying off fewer than 80 manufacturing-related employees.

Notch estimates that the Opelika plant at full capacity consumed roughly 80 million pounds (36 KT) of elastomers per year, 45 million pounds (20 KT) of carbon black, 8 million pounds (3.6 KT) of textile reinforcement, and 3.5 million pounds (1.6 KT) of rubber chemicals including antioxidants, accelerators, and processing aids. Not all of this demand will be removed from the market, as some of Opelika’s production capacity will be consolidated at Tuscaloosa and Fort Wayne. Michelin has not publicly stated how much capacity will be permanently removed.

It is worth noting that the Opelika plant used a material handling system called Sealdbins for receiving and consuming carbon black in the plant. Originally developed by Uniroyal, Sealdbins are portable, collapsible rubber containers that are designed to minimize dusting and ease processing of dry powders and pellets. However, the system is outdated, and the bins apparently are no longer manufactured. Also, only a few carbon black plants in the US are still configured to deal with loading these containers.


Update: Since this post was published, I have heard more on some of these issues. Sealdbins were introduced in the 1950s and are similar to the fuel bladders widely used during the Vietnam war. Each one holds about 7,000 to 8,000 pounds of carbon black; they allow the carbon black to be shipped by flatbed truck. Onsite, the Sealdbins replace storage silos, which allows the plant to stock more grades without additional silos. This was important back in the 1960s, when plants were making both bias ply and radial tires, but less important today. People familiar with the system say that it worked well but just never caught on outside Uniroyal. I know of only one other tire plant in the US still using Sealdbins, but that plant has installed an on-site transfer station so that suppliers do not need to deal with the bins.

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