Evening star., 1928-04-30
SMALL PRODUCERS
OF TIRES Do WELL
Inventory Losses of Little
Fellows in Industry Re-
duCed to Minimum.
BY J. C. ROYLE.
pisnaich 10 The Star.


NEW IRK, April 30.-"There will
always be place in the business world
for the smaller rubber manufacturer, "
That was the statement made today
by a big tire company executive, who
declared that the conditions in the trade
at present favored the smaller concerns,
and that this condition would continue
for some months.
The drop in the price of crude rub
Der, as result of the removal OF the
export restrictions on shipment on
crude from the Straits settlements by
the British government, is bringing big
profits to the smaller companies. To
their larger rivals, 1t has brought con-
siderable anxiety. AS result. there has
been wild furry in the stocks of the
smaller concerns. many OF which have
been inactive for months. One stock
has risen from 2934 to 140, Another
rose from Is to As. and third ad-
vanced from to IL.
The reason for the difference between
the effect on the large and small pro-
ducers lies in inventory. The smaller
companies do business pretty much
from hand to mouth. They have no
big inventories, and usually supply a
limited number of customers. Conse-
quently they keep production close to
consumption and have no big inventor
les. The large concerns. supplying
manufacturers and dealers all over the
United States. are forced to keep big
supplies on hand. These tires have
been made from high-priced rubber.
If the drop in the price of raw ma
teriais forces decline In the price Of
tires. they must sell their high-cost
tires in competition with those made
from low-coSt rubber.
SeiberIing Buying Cheap Rubber.
The Seiberling Tire Co. for example,
Is buying crude rubber at 20 cents a
pound, while other concerns are using
rubber that cost 40 to ~ cents. Fig
uring eight pounds of rubber to the
tire. Seiberling is saving about $1.60 In
crude rubber costs alone on every cas-
ing. The Seiberling output Is about
1000 tires a day. so the company's gain
is approximately $4,000 to $1,000 day.
1t is likely to be over two months be-
fore this advantage is lost to the small
producers.
]. r. Mutt, president of the Union
Trust Co. Of Cleveland. who is in close
touch with the rubber situation, says
tire prices now are the lowest In his
tory, and leading manufacturers are
strenuously opposed to further reduc-
ton. He says. however. that the aban-
donment of the Stevenson restriction
plan will cause an increase in produc-
tion in the British possessions, and
there is likely eventually TO be drop
in prices OF tires and other rubber
products.
present indications" he continued.
ARE that 10000 900 tires will be sold
this year. or 100000 more than in
1927. with a consequent expenditure OF
$500 .000. 600"
Spring dating contracts expire on
May Is, and many experts in the tire
business. who are in close touch with
the smaller makers. anticipate a drop
in quotations at that time. Under the
contracts dealers are protected against
price declines until that date. In con-
sequence dealers are keeping their
stocks down TO an absolute minimum.
Motor car manufacturers naturally are
pressing for lower priced tires for orig
inal equipment, and they also are hold
ing orders down to actual nearby re-
quirements.
Consolidation Predicted.
Predictions are freely made of con-
solidations among some Of the prom
inent tire producers in an effort TO cut
COSTS anu oNeIHedu htiu WINCH MAJ 64AAo
OF profit These are rumors merely. and
there is nothing to indicate tha ne
gotiations have reached a conclusive
stage In any case.
Combinations are not always as prof
liable as they seem. Many OF the man
ufacturers Joined In rubber pool. Of
ficially known as the National Reserve
for Crude Rubber II was formed In
December, 1926. with a credit OF $40
600 600. to acquire supplies to protect
manufacturing members against short
age or extreme price fluctuation, due
TO the British restriction plan. As a re-
suit OF the abandonment of that plan,
1t is estimated the pool now has a
paper loss OF S20, 1000 900 on stocks ac-
nuired at prices ranging from 35 70 Il