The Bad Old Times

In the rubber industry, it was almost like the bad old times. Goodyear Tire & Rubber Co., U.S. Rubber Co. and Firestone cut their tire prices about 10% last week to meet a price cut by B. F. Goodrich Co. This brought the cost of a 6.00 x 16, the most popular tire size, down to $14.40, slightly under the 1941 price. To make things worse for tiremen, independent dealers slashed their prices as low as $11.38 by trimming their normal profit of 25 to 30% down to 10% or less. The reason was simple: there were just too many tires. In the first quarter of 1947, the tire companies produced at a rate of 100 million a year (1939 rate: 58 million).

As tires piled upon shelves, dealers wondered if they were in for a price war like those that harassed the industry during the '30s. The big rubber companies got ready for trouble. Already 3,000 workers have been laid off in the industry.

There is trouble in other areas of the rubber business, too. In Malaya, there is so much natural rubber in storage that prices have fallen from around 21-c- a lb. to as low as 15-c-. Some planters fear that they may fall to 10-c-. The reasons are 1) the club held over crude prices by U.S. synthetic-rubber production and 2) estimated world production of 1.2 to 1.5 million tons of natural rubber in 1947, equal to 1941's alltime record.

The U.S., which now allows only 23% of natural rubber to be used in tires, is relaxing its wartime restrictions far too slowly for Malaya. In the next 60 days they will be eased again. But the U.S. intends to keep enough controls so that at least 250,000 tons of synthetic rubber will be used annually, the minimum to keep the synthetic industry going. All this is a far cry from 1925, when Britain's "Stevenson plan" to restrict rubber production ran up prices to more than $1 a lb. Recalling those days, a Malayan planter last week wrote to the Singapore Straits Times: "One can hardly blame the Americans if they decline to allow that sort of thing to happen twice."

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