Friday, February 27, 2009

Trends of the tyre industry

A review of past Economic cycles
The tyre industry has seen the good and bad times, but the good and bad times usually closely linked to the regional or global economic situations. As far as my generation is concerned, Asia had its first economic corrections in the mid 1980s.

Who could have forgotten the currency crisis in Asia in 1997? What was supposedly a simple free float of the Thai Baht resulted in a near collapse of all Asian economies, and affecting countries as far flung as Brazil.

The year 2008 will definitely go down in history as a year the global financial system was practically on its knee. My personal thought about how this entire episode will turn out is quite contrary to the beliefs of many. I think the consumers today are just raring to see another round of positive growth. I also feel the consumers of today are a lot more forgiving towards the negatives of an economy but will dive in during positive times. It may take a few years, but it will be over and life will be back to normal before we know it.

As a gentle reminder, let me assure you that the current American situation is nothing new. In the early and mid 1980s, the S&L (Savings and Loan) crisis which saw a collapse of more than 700 saving and loan associations in the United States cost more than USD160 billion, of which more than USD120 billion was paid for by the US government.

Ler will explore how the tyre industry has been affected in his next post by looking at these key few cycles - between mid 1980s, to the mid 1990s and 2008. Ler Hwee Tiong is Managing Director at Tyrepac Pte Ltd .

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