Price fixing among tire manufacturers

I don't buy crap, regardless of where it is made. Of course, I do buy
good quality stuff from China as well as the US, India, Singapore,
Canada, Europe, Isreal, and other countries.

Just because it is from China doesn't mean it is (or isn't) crap.

Jeff

 

For most things we buy, the cost to produce an item has little to do
with its selling price (companies don't spend billions on advertising
every year for nothing, after all)

Gets a lot of lip service, but companies & CEOs hate it in real life.

Just between you & me, I'd save my energy. Look around for your best
deal and get the tires you want.

Have you considered how little gasoline prices differ regardless of
where the oil comes from, where it's refined, the price the oil co. is
actually paying for its crude by virtue of its futures contracts, etc.?
It's a good way to drive yourself mad if you worry about it too much.

 

The treadwear ratings, while technically more accurate, is a concept that
some consumers have difficulty understanding so a lot of tire makers
advertise that their tires will last 75,000 or whatever miles they think
their tires will last because mileage is easy for the consumer to
understand.

 

The so called magic of the market is supposed to see to the best prices
for the buyers (ref. Adam Smith & the like), but that has little to do
with real world prices in the 21st century IMHO.

 

I don't think Adam Smith would agree with your assertion, at least if you
mean the best price is the lowest price for you. I think even Mr. Smith
understood things were a lot more complicated than that. And very few
current markets are truly free markets or even truly competitive. All tire
makers try to distinguish their brands and create the opinion (fact or
illusion) that their particular brand of tires are inherently more valuable.
If all tires of a given size and type truly were identical and there were no
marketing impediments, then you might have a free market but this does not
guarantee that you would get the lowest possible price. A manufacturer might
decide that they would rather sell fewer tires at a higher price in order to
maximize their profits. They might induce you to pay more by creating the
illusion that there tires were better (even if they were not) or by
providing superior service, or because they had outlets more convenient than
a competitor that charges less.

Ed

 

Correct - but "good quality" stuff from China is always a crap-shoot
with their quality control issues.
Also, too many of my friends and their parents have lost their jobs in
the Canadian Rubber industry - BFG, Goodyear, and Uniroyal are all
gone now.

I'll still buy Canadian/American and even Euro and Japanese before
I'll buy Chinese.

 

I would like to see your evidence for this. For gasoline, most of the
cost is the crude oil, refining, transportation and cost of selling the
fuel, like operating the station and taxes. For electricity, it is for
the coal, oil, or carbon-containing substance or uranium or the cost of
the dam, windmill, or solar panels, the cost of transmission and the
cost of billing.

For computers, almost all the cost is the cost of the raw ingredients
(e.g., CPU, motherboard, disk drive) and putting the computer together.

For paper, the biggest cost is trees and processing the tree at the
paper mill.

For car and trucks, the cost of making the vehicles is a major
determining factor in the price of the vehicle, however, some cars get
much higher prices than the cost of the vehicles, and for others, like
GM's EV-1, the cost of the car was not related to the cost of manufacturing.

For all of these things, market forces do play a major role. For
example, if Dell could sell its $1200 notebook for $1500, it will. And
if it costs ExxonMobil more to suck its oil out of the ground than it
can buy crude oil for, it will buy the crude.

There are other things where the cost has nothing to do with the cost of
the product, like cell phones, which are basically an advertising
thing to get people to buy cell phone service. And for prescription
drugs under patent, the cost of manufacturing drugs has very little to
do with the price of the drugs (actually the cost of marketing the drugs
- essentially kickbacks to docs, dividends for stock holders and the
price of development are the main costs). The cost of food crops (e.g.,
grain, corn, milk) has a lot more to with outside forces, like market
forces and government subsidies than the cost of growing the crops.

Of course they hate it. Would you rather sell cars when there are only
three makers or many more (lets see, Ford, GM, Chrysler, Diamler,
Mitsibushi, Toyota, Honda, Hyundai, Kia, Subaru, VW, BMW, Fiat,
Alfa-Romeo, Nissan, Isuzu and Mazda all sell cars in the US, but there
are more, like Cherry who would like to sell in the US as well).

Good advice.

That's called "market forces." For a commodity, the cost of
manufacturing matters little for the cost of a particular brand.

Perhaps you have been worrying too much about it. Sorry, couldn't resist.

Jeff

 

I don't see how that is China's fault for producing a product for less.
Of course, a lot of people who had the option of buying products made in
North America chose ones from China instead for a few measly dollars
less. However, the cost of the jobs lost was not figured in.

One thought that comes to mind is do you really need to buy it all? I
mean, kids have so many toys, do they really need another toy from the
fast food restaurant, especially when the toy is often made with some
plastic from our used electronics (by "our" I mean the US's, for the US
is the only country that allows its waste electronics to be shipped
overseas to be recycled into lead-laden toys). It seems to me that we
have too much stuff that we don't really need. Kids need toys -- that's
how they learn, but they don't need a new cheap toy with every meal.

Also, when it comes to food, I prefer local, because it takes so much
energy to transport food half-way across the country or even half-way
across the world. Energy is one commodity the world is using more and
more of every day.

The American Museum of Natural History in NYC has a neat exhibition
called something like H2O - the stuff of life, that looks at how much
water people, especially Americans, use, as well as the large amount of
water it takes to grow the food to feed a cow for a single quarter
pounder with cheese compared to the water to grow crops for the same
amount of food energy say in a loaf of bread or a few ears of corn or
other vegetables (not even adjusting for the toys).

Jeff

 

If every maker picks the same base mileage for that "100" tire to
achieve - say 20,000 miles - then advertising a UTQG 375 tire as
"75,000 Miles" would make more sense to the consumer. But if they
inflate the claim it makes the advertising irrelevant.

(Don't pick on my math, I'm just making a rough guesstimate. It's
somewhere in the 365 to 385 neighborhood...)

--<< Bruce >>--

 

But, a tire will wear differently on different vehicles, depending on
such factors on where it is driven (city vs. highway [vs. racetrack]),
the type of roadway (dirt vs. pavement vs. concrete vs. snow vs. ice),
temperature, tire pressure, weight of the vehicle, the speed at which it
is driven and how it is driven (fast acceleration vs. slow acceleration)
and maintained.

Jeff

 

But water is not permanently converted or bound up once it is used. It
gets released (OK - recycled) in short order. The only thing that would
make it globally scarce is if it gets bound up for long periods of time.
IOW - if I use 300 gallons of water to take one bath, it's not lost.
It's pretty much immediately available for use (perhaps after some
processing). (and no - I'm not saying that people should use 300
gallons of water for a bath - just an illustration)

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

By using a relative rating (UTQG treadwear), it releases everyone from
achieving actual mileage, which is as it should be. It simply gives
some relative assessment of one tire's resistance to wear compared to
another. If I drive fast (say, 50 mph) around interstate cloverleafs,
and you drive them at reasonable speeds (say, 30-35 mph), a given
mileage rating (claim) is going to be meaningless (and subject to legal
recourse). However, if we both have 600 treadwear rated tires, we each
will both get more miles out of those tires than we would get out of 400
wear tires. But with your type of driving (using you again as the
hypothetical person who drives more slowly on cloverleafs and me as the
hypothetical aggressive driver), you may get more miles out of your 400
rated tires than I would get out of 600 rated ones - a fact due solely
to differences in our type of driving, in spite of the better wear
properties of the 600 rated tires.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

Yet water is rarely reused. There are a few exceptions where water is
recycled. In some parts of California, they are planning on purifying
the water and injecting it back into the ground. Some people recycle
gray water (water that is relatively clean, like washwater from baths
and washing machines and use it to water their lawns). And sewage is
sometimes recycled for watering grass. And, of course, for many years,
water has been (and is) indirectly recycled when the same river is used
for sewage disposal and drinking water.

However, for the most part, when water is used, it effectively gone
forever for human use, because it usually ends up in the ocean or in the
air.

If I am incorrect, please explain why there are so many water shortages,
including in the US. In addition, in large areas of the US, the water
table continues to fall.

Jeff

 

The evidence is all around you. Look at the clothing and cosmetic industry.
Then stop off at the jewelry department. It is common in those business to
have a dealer offer goods at a certain price, then ask what selling price
you want them tagged and the variation can be 500%. How about the cost of
making a bottle of beer or wine?

I know a craftsman that makes a wood product. He started selling a
particular box for $50. When the demand went up, he raised prices to $100
and found ways to cut the production time from two hours to 30 minutes. Do
you think he is going to lower his price?

 

Look up the words "evaporation", "rain", and "distillation". They are a
big part of the answer.

I submit that 99.9% of the water that I use for any purpose whatsoever
is back in global use within 5 years of my using it - probably much
quicker - but certainly not gone for 100 years, much less forever. That
can't be said for, say, chemicals that are in epoxy that I use to glue
something together, or gasoline that I use in my car. Water is pretty
much 100% ultimately re-usable. Realizing of course that there is
certainly a time lag in its release (that "bound up" thing I mentioned).
But to say that once it's used, it's gone forever for human use - no way.

As for shortages - for every person with a shortage, there's someone
somewhere else during the same time period that has an excess (called
flooding). That means the issue is controlling and managing it. It
disappearing forever is not an issue.

The truth lies somewhere between zero and infinity. We could argue for
a long time exactly where.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

What are you...an effing whale?

 

Those are particular businesses. In other businesses, like most
utilities, energy, cars, computers, most services and many food
industries for the cost to produce a product to be closely related to
the cost at which a product is sold.

Even in each of those industries, the cost of a product has little to do
with the selling price (the cost of a 32 oz of soda that is sold at a
fast food restaurant is less than 10% of what the restaurant gets for
it), but for most industries, the cost of producing a product is a major
determining factor in the cost of the product. Otherwise, more and more
people would get into making the products, ultimately driving the cost
of the product closer to the cost of producing the product.

Jeff

 

For all practical purposes, once water is used, it is gone forever. When
water goes down my drain, it goes to a sewage plant, then to a river and
out to sea. Certainly, the water will evaporate and eventually rain down
on earth someplace. Virtually the same amount of water would have rained
down on earth if that water were never used. In some parts of the world,
the water comes directly from the ocean (e.g., from reverse osmosis).

Really? Try telling that to the people in Ethiopia. I bet they really care.

Wrong!

The water table in many parts of the US is getting lower and lower.
That's true in other parts of the world. Fresh water (i.e., water that
doesn't have a lot of salt in it) is a limited resource. There is a huge
amount available, but the amount of fresh water that is usable is
limited and shrinking.

I suggest you read this article and some of the references at the bottom:

http://en.wikipedia.org/wiki/Water_resources

Jeff

Happy New Year!

 

I don't think that is exactly what you mean. The cost of raw material
affects the cost of goods sold to some extent. Most industries have an index
of some sort. If the price of a barrel of oil goes up $1, the price of a
pound of plastic goes up 1¢ a pound. If the price of a bushel of wheat goes
up $5, the loaf of bread goes up 6¢. That allows the company to maintain
the same margins, but still may or may not be close to the cost of
production.

The cost of making the first Ritz Cracker or steel beam is what stops most
of us from starting a business. Many items that sell for pennies require
huge up front investments. It is laughable when people talk about corporate
greed and obscene profits. Sure, some company fall into that category, but
most do not. Corporations have an obligation to be profitable and maintain
a safe workplace, pay their bills, etc. Our company maintains a large
inventory of finished goods. People look at it and make the statement that
"you guys must make a lot of money". Then we walk by the machines and I'll
ask what they think the gas bill is to operate. Most guess at $1000 or so.
Then I show them a $30,000 bill for the month.

 

Well perhaps, if you exclude the largest source of recycled water, RAIN...