Obama’s union coddling claims another victim: Cooper tires goes to India


Future home of Cooper Tires


It’s another chapter of the lesson titled “How hamfisted and shortsighted industrial policy kills jobs.” Copper Tires, American’s second-largest tire manufacturer, and one of the few significant tire manufacturers left in the country, is about to be sold to India. The company became a victim of President Obama’s much too cozy relationship with the union machine. In September 2009, and prodded by the Steelworkers Union, Obama slapped a 35 percent punitive tariff on Chinese car and light truck tires exported to the USA. Ostensibly geared to protect American jobs from a flood of cheap Chinese tires, the policy was an outright failure. It did not stop imports of low-cost tires. They were made in other countries, and came to America at tariffs even lower than those originally on Chinese tires.

As a result of the policy

  • Not a single new job was created in America, but more than a few jobs at tire importers were destroyed.
  • Americans paid more for tires.
  • A trade war erupted. Retaliatory tariffs did hurt exports of big displacement cars made by Chrysler, Ford and General Motors.
  • American companies that had tire production in China were hurt, most of all Cooper tires.

Shareholder of Cooper Tire and Rubber Co are expected to approve the sale of their company to India’s Apollo Tyres for $2.5 billion, raised mostly as debt Cooper Tires will be saddled with, Reuters writes.

The deal is opposed by another union, this time in China. Workers at Cooper’s joint venture plant in eastern Shandong province, have been striking against the deal for about three months. Cooper’s Chinese joint venture partner went to court trying to end the JV. Meanwhile in America, a U.S arbitrator ruled Cooper cannot sell two of its American factories until a collective bargaining agreement is reached between buyer Apollo and the plants’ union.

Apollo is not interested in American factories. It hopes to gain access to the lucrative tire markets of the world’s largest and second largest car markets, China and the U.S., Reuters says.

Apollo wants to fund the acquisition entirely through debt, most of which will be raised through Cooper. Cooper, supposedly one of the companies hurt by cheap tires, had vehemently opposed the tire tariff. Weakened by the tectonic destruction brought about by a shortsighted tire tariff, Cooper had no other alternative than to sell. The naive trad policy drove tire production from one off-shore location to another, and now, it drives a big tiore manufacturer out of the country. Good job.