In June 2016, the UK populace voted in a referendum (Brexit) to leave the European Union (EU). The effects of the vote began to be felt immediately in financial markets. Every industry will ultimately be affected by Brexit, once the terms of Brexit have been agreed and finalised between the UK and EU.
Since the Brexit vote, the author has been following the impact that it will have on a range of industries, including the Chemicals & Materials industry. Previous studies looked at how it will affect the Plastics & Coatings industry, and the PPE industry.
The main raw materials used in tyres are:
- Rubbers including natural rubber, SBR (styrene butadiene rubber) and PBR (poly-butadiene rubber)
- Reinforcing materials such as steel cord and synthetic textiles including nylon and polyester
- Fillers such as carbon black and silica
- Process oils and other additives
These raw materials are processed into tyres via a number of steps, including the formation of several semi-finished parts. These include rubber compounds, steel cord reinforced fabrics and textile cord reinforced fabrics. In some cases, there will be vertical integration with the rubber compounds and other semi-finished parts will be made in the tyre assembly plant. In other cases however, some tyre producers maintain specialist plants that focus on the production of compounds and fabrics. The movement of semi-finished parts from these specialist plants to the tyre assembly plants is a critical part of the pan-European logistics of the tyre industry.
The aim of this study is to look in more detail at a specific niche of the chemical industry, with its own unique supply chain dynamics - namely the tyre industry. The study will consider whether this industry, with its unique dynamics, will be affected differently from other important chemical end-markets.
Key Issues Addressed
- What are the possible scenarios that Brexit could follow before the deadline next year?
- What are the key defining factors for the UK within these scenarios that would greatly impact the automotive, tyre and raw materials industries?
- How will the UK tyre industry be affected once new Brexit terms come into effect, in terms of raw materials sourcing, production and sales?
- What are the new market opportunities that will be created as a result of Brexit and how will market participants adapt to these?
- What mitigation strategies can suppliers and other market players employ to remain competitive once the deadline has passed and new economic changes occur?
1 Executive Summary
- Key Findings
- Implications of Brexit
- Market Opportunity Analysis
2 Research Aims and Objectives
- Key Questions This Study Will Answer
3 Potential Brexit Scenarios and Transition out of EU
- The Brexit Timeline
- 6 Brexit Political Possibilities
- Likely and Unlikely Brexit Scenarios
- Brexit Scenarios - CETA / CETA Plus Scenario
- Brexit Scenarios - No Deal (WTO) Scenario
- Brexit Scenarios - Soft Brexit (Chequers) Scenario
- Summary of Brexit Scenarios
- Brexit Scenario-Based Economic Impact on the Automotive Industry
- Transition Period Introduction
- Transition Period Impact
4 Impact on the Tyre Materials Market
- Impact of Brexit on the Chemical Industry
- Impact of Brexit on Automotive Aftermarket Products
- The Tyre Industry in the UK
- Raw Materials for Tyre Production
- Tyre Supply Chain
- Factors Influencing How Brexit will Affect the Industry
- Other Factors Influencing How Brexit will Affect the Industry
- Impact of Regulations
- Impact of Logistics
5 Key Conclusions and Future Outlook
6 The Last Word
- 3 Big Predictions
- Legal Disclaimer