United States Rubber Company

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UNITED STATES RUBBER COMPANY

In the years leading up to the formation of the United States Rubber Company, the rubber industry was marked by intense competition. Rubber footwear firms, then the industry's largest and most profitable operations, were competing through price wars. Rubber footwear turned an easy profit, and many new companies developed. The increasing number of companies influencing prices caused them to fluctuate dramatically. At the same time, a business financier named Charles Ranlett Flint (1850–1934) was involving himself in the rubber trade between Brazil and the United States. Flint was also involved in a wide range of industries, and he was famous for consolidating numerous firms into single, large industrial units. Numerous footwear firm owners thought that a major consolidation of companies, orchestrated by Flint, would stabilize the industry. In 1892 Flint joined 11 firms and created the United States Rubber Company. The new company immediately controlled half of the nation's footwear sales.

The United States Rubber Company's member firms made shoes that were commissioned by a central sales unit. A board of directors supervised the central selling organization, and the manufacturers operated with virtual autonomy. The new company shifted its assets early on, closing two small factories and acquiring two of its biggest rivals. By 1898 the United States Rubber Company increased its market share from 50 to 75 percent. The company, however, was turning only modest profits, due primarily to the financial strain of absorbing its competitors. As the 1800s ended the rubber industry was rapidly shifting its focus to tire manufacturing for the automobile industry. But U.S. Rubber ignored the industry changes and chose to remain solely a footwear company.

The new tire market turned high profits and companies competed heavily for top market shares. One of the industry's leading firms, Rubber Goods Manufacturing (RGM), saw its position in the industry gradually decline. In 1905 U.S. Rubber bought RGM as a means of entering the tire market. Immediately, the former footwear company was the top tire producer. As treasurer of U.S. Rubber, Charles Flint went to Brussels, Belgium, in 1906 to secure the entire rubber output of the Belgian Congo from King Leopold. U.S. Rubber was seen as one of the tire industry's most significant newcomers.

The Du Pont family took control of U.S. Rubber in 1927. That same year, Du Pont and other elite industrialists wanted to consolidate U.S. Rubber, Goodyear, and Seiberling companies in order to establish a powerful industry leader. The idea failed to win support from financial institutions and shareholders that were unsatisfied with the industry's performance during the 1920s. With the onset of the Great Depression (1929–1939) in 1929, tire sales dropped by two-thirds and suppliers lowered prices for car manufacturers in order to maximize sales. In spite of these industry setbacks, U.S. Rubber thrived. It increased its market share from 6.9 percent in 1929 to 30 percent in 1931. The company's success was linked to Du Pont's interest in both U.S. Rubber and General Motors Corporation. U.S. Rubber's manufacturing base was in Detroit, Michigan, and General Motors' nearby location gave U.S. Rubber half of the carmaker's business in 1931. U.S. Rubber was simultaneously boosting its sales to Ford Motor Company.

The company held a key position in the tire and rubber industry for four decades. In 1966 U.S. Rubber changed its name to Uniroyal. In the 1970s, due to the recession and to the development of radial tires which required totally new production equipment and processes, the industry began to shift. Uniroyal was among the companies hardest hit. Though it was ensured a good market share with its General Motors contracts, the overall depression of the car industry and the expensive switch to radials overwhelmed the company finances. Adding to that, Uniroyal's sales on replacement tires were low. The company's losses in 1979 were heavy enough to lead to drastic cuts in capacity in 1980. In the mid-1980s Uniroyal sold many of its divisions and organized a buy-out by Clayton and Dubilier. In 1986 Uniroyal and Goodrich merged their tire operations to form a jointly owned Uniroyal Goodrich Tire Company (UGTC). The new company would combine Uniroyal's strong supplier business with Goodrich's large replacement business. But the venture wasn't successful. Debts, losses, and conflicting management styles brought the company down. In 1987 Dublilier and Clayton bought out Goodrich's holdings in the venture.

As the decade ended, more U.S. tire companies were taken over by foreign firms. The French company Michelin purchased UGTC in 1990. The Uniroyal brand, however, continued. In the late 1990s the Tiger Paw NailGard tire was issued, boasting the capacity to seal 90 percent of tread punctures up to diameters of three-sixteenths of an inch.

The competition that gave rise to the formation of the footwear trust, which came to be known as the United States Rubber Company, followed the rubber industry throughout the twentieth century. As the century ended, the competition that had marked the industry's history shifted to a global scale. Even U.S. Rubber—or Uniroyal—the longtime industry leader, had trouble staying afloat in the face of foreign competition.

See also: Charles Ranlett Flint, Tire and Rubber Industry