Tyre makers tread carefully as car sales soften

Pirelli is a global name in vehicle tyres - a brand which ought to be able to ride out the storm engulfing the world of vehicle manufacturing. But as this BBC video shows, a downturn in the market demand for new cars is having an immediate effect right the way through the supply chain of the industry and Pirelli is having to take strong action.

Pirelli’s plant in Carlisle in Cumbria is slashing the hours available to their permanent workforce in response to a slump in orders for new tyres. Although most jobs look to be safe, the cutback in hours will hit the pay-packets of hundreds of workers in a region where per capita GDP is persistently below the national average. And this decline in real take home pay will affect retail businesses and the local housing market. The short video clip is a good example of derived demand and also the inter-relationships between markets - it is also a sign of a tyre company keen not to lose its grip.