Bruce Besancon, senior director of OTR sales for Yokohama Tire Corp. (YTC), has spent more than 30 years working in the OTR tire market. Prior to joining Yokohama in April, he was vice president of marketing at Alliance Tire Americas Inc.
What are the issues affecting the OTR market, and what can tire dealers expect in 2018? Besancon answered these questions and more in an interview sent to Modern Tire Dealer by Yokohama. Both the questions and answers have been edited.
Q.: Industry-wise, how would you describe the OTR tire market this year?
Besancon: We've seen a very good OTR market in 2017. It’s not up to the 2006-07 levels, which were the peak of our industry, but we’ve definitely come through the 2009 and 2013 dips. We've been on a pretty steady increase for OTR. The big areas that are really showing great improvement are in what I would call the more industrialized applications: the smaller tire, the port and rail, small construction and small quarry.
If we look, we can go back and trace a lot of this to the housing market, which is well over a million units per year start, and we're at a pretty good GDP right now. Those things add up to a healthy increase. We're seeing better than 5% growth in our industry overall.
Don't forget that housing always entails more than just housing. You have to have new road and utility construction that goes in. New shopping centers, restaurants and hotels tend to go in with those.
The port business looks like it will double in the next six to seven years across the U.S. We're importing a lot of goods, but we're also exporting a lot, which is great for everybody's economy.
The one thing that we're all watching is what's happening with the original equipment market. It can either be a leading or a lagging indicator. Today we're starting to see it pick up, which is really good news for us as we look beyond '17.
There’s also been an upturn in the coal market, particularly the underground coal in the east. We haven't seen that in a few years, and that’s been a very welcomed increase in business. Large, heavy mining is probably at an equilibrium state. It's not tremendously growing or shrinking. I believe the fleets are where they need to be. We’re waiting to see what the markets are going to do, whether they can really grow or not.
Q.: Putting on your forecast hat, how does 2018 and beyond look for the OTR tire industry as a whole?
Besancon: I'll be like pretty much any economist and say we're moderately optimistic. There's always a bit of caution. We're not in this huge, hyper-expansion of the market. We're in a slow-to-moderate range increase of business, which is good.
It appears the current U.S. administration has helped our coal mining industry, or at least given some benefits to industries that have helped us out. We don't see any of that changing. It's actually been a pretty decent business climate for the last year. Everybody we talk to appears optimistic. I believe we're probably in for another plus-5% to 6% market as we go into 2018.
There's been a lot of discussion about tariffs imposed, but we don't know where all those are going. As we saw last year, many people were aiming at a lot of import companies, particularly those from emerging market areas. We'll have to see how that plays out.
There are a lot of people making a lot of product these days, as opposed to the early 2000s. It doesn’t appear we’ll have a huge deficit in production. However, there will probably still be some specific tires that will have some relative shortages as they go forward. Everybody's trying to make sure they're adjusting their production correctly.
Q.: Tell us about Yokohama’s new OTR dual marked tires, which feature dual Tire and Rim Association code designations.
Besancon: The end game is that the dual marking helps customers and dealers. With both E and L designations on the sidewalls, the dual marked tires can be used for both loader and transport service applications. Now customers won’t have to have two or three types of tires for different applications. They can have one tire for multiple types of machines, whether it's a loader or articulated dump truck. The dealer only has to stock one tire versus two or three different ones. That's a great economic driver.
Q.: What other product plans does Yokohama have for 2018?
Besancon: In 2018 we’ll be expanding our range of radials, particularly as we look toward getting in some of the larger haul truck radials that even go into the large mining areas. We're also looking to expand in a lot of tires that go into the construction area as well. I just got back from Japan, talking with our R&D and production folks. We have a very good plan on tap, not just for 2018 but also several years after that.
Q.: You were with ATG, which is now owned by YTC’s parent company, Yokohama Rubber Co. Ltd. How is the transition between the two companies going?
Besancon: The direction we're going – for the foreseeable future – is we'll operate as independent companies. I think that’s to give each company their margin of independence, but also each has a little bit different fitting inside the market, whereas there are a lot of products that Yokohama doesn't carry that ATG does. By the way, we share a large number of dealers.
Q.: Will Yokohama and ATG share booths at trade events?
Besancon: We've already begun doing that. At ConExpo, there were some ATG tires in the Yokohama booth and vice versa. We'll always do the things that make sense, such as having Yokohama passenger tires in the ATG display at the last Farm Progress Trade Show in Illinois. Why? What does every farmer own? A pickup truck. It's a great market. We shouldn't ignore those things and we're not. Again, we’re looking for the best ways to use the synergies between both companies.