What’s in store for retreaders as the economy starts to reopen? Clif Armstrong, CEO and president of Marangoni Tread North America, says members of Marangoni’s U.S. retread network “are very bullish about where they are. They’re looking forward to things starting to loosen up.”
Armstrong believes that a rebound in demand “will not be dramatic. There will not be an on-off switch But it will come back at a pace that allows the market to plan for what the business climate will be.”
In the meantime, retreaders will continue to hold their own as demand gradually increases, he says.
Armstrong says demand for retreading spiked during the early days of the COVID-19 pandemic. “There were so many unknowns. When local governments started issuing stay-at-home orders, I think retread customers somewhat panicked. ‘I don’t want to run out.’
“Business was very brisk. Fleets were saying, ‘I need these tires retreaded.’ They were grabbing every casing they could so they would have stock. Freight was being hauled. Consumer goods were being put in grocery stores. And construction had not been curtailed in most places. The first few weeks of the pandemic were robust. It was a good time for retreaders.”
Overall demand for retreads has levelled out somewhat, says Armstrong.
But he predicts that demand will rise, especially as trucks that were sold in 2017 and 2018 enter their first tire replacement cycle. “The (truck) original equipment manufacturers had several good years. But the trucks that were sold in mass quantities are now coming to (the point) where they need to replace worn-out tires.”
Fleets and owner-operators “can buy new tires or they can retread. I think it’s our time to be part of that mix. If nothing else, the pandemic has given all of us an opportunity to sit in our chairs and really think about what we’re doing and if there’s something better we can do.
“I think we offer something unique to the marketplace versus strictly a new tire program, whether it be a low-cost import or a high-end, domestic new tire. I truly think that with the tariffs in 2019, (fleets) were moving in that direction,” he says. (Click here for more comments from Armstrong about tariffs on truck tire imports.)
Continuing to invest
When asked to describe the general outlook of Marangoni retreaders, Armstrong told MTD that he believes they “are feeling very good. Most of our dealers are very happy with where they are today, given what they see around them. They may not be on target – they may not be at or above 2019 levels – but I think they’re happy to be able to provide services to people who need them, and able to offer quality, high-end retread products.
“We have a couple of dealers who have invested heavily in equipment, even during the pandemic. They are preparing themselves for when that true ‘new normal’ comes and are preparing their businesses to be out in front of the competition. They want to be ready.
“I think if you aren’t preparing yourself, you’ll be a step behind. You won’t come out of the gate swinging. You’ll still be trying to figure it out and other people will be prepared.”
Seeing an uptick
Looking ahead to the rest of 2020, Armstrong says Marangoni “is in a great position and poised to respond to business increases.”
The company has made a number of key investments in its tread rubber plant in Madison, Tenn., over the last several years, “so we have the ability to ramp up production quickly. From a production standpoint, we haven’t missed a beat. Our raw material suppliers are working very hard to keep us where we need to be. We have a unique product, Ringtread, which has a following.
“We’re seeing a gradual increase in demand,” he notes. “Over the last three weeks, we’ve seen an uptick. A lot of our dealers rely on us for the majority of their retread supply. When their business is off a certain percentage, our business is going to be off a certain percentage. While our business is not at 2019 levels, it’s healthy. We’re shipping every day.”
As the economy inches back, his advice to retreaders is simple. “Stay close to your customers. Solve their problems. Use the time we’re in to think through what you’re doing. Make sure your foundation is covered and you can build from it.”