From trucking to manufacturing to construction, Sumitomo Rubber North America Inc. (SRNA) gathered data to paint a picture of the overall commercial sector as a way to calculate how it will affect the tire world. Here are takeaways from three key segments of the industry.
Trucking is improving
Rick Brennan, vice president of strategic planning for SRNA, said the improvement in trucking hasn’t yet translated to the tire market, “but trucking has been lagging about 45-60 days” behind the impact and recovery of consumer mileage trends. Line haul is down 3%, and local fleets are down 2%, Brennan said. There’s less freight moving, which is affecting freight rates. “They’re dropping – but we only see that impacting us for another 60 days.
“Over the long run we see freight experiencing some large increases as we go forward. So expect the freight rates in 2021 to be much higher than they are now, even though we are having a downturn at the present time.”
After a surge in March, and a 10% gain, medium truck tire shipments in the U.S. fell 15% in April and 27% in May, Brennan said. In Canada, the numbers are worse. The uptick in March was 5.7%, but TBR shipments fell 31% in April and 32.2% in May.
When looking specifically at April and May sales, Brennan noted that some segments of TBR have been affected more heavily than others. He compared segments for those two months in 2020 with data from 2019 and found that steer tires are down 13% and drive tires are off by 16%, representing the areas seeing the least impact.
On the flip side, the segments affected the most are all-position tires, down 27%, and 19.5-inch tires, down 31%.
MTD also profiled the states that have been most- and least-affected by the economic downturn, in both PLT and medium truck tires.
Manufacturing expands slightly
Bob Klimm, director of commercial sales for SRNA, provided the latest data that shows there’s signs of life in at least some segments of the manufacturing economy, though he noted “manufacturing is still in a fairly week state.”
The Purchasing Managers Index (PMI) is an industry predictor of manufacturing. A PMI above 50% indicates the manufacturing economy is generally expanding. A number below 50% indicates contraction.
The May PMI was 43.1% - but that’s up slightly from 41.5% in April, Klimm said.
New orders increased 4.7% in May, following a 15% decline in April. And production was up, too – by 5.7%.
Manufacturing in the U.S. is broken down into 18 industries, and only six reported growth in May:
- Nonmetallic mineral products
- Leather and allied products
- Furniture and related products
- Food, beverage and tobacco
- Paper products and wood products
Construction shows positive signs
Klimm also outlined what’s happening in construction. The industry added 464,000 jobs in May, offsetting not quite 47% of the 990,000 construction jobs that were lost in April.
One potential game changer in construction is a draft of a $500 billion transportation infrastructure bill in the U.S. House. That bill includes large expenditures that would result in an investment in the nation’s roads and bridges.
Klimm says total construction increased 3% in May. Non-residential building showed the strongest gains, with an 8% increase, while residential building increased 4%. Non-building construction lagged behind at -4%.
Klimm expects the upward trends in construction to continue, as most states have lifted their restrictions on construction. As of June 10, only Washington and Connecticut were still restricting construction activity. That should drive an uptick in the commercial tires for those construction crews as well.
As of early June, Klimm said commercial tire volume was still down, but not as much as May. He said most dealers posted a 15-25% decrease in May, and that “June was looking slightly better,” though dealers are keeping their inventory at lower-than-normal levels.