Tire dealers are well-acquainted with the economic impact of COVID-19. Retail sales plummeted after the initial shock from the pandemic, but then began to recover as stimulus checks were deposited into Americans’ bank accounts and stay-at-home orders were eased.
Medium truck tire shipments surged early as fleets worried about supply, but then those, too, dropped off. Tire dealers with whom MTD talked, as well as the quarterly performances of tire manufacturers, painted the picture of a struggling industry.
Now there’s more data to add to the big picture – specifically, employment figures.
The U.S. Bureau of Labor Statistics lumps together auto parts, accessories and tire stores. In May 2019, those stores employed 566,000 people. A year later, employment at those facilities has dropped to 509,100 people – a 10.1% decline year-over-year. Collectively, employment numbers at those stores had not dropped below 510,000 employees since January 2013, according to historical employment figures.
Statistics show that the retail landscape outside of the tire industry is gaining ground. In May, employment in retail rose by 368,000 jobs, following a loss of 2.3 million jobs in April. The retail category is divided into 17 subcategories, and all but four of those categories improved their employment picture between April and May.
The auto parts/accessories/tire stores category is among those that are still recording employment losses. The industry shed another 35,800 jobs in May. That’s on top of the 43,000 jobs lost during the previous month.
In April, tire dealers had 182,100 employees, down 7.9% from the 197,700 people on payroll in March. Auto parts and accessories stores fared slightly better in April, losing 6.9% of employees compared the previous month.
“It has been a bumpy ride to say the least,” says Mike Cioffi, founder of Tire Talent, a tire industry-focused recruiting firm. “Most of our clients froze their (job) openings when COVID-19 became ‘real’ in the United States.”
Cioffi follows the numbers and has analyzed what the latest employment figures from the Bureau of Labor Statistics mean for three specific segments of the tire industry. Here’s his take:
Manufacturing: “We see across the board that top 10 tire manufacturers are drastically reducing their workforce and doing more with less. Plants are coming back online, as we know, and production is behind, in some cases, to keep up with fresh original equipment demand. However, roles like regional and key account sales (positions) seem to have decreased. The only companies we have seen increase are startups or small companies looking to enter the U.S. and take market share. This is a perfect opportunity, in our minds, for disruption to occur. Multinational manufacturers should remain vigilant if they want to protect their market share.”
Wholesale-distributors: “We see the same across this channel, with hyper-sensitivity to headcount and only replacing critical roles within the organizations. We know that all channels are facing some issues in lower-income areas in pulling back their hourly workers into the workforce as the extra $600 per week (paid to supplement usual unemployment benefits) is leaving workers the hard option to make less and risk catching COVID-19 versus staying home and getting paid more. This is also one of the recurring themes we are hearing while consulting with our clients.”
Retailers: “You can see that most retailers are down dramatically in headcount. When I’m on the phone with a regional retailer, I generally tend to hear, ‘I’m down anywhere from 15% to 25% right now in sales.’ There are some cases where some have said they have never been busier due to their competition pulling back and servicing essential business lines.
“Also, as furloughs come to an end, companies are deciding to scale back and consolidate executive roles instead of bringing their employees back,” he says.
|Retail sector||May 2019||Jan. 2020||Feb. 2020||March 2020||April 2020||May 2020|
|Auto parts, accessories and tire stores||566,000||588,900||588,700||587,900||544,900||509,100|
|Auto parts and accessories stores||379,300||391,700||391,700||390,300||363,400||n/a|