Top retreaders invest to add capacity
Retreaders made about the same amount of retreads and sold them at higher prices in 2013. According to Modern Tire Dealer market data, production rose slightly to 14.9 million units, just 100,000 more than in 2012, while retread pricing rose 9.6% year-over-year.
The improved pricing on relatively unchanged supply suggests demand is up. Even so, “cautious optimism” describes retreaders’ outlook for 2014, according to David Stevens, managing director of the Tire Retread & Repair Information Bureau (TRIB). “2013 for many retreaders was flat or soft,” he told MTD following TRIB’s semi-annual board meeting on March 25 during the 2014 Mid-America Trucking Show in Louisville, Ky. Retreaders on the TRIB board feel business levels outside the OTR segment are about the same so far in 2014. “It’s been a flat start to the year. For dealers in areas impacted by winter weather, it has been challenging,” says Stevens.
Among retreaders reporting improved business levels, Callaghan Tire Inc. of Bradenton, Fla., which is ranked No. 42, saw a 9.5% increase in sales. Jim Wochinske, president of Pomp’s Tire Service in Green Bay, Wis., says overall sales for his company grew about 4.5%. Pomp’s Tire, which holds the No. 10 spot, produced about 2% more retreads in 2013 and added a retread shop to end the year with 12 shops.
The story was different in the OTR segment. “Slow demand for coal and the bad winter have really hurt demand through the first quarter of 2014. Look for a flat 2014,” says Jim John of Craft Tire Inc./Shrader Retreading in Uniontown, Pa., which holds the No. 30 spot. Noah Hickman, president of H&H Industries of Oak Hill, Ohio, cited government influence on the mining industry, heath care coverage and rising costs as major challenges.
“Our current government administration is forcing small business to a point of smaller margins and reduction of workforce in order to maintain a viable company that is directly impacted by the mine sector.” H&H is unchanged in the rankings at the No. 23 spot. The company invested nearly $600,000 in new machinery and facility expansions in 2013.
Free Service Tire Co. Inc. derives a significant portion of its retread market from over-the-road coal haulers and non-highway-service medium truck tires. “With the national reduction in coal tonnage, we’ve had to reallocate our marketing efforts into new market segments,” says Lewis Wexler, chairman of CEO of the Johnson City, Tenn., company. “With offshore pricing closing the gap between cheaper imports and retreads, we have had to promote the ‘value of retreading’ now more than ever.” Free Service Tire, which is not ranked among the “Top 100” retreaders, built a new medium truck tire and over-the-road retread plant in 2012.
“We have outfitted this facility with new manufacturing equipment at nearly every station, thereby increasing our capacity while reducing operation costs, especially utility costs,” says Wexler.
OTR business fell by 6% for NRI Inc., which does business as Northwest Wholesale and Retreading. The decline was offset by a 3% increase in medium truck retreads and a 7% increase in industrial retreads. Owner Willis Gill says many shops have stopped retreading industrial tires due to the equipment required for smaller, solid tires. The Portland, Ore., company is ranked No. 9, same as last year.
Different paths to growth
In 2012, Royal Tire Inc. added market coverage and retread capabilities through acquisitions. The strategy worked in 2013 as the St. Cloud, Minn.-based company produced 10 more light truck retreads, 100 more medium truck retreads and two more OTR retreads a day. The increases helped push Royal Tire to 26 in this year’s rankings versus 34 a year ago.
Atlanta Commercial Tire Inc. of Forest Park, Ga., moved to 23 from 31. Larry Faulkner, vice president of sales and marketing, attributed the jump to a “strategic commitment” to provide the best commercial tire service in the Georgia market through new points of sale, increased capacity and heavy investment in technology.“We do not strive to be the lowest price dealer in the market. Instead, we strive to be the lowest cost dealer in the market for any size fleet.” The company added a retread shop in 2013, bringing its shop count to three.
Sumerel Tire Service Inc. is investing $600,000 on new molds, extruders, two buffers and a precure builder in two plants. A new shop is scheduled to open in June 2014, according to Bob Majewski, president. The Newport, Ky., company is ranked No. 66, the same as last year. Service Tire Truck Centers of Bethlehem, Pa., added capacity through additional shifts to meet customer expectations of retread turnaround time, says Scott Bennett, vice president of sales. The company holds the No. 14 spot, unchanged from last year.
Ranger Tires/J.A.R. Rubber Corp. of Bayshore, N.Y., moved to the No. 52 spot, up from 69 last year. The company increased daily production of medium truck tires from 202 to 262, light truck retreads from two to 10, and industrial tire retreads from zero to four. President John Roefs credits the increases to his company’s ability to offer economy, standard and best performing products.
In October 2013, Commercial Tire Inc. of Meridian, Idaho, celebrated its 45th year in business by moving into a new 45,000-square-foot building housing its retread plant and a truck fleet center (see photo). The company produced one OTR retread and four industrial tire retreads per day in 2013, compared to zero in both categories in 2012. Production of light truck and medium truck tire retreads remained the same at nine and 290 units per day, respectively. The company is No. 48 on this year’s list, up one spot from last year.
A focus on hiring and retaining high-quality employees helped McGriff Treading Co. increase production by 10% despite closing one of its three retread shops. “We raised our starting pay and give a 50 cent increase every 30 days until they get through their probationary period,” said Jim Osborne, president.
“This allows us to attract a better grade associate to train and keeps another company from hiring them from us after we have drug tested and trained them and given them a good work reference. After 90 days they are paid higher than most companies’ starting pay. “We closed a plant and moved the equipment into two existing plants. By the end of the first quarter, we had both plants up to capacity, produced more than we did the year before and had better productivity.” The Cullman, Ala., company is No. 24 versus 26 a year ago.
Casings, imports and other challenges
The availability of good casings is the top challenge to operations cited by retreaders. “I think all retreaders are wrestling with that,” says John Snider, president of Snider Tire Inc. “We are in a competitive industry but we’re making a go of it and we’re doing well. Like a lot of others in our industry, we’re not able to get all the casings we need. It goes back to the recession and people running their tires longer. They went several years without replacing their equipment and it depleted the available casings. It will take some period of time for it to get back to what we consider a more normal supply situation.” The Greensboro, N.C., company, which goes to market as Snider Fleet Solutions, is ranked No. 6 on the “Top 100” list, unchanged from last year.
Several retreaders identified sales of imported tires as a major challenge. “Pricing of Chinese new tires is a continuous issue,” says Bill Ziegler, president of Ziegler Tire & Supply Co. in Massillon, Ohio. “Imports are close or below the pricing of a retread and casing.” Ziegler Tire holds the No. 29 spot, same as last year.
For Rice Retreading Inc., maintaining a consistent supply of tread rubber has been the biggest challenge. The Winchester, Va., company, which is not ranked among the “Top 100” retreaders, has been forced to increase its inventories, according to Steve Gray, vice president of sales and operations.
An increase in national account business impacted margins at McCarthy Tire Service Co. Inc., which holds the No. 8 spot. The Wilkes-Barre, Pa., company is addressing the decline through technology, training and efficiencies, according to Neil Horn, vice president.
To see all “Top 100 “Retreaders , click here. ■