Some retreaders grow business in an off year
In 2011, domestic retreaders produced 7% more truck tire retreads than they did in 2010. Production fell in 2012 to 14.8 million truck tire retreads, 3.2% less than the prior year.
“We saw same-store growth in dollars and units in 2012 versus 2011,” said Mick Pickens, president of Royal Tire Inc. “However, we believe the unusually strong volume in 2011 was driven primarily by significant price increases in new tire prices which caused many fleets to try or increase their use of retreads.”
David Stevens, managing director of the Tire Retread & Repair Information Bureau (TRIB), attributes pent-up demand coming out of the recession for the year-over-year variances in production. “2012 had a strong-start trajectory and then all the uncertainty with the economy and election led to pull-backs across the board.”
Economic concerns and casing availability are key reasons for the drop in production, according to Harvey Brodsky, managing director of the Retread Tire Association (RTA).
“There is an ongoing shortage of casings in the most popular sizes and this prevents retreaders from filling pent-up orders. Another is the state of the economy, meaning that fleets are being very careful how they spend their money and are putting off purchases while they are waiting for an upturn, as well as wanting to see what the future holds under the present administration.”
Despite the drop in the industry’s output, a number of Modern Tire Dealer’s “Top 100” retreaders boosted production levels to meet demand, expanded their geographic coverage, or both in 2012. Among the nation’s largest retreaders, production increases in all categories pushed Southern Tire Mart LLC from the third to the second spot in the Top 100, ahead of Bridgestone Americas Tire Operations. Southern Tire Mart entered the OTR market with its purchase of H&W Retread and Repair in Sulphur Springs, Texas. The Columbia, Miss.-based company is retreading five OTR tires per day using the Bridgestone/Bandag Continuum precure process.
The purchase of two commercial service locations and a Bandag franchise helped push Royal Tire to 34 in this year’s rankings versus 44 a year ago. The St. Cloud, Minn.-based company purchased St. Paul Tire in Newport, Minn., and acquired Midstates Retreading & Wholesale and a commercial service location from Northwestern Tire Co. Inc.
The MTD Top 100 Retreaders list combines the annual volumes of Midstates and Royal Tire to accurately depict Royal Tire’s current size.
As part of the Midstates purchase, Royal Tire received a Bandag franchise and a 40,000-square-foot warehouse. The acquisition increased the company’s number of commercial outlets to 16. The purchases expand Royal Tire’s commercial service and retreading outreach in southeastern Minnesota, southwestern Wisconsin and northeastern Iowa. They also support continued growth across the Upper Midwest region, according to Pickens.
“This strategic acquisition will give Royal Tire the ability to reach into markets we could not get to before and is consistent with our long-term growth strategy. It will also give us additional retread capabilities which will result in greater efficiencies and significantly enhance service for our fleet customers.”
Along with new equipment, McCarthy Tire Service Co. Inc. of Wilkes-Barre, Pa., purchased Main Tire Exchange Inc., which held spot 91 on last year’s retreaders list. McCarthy says the December acquisition of the Dansville, N.Y., company had minimal impact on its overall results for the year. The company used 8.5 million pounds of rubber, 1.8 million pounds more than in 2011. McCarthy’s Charlotte, N.C., plant more than doubled its output; the Wilkes-Barre operation also increased production levels.
An increase in medium truck tire production was offset by a decline in light truck retreading, which the company attributed to a switch to a new tire program. McCarthy is ranked number eight among retreaders, unchanged from the prior year.
Graham Retread Co. of Spencer, Iowa, plans to add warehouse space as well as equipment in 2013 to keep up with demand. Says President Pat Shaughnessy: “We are planning on purchasing a 25-tire chamber. We have six now and will go to seven. We plan to add a new A-TEK repair station. We lack warehouse space. We have to maintain so many pounds of rubber; it’s a perpetual back-order situation. We have casings outside and we want to get them inside. We are planning on Madding 21,000 square feet to our building. We send out two semis a day; some days they come back with 50 tires; other days with 200 tires.” The company is ranked 58th among the MTD Top Retreaders, the same as the previous year.
Wonderland Tire Co. Inc. of Byron Center, Mich., ranked 69th on the Top 100 list, also reports significant demand for its retreads. The company specializes in tires and tire-related services for passenger vehicles, light trucks and commercial trucks. About 50% of revenue is generated from sales of Wonderland’s AcuTread remanufactured truck tires, which are produced via a proprietary retread process.
“Our AcuTread products give fleets a great alternative to expensive new tires by providing a remanufactured tire product that looks and runs like new tires for about one-half the price. This has resulted in rapid growth of our AcuTread manufacturing plant,” says Jon Langerak, president.
Wonderland added a new computerized Matteuzzi buffer, new A-Z Formen cushion extruder, new automatic tread rubber extruder, and four new CIMA presses in 2012. “In 2013, we have increased our warehouse space at our AcuTread plant and have four more new CIMA presses on order. We also have plans to add new inspection equipment later in 2013. Most of these improvements and new equipment investments have been made to increase production of the AcuTread product,” says Langerak.
What does the industry anticipate for the remainder of 2013? “I believe we will not see strong growth by many retreaders. In the parts of the country where coal is a factor, there is a definite turndown in the movement of trucks,” says the RTA’s Brodsky.
TRIB’s Stevens echoes that outlook: “The discussions I’ve had with TRIB members show that they remain very cautious about growth this year. As they look to the third quarter many are looking at relatively flat raw material costs and relatively flat or very slightly increased product demand. With respect to casings, there seems to be a very slight improvement in availability for the most popular sizes (11R22.5, LP22.5), but to the dismay of retreaders, that hasn’t necessarily translated into a reduction in casing prices yet.”
When orders do pick up, retreaders will be ready. “There are a fair number of retreaders who are taking advantage of lower interest rates to make investments for future growth,” says Stevens.
When asked how they are positioning their operations for growth in 2013, many retreaders indicated they are updating technology or adding capacity to their operations.
• Belle Tire Distributors of Allen Park, Mich., plans to increase capacity to service new business gained in late 2012, according to Tom Bowman, vice president, commercial division.
• B.R. Retreading of Glasgow, Ky., is installing a new 2700R49 segmented radial mold.
• McGriff Treading Co. of Cullman, Ala., closed one plant and transferred equipment to two others in a move that increased capacity and lowered costs. The company says it will continue to add new equipment as it is available through Bandag and has plans for two 8450 buffers, two new non-destructive testers (NDTs), and two new 7450 casing analyzers for 2013.
• Morton Supplies Inc. of Morton, Ill., plans to add 20,000 square feet of warehouse and production floor, according to Fred Schmidgall, president.
• Purcell Tire & Rubber Co. of Potosi, Mo., says it plans to purchase more equipment to keep up with demand.
• Jack’s Tire and Oil Management Co. Inc. of Logan, Utah, is continuously upgrading retread equipment, according to Bob Feldbauer, CEO and president.
• H&H Industries Inc. of Oak Hill, Ohio, is building a new solid tire and expanded wheel division as well as adding a second OTR skive machine.
• Maine Commercial Tire of Hermon, Maine, is replacing dated equipment, adding a building and aggressively pursuing new customers in 2013, according to Jim McCurdy, president.
• Barnwell House of Tires of Ronkonkoma, N.Y., plans to focus on efficiency and additional capacity by adding new equipment and floor space.
• Central Tire Corp. of Verona, Va., reports that significant expansion of production capacity was done in 2011 and 2012. Equipment plans for 2013 will be limited to new AcuTread tread designs and matrices.
• White’s Tire Service Inc., of Wilson, N.C., is expecting to increase capacity due to the addition of Continental tire brand retreads.
• Sullivan Tire Co. Inc. of Norwell, Mass., continues to expand capacity within the plants through effective scheduling and thoughtful and aggressive management. Equipment is up-to-date, and minimal replacement was necessary in 2012, according to John Donovan, vice president. ■
Smaller volume, larger tires: OTR retreaders snapshot
The largest retreaders in the nation are not the largest builders of the biggest retreads. The sixth largest producer of OTR tires, Craft Tire Inc./Shrader Retreading in Uniontown, Pa., is ranked 31 on Modern Tire Dealer’s Top 100 Retreaders list. Although Craft produces only OTR retreads, the amount of rubber needed to retread an OTR tire places it in the top third of all the nation’s retreaders.
Likewise, the retreader holding the 23rd spot in the Top 100, H&H Industries Inc. in Oak Hill, Ohio, is the nation’s fourth largest retreader of OTR tires. Like Craft Tire, H&H produces only OTR retreads.
Top 100 rankings are based on the average amount of tread rubber used to retread different types of tires. An average of 325 pounds is used for one OTR tire retread. Each OTR tire retread equals 46 points. Figures for the top 10 below show daily production.
Purcell Tire & Rubber Co. – 139 tires/6,394 points
Northwest Wholesale and Retreading – 118 tires/5,428 points
B.R. Retreading – 89 tires/4,094 points
H & H Industries Inc. – 53 tires/2,438 points
McCarthy Tire Service Co. Inc. – 50 tires/2,300 points
Craft Tire Inc./Shrader Retreading – 40 tires/1,840 points
Community Tire Co. – 35 tires/1,610 points
RDH Tire and Retread Co. – 30 tires/1,380 points
Les Schwab Tire Centers – 10 tires/460 points
Bridgestone Americas Tire Operations – 8 tires/368 points
Here’s how the point totals are calculated:
Each April, Modern Tire Dealer ranks the “Top 100 Retreaders in the U.S.” based on the average amount of tread rubber used to retread different types of tires. Twelve pounds of rubber, on average, are used to produce one light truck tire retread, while 24 pounds are used to produce one medium/heavy truck tire retread. An average of 325 pounds is used to build one OTR tire retread. MTD awards one point for every seven pounds of rubber used per retread. Each light truck tire retread equals 1.7 points, each truck tire retread equals 3.5 points, and each OTR tire retread equals 46 points. Numbers are rounded to the nearest point.
The “Top Retreaders” list was started in 1988, when the top 10 retreaders were: Goodyear Tire & Rubber Co., ABC Treadco Inc., Pro-Tread Corp., Les Schwab Tire Centers, Edward-Warren Tire Co., Northwest Retreaders Inc., Ray Carr Tires, Radar Tire Inc., Purcell Tire & Rubber and McGriff Treading Co. (* estimated; N/A = not available.)
To see the 2013 MTD Top 100 Retreaders list, click here.