Mixed results: Construction season isn’t delivering steady tire sales
Construction crews are back to work across much of America, and economists are predicting the construction rebound is going to continue.
One outlook, by Dodge Data & Analytics, is calling for a 9% rise in construction starts, to $612 billion, throughout the year. That same report says commercial construction and single family housing will lead the way, with 15% increases for each in 2015.
More construction sites calls for more construction workers. In the last 12 months construction has added 280,000 jobs across the U.S., including 45,000 in April. Those workers are rolling onto construction sites in the country’s best-selling pickup trucks.
In Wichita, Kan., the rise of construction is evident everywhere. “It’s booming here again in Wichita and around the state for sure,” says Jason Burhenn, general manager of Tire Dealers Warehouse, a wholesale operation that serves customers throughout the state of Kansas and also does some business in adjoining states. (And to answer the question Burhenn answers constantly, no, the dealership wasn’t bought out by American Tire Distributors. It has the same name, but Tire Dealers Warehouse in Wichita is privately owned. The business also encompasses a retail store with seven service bays next door, Shamrock Tire and Auto.)
Burhenn says commercial light truck tires are big sellers.
“A lot of the dealers I sell to, it’s their biggest account. The LT stuff, they want the heaviest tire they can get a hold of with three-ply sidewall technology,” he says. “Sales have got to be up 70% in the last five years.”
Tire Dealers Warehouse doesn’t run its own service truck, but all of its commercial customers do, and Burhenn says those customers “are constantly sending service guys to take tires and tubes out on job sites.”
In addition to the increase in volume, Burhenn sees an even bigger take away. Consumers — in this instance, construction companies — are buying a different kind of tire than they did a few years ago.
“It seems like a lot of the construction companies, before they wanted the cheapest tire possible because business wasn’t that great,” Burhenn says. “Now they’re spending extra to get a premium tire. Instead of just throwing the cheapest thing on there to get them through the day, they’re investing in premium tires. They’re not putting tires on monthly.”
Those premium LT tires are rolling to all kinds of construction sites in Kansas. Burhenn says he sees more commercial building than homes, though residential construction is up, too. “It didn’t have anywhere to go.” The 2012 opening of a casino south of Wichita has spurred a mix of development nearby. Elsewhere in the city retail and commercial projects are the name of the game.
About 1,500 miles to the east, Don Derosier, service manager at Connecticut Tire in Berlin, Conn., isn’t experiencing the same boom.
“I haven’t seen anything great,” says Derosier, who has been with the two-location dealership for 30 years. “It’s definitely not as good as it was” before the recession.
As he runs down a list of customers in the construction business, Derosier says there are a couple bright spots. There’s one customer who builds new homes and new developments, and Derosier says it seems that customer is always working. Another customer paves residential subdivisions and is “pretty busy.” Another bright spot is that the dealership’s retail business is “getting better,” and that’s a good balance for times when the commercial business isn’t firing on all cylinders.
Still, his customers on the commercial side remain loyal, but most don’t have as much work as they used to. “We’re not doing as much with them.” ?