Plentiful low-cost truck tire imports cloud retreaders’ outlook
Production of retreaded truck tires grew nearly 5% in 2014, according to Modern Tire Dealer market data. Yet David Stevens, managing director of the Tire Retread and Repair Information Bureau (TRIB) says retreaders expect a flat year in 2015. “I don’t think anyone is forecasting much in the way of growth,” he says.
One reason for the lackluster outlook is the growth of low-cost truck tire imports. “The hope is that with some of the continued investment in trucks, you get more trucks out there, so there’s more replacement demand that will go to the retread business. But putting constraints on that is competition with low-cost import tires,” says Stevens.
Service Tire Truck Centers Inc. of Bethlehem, Pa., is “continually watching the pricing coming from Chinese imports, which is pressuring the Tier 2 tires and retreading,” according to Scott Bennett, vice president of sales. The company is ranked No. 12 on this year’s Top 100 list, up one spot from last year.
Imports are affecting casing supply at Allen Park, Mich., based Belle Tire Distributors Inc., which is ranked No. 22 , down two spots. “Casings continue to be an issue in regards to major brands,” says Tom Bowman, vice president of the commercial division. “With all the Tier 3 and Tier 4 imports flooding our North America market, the quality is getting tougher to find in the Tier 1 and Tier 2 casings.”
Bill Ziegler, president of Ziegler Tire and Supply Co., says the Massillon, Ohio-based company has been challenged by casing supply and price competition. “Casing availability has been very difficult for the year, although it has been easing up. Casing prices are starting to drop a little. The low price on Chinese tires has definitely started to squeeze the pricing on retreads and this has affected our volumes. As the raw material prices have declined the retread rubber manufacturers have been slow to lower prices and the Chinese imports have been quick to lower their prices,” he says. The company is No. 27 in the rankings, up two spots from last year.
Customers choose a lower cost tire because they don’t understand cost per mile, according to Rick Majewski, vice president of Wilson County Tire and Retreading in Lebanon, Tenn. “I think they ought to put a tariff on Chinese tires to pay for the highways because they’re pricing the tires so low they are going to put the retreader out of business. If everyone retreads a premium product, the retread will outrun the Chinese tire in mileage. But people don’t look at long-term cost, they look at acquisition cost, that’s the problem.”
Wilson County Tire and Retreading is part of Sumerel Tire Service Inc., which is owned by Rick’s brother Bob Majewski. The Newport, Ky.-based company is ranked No. 60 on the list, up three spots from last year. The plant opened in July 2014 and has seven employees. Even with the pricing pressures from imported tires, the plant was profitable by August. Majewski says his core customers are dealers who do not have their own retread plants, and he expects business levels to double in 2015.
While volumes were higher overall, business levels were down for OTR retreaders serving the mining industry. Government regulations placed on coal mining and the use of coal in power generation are behind the decline, according to Jim John of Craft Tire Inc./Shrader Retreading in Uniontown, Pa. “Also, road construction and housing construction are still lagging behind a normalized pace.” The company dropped two spots to No. 37.
Acquisitions in a nutshell
Several dealers added market coverage and retread capabilities through acquisition. Best-One Tire & Service purchased a Bandag retread plant in Alliance, Ohio, from American Tire Distributors Inc. (ATD) in August 2014. ATD had acquired the plant from Terry’s Tire Town Holdings Inc. earlier in 2014. The Alliance plant operates under the Great Lakes Best-One Tire & Service banner. Best-One Tire Group now has 16 retread plants and holds the No. 5 spot, the same as last year.
Also in August 2014, McCarthy Tire Service Co. Inc. purchased Terry-Haggerty Tire Co. from Jim and Tom Terry. The acquisition gave McCarthy a combined commercial-retail location and a stand-alone retread shop in Albany, N.Y. The purchase increased McCarthy’s production capabilities for Bandag retreading by 200 units a day. McCarthy now has seven Bandag retread plants and one OTR retread plant. The Albany plant helped push it to No. 7, up one spot from last year.
Bob Sumerel Tire Co. Inc. of Erlanger, Ky., gained a Bandag plant in Wooster, Ohio, as part of a transaction involving five Kauffman Tire Inc. locations. The purchase increased capacity by 150 truck tire retreads a day. Bob Sumerel Tire now has six retread plants and ranks No. 16, the same as last year.
ComCar Industries Inc. of Auburndale, Fla., retreaded its own casings for its trucks up to November 2014. At that time, ComCar sold its Bandag plant to Boulevard Tire Center based in Deland, Fla. ComCar was retreading about 9,000 medium truck tires annually. Boulevard now has six retread plants and holds the No. 15 spot, the same as last year.
More “BestDrive” shops open
“Others” account for 4.5% of domestic retreaded truck tire market share, behind Bridgestone Bandag Tire Solutions (42%), Goodyear Tire & Rubber Co. (25%), Michelin Retread Technologies Inc. (23.5%) and Marangoni North America Inc. (5.%). “Others” includes Continental Tire the Americas LLC, which opened its newest company owned and operated retread shop in March 2015 in Detroit, Mich. It is one of three Continental plant locations in the U.S. The shops are branded “BestDrive.” A BestDrive retread plant has been operating in Memphis, Tenn., since September 2014 and in Phoenix, Ariz., since May 2011. Production for the three BestDrive plants places Continental at No. 42 on the Top 100 list.
Continental is focused on creating a retread footprint that will allow it to better service fleet business, according to R. Scott Miller, ContiLifeCycle manager for the U.S. and Canada.
“Our strategy is to target retread opportunities that include existing retread operations for conversion such as Piedmont Truck Tires in North Carolina or to partner with entrepreneurial new start-ups as we did with DLS Retreading in South Carolina. Our final approach is to establish our company-owned BestDrive retread tire facilities in markets that have a high demand for retread where the first two options are not available.”
Continental says 13 independent dealers are ContiLifeCycle licensees. With the exception of Piedmont Truck Tires and DLS Retreading, the company declined to identify them or discuss plans for new licensees and company-owned locations.
Building business through training
Jack’s Tire and Oil Management Co. Inc. is training its sales force to better understand issues unique to fleet owners and managers. The Logan, Utah-based company is ranked No. 20, down two spots. “Everybody sells tires and retreads. We have to make sure we understand their hot buttons,” says Bob Feldbauer, CEO and president. The hot buttons for trucking companies are driver retention and compliance with the federal government’s Compliance, Safety, Accountability (CSA) initiative to improve fleet safety. Feldbauer says the training helps the sales force explain how quality retreading services help fleets maintain CSA scores and retain drivers.
Heartland Tire Inc. began training its customers in the nuts and bolts of retreading operations in 2014. Based in Brainerd, Minn., Heartland offers retail and commercial services through 12 locations. The company acquired five retail stores in the Minneapolis area in October 2014. Heartland retreads tires for its commercial stores as well as retread customers across the Midwest. The company holds the No. 88 spot; it was not ranked on the Top 100 last year.
“Many people have taken a plant tour at one time or another, but that is just a quick snapshot of how a tire flows through the plant,” says Jim Anderson, director of retreading. To educate customers about its process, benefits and value, Heartland expanded the typical plant tour to two days of hands-on training.
Heartland splits attendees into two groups of five or six. One group learns about tread designs, correct application, warranty information and more in a classroom setting as the other group is trained in the plant.
The attendees spend the most time in the initial inspection and the RAR (Returned as Received) areas. “Let’s face it; we as an industry haul around way too many casings that will never make it through initial inspection,” says Anderson. “The only way to make this situation better is through educating the customer who will in return educate the end user.”
Anderson says there is no better way to educate a customer than placing him or her alongside the person working the initial inspection station. The knowledge acquired is carried out into the field where commercial tire salespeople can add value to their end users. Customers also examine examples of returned as received casings. Learning why a casing is rejected is more effective than seeing a note on a report that a tire did not make it through the inspection process.
The company is launching a monthly newsletter for retreading customers in April 2015. Heartland is also gaining more exposure through trade shows, event sponsorship and involvement in relevant trade associations. activities which Anderson says are paying dividends already. “It doesn’t matter what industry you’re in, you must find new ways to better serve your customers and make it easy for them to do business with you,” he says. ■
To see the MTD 2015 Top 100 Retreaders list, click here.