Strong export demand, large increases in corn-based ethanol production, comparatively high commodity prices and other factors will push United States net farm income to a projected record of $90 billion in 2008. Farm tire dealers throughout North America are seeing the benefits.
“Farmers are coming off one of the best years they’ve had,” says Jeff Vasichek, vice president of sales and marketing for Titan International Inc. “They’re continuing to invest in equipment.”
In response to anticipated demand next year, several farm tire manufacturers are quietly boosting their production capacities.
Titan is adding “considerable” press capacity at both its Des Moines, Iowa, and Freeport, Ill., farm tire plants. The company also started producing farm tires at its factory in Bryan, Ohio. “We’re adding a good 30% to 40% capacity in radials,” says Vasichek, though he notes “it’s a pretty sharp curve to get all of it running.”
Groupe Michelin is investing in its three farm tire plants in France, Poland and Spain in order to ramp up production. (Michelin stopped making farm tires in the United States six years ago.)
Firestone Agricultural Tire Co. (FATC) has added some production in large capacity radial tires, following additions in 2007. (See page 50 for a full interview with FATC Vice President Ken Allen.)
Due to overwhelming international demand, farm tire supply was tight in 2007. “Demand is still outstripping supply,” says Jeff Jankowski, director of sales, North America, for Trelleborg Wheel Systems Americas. “But we expect some leveling off in 2009.”
That said, “order books for the original equipment farm equipment manufacturers are still strong. They’ve booked orders six or seven months into 2009.”
While supply is improving, commodity prices seem to have topped off. Corn was $7.54 a bushel this past July, according to Bill Schafer, vice president of marketing and sales, Michelin Ag North America, Michelin North America Inc. By early November, corn had fallen into the upper $3 range. However, this drop is expected to have minimal effect on business. In fact, if crop prices stabilize at a relatively high level, it will be to farm tire dealers’ overall benefit.
“Typically, farmers will take their net income from the previous year and spend it the following year,” says Schafer. “Farmers’ debt-to-equity ratio has dropped. Farmers are not highly leveraged and they don’t have to be significantly leveraged in the future in order to finance their operations.”
Bye-bye to BFG -- Michelin will focus on flagship brand
Michelin North America Inc. (MNA) will no longer offer the BFGoodrich Power Radial 80 farm tire in North America as of Dec. 31. Michelin will convert its BFGoodrich manufacturing capacity to the production of Michelin brand farm tires.
“This decision helps focus the company’s resources and energies on the continued, sustainable growth of Michelin brand agricultural tires in North America,” says Bill Schafer, vice president of marketing and sales for MNA. The company will continue to sell the Kleber farm tire brand in North America, he adds.