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Industrious endeavor

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Industrious endeavor

For a tire dealer, a slow-moving tire might refer to one that doesn’t sell. Not to Bruce Fate, manager of the Industrial Tire Division at Commercial Tire Service (CTS) in Melrose Park, Ill.

“I call the industrial tire business the ‘slow-moving’ tire business because they’re tires that you find on slower-moving equipment,” explained Fate. “It could be a Bobcat machine, it could be a forklift, it could be a front-end loader or it could be lawn and garden equipment.”

Fate said he’s been trying to master the slow-moving tire business for 30 years, and he’s still learning. Currently, the industrial tire brands CTS handles are Kenda, Continental, Solideal, Tong Yong, Uni/Ace, Samson, Goodyear, Hankook and Carlisle brands.

Fate has seen many post-recession changes in the industrial tire market. He said that like everywhere else in our economy, the market has softened since 2008.

“Demand isn’t as high as it was previous to 2008,” explained Fate. “Even though equipment may not be used as hard or as long or on as many shifts, it’s still being used and tires end up being replaced. The more multi-faceted you are as a dealer, the better chance you have of getting more of that business — and keeping it.”

With post-recession corporate belt-tightening, a lot of companies are gearing themselves toward having fewer vendors. Fate said some material handling dealers are really benefitting from that trend.

“Some dealers garnish a lot of solid tire business because they are the forklift parts supply operation for a company,” said Fate. “Many times, a forklift tire is just considered another part.”

In addition to supplying tires and parts for equipment, dealers like Fate are getting into the service side of the business. CTS not only supplies the tires for industrial equipment; the company also does the service for it.

A new competitor?

Fate said that a current issue for him is that some manufacturers are going directly to the end-user. In doing so, they cut out the distributor and the dealer.

“They’re going after freight carriers that are high-usage operations,” said Fate. “For a company to be able to supply solid forklift tires to these operations, it’s a big windfall of business. Some manufacturers are going for that side of the business.”

Fate said that in one instance, there was a big scrap company with a large amount of equipment including front-end loaders, forklifts and Bobcats. One of the manufacturers went to them directly – while CTS was doing business with them.

“They went in and offered to sell them tires directly, and then they arranged for my competition to do the service,” explained Fate. “Everyone in business today is looking to do more with less, and they cut out people. When that happens, the relationship between manufacturer and dealer gets to be strained. That is a current trend in the market.”

Fate said that some manufacturers go after industrial tire market share when they could be employing tactics to fortify their dealer base. Good pricing and strong structures to bring in more business help dealers like CTS. But in some markets, manufacturers are opening company stores.

“The company stores are not just your local Ma & Pa change-your-car-tire places,” Fate explained. “These are large facilities dedicated to aligning front-ends on trucks and doing larger fleet service. With that in mind, your supplier is now your competitor.” Fate also said that the average margin on sales has dropped for truck, commercial and industrial tire dealers. How do they deal with that loss?

“You have to buy smarter and you have to make deals with people who are truer,” said Fate. “Loyalty goes a long way, but loyalties aren’t there as much as I think they should be.”

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Keep the variety

“If you consider the business that a commercial tire dealer does, industrial tires are a smaller segment of that business,” said Fate. “But without industrial tires, it doesn’t get you the variety of business that can be had out there. There are smaller tire dealers that will buy from larger ones because the larger ones can maybe work on a smaller margin and allow the smaller dealer to make a profit and he can control or maintain service with his customer.”

Fate said 65% to 70% of an industrial tire dealer’s business is solid-type tires. Compare that to a combined commercial/industrial tire business.

“You may have one truck out doing solid tires all day long, but you have three or four other trucks that are handling a variety of other applications whether it’s a pneumatic forklift tire, a tire on a Bobcat, on a front-end loader or a backhoe.”

Fate thinks that for dealers who offer variety, industrial tires will remain a mainstay of the tire business in general.

“Tires are the largest expense of the truck tire business – the average truck tire goes for $500 to $600 each now,” said Fate. “A retread is $300. You’re talking about big dollars as compared to a $150 forklift tire.”

While the dollars aren’t as big for industrial tires, the units can be high in number. The service from those units can be quite high as well, so the overall gross profit average is higher. Fate said that makes it worth it to be in the business.

“I’ve been in this business for a long time. I started with BFGoodrich when Goodrich was really in the tire manufacturing business, servicing tires and such, and I got into specializing in industrial tires back in the late 1970s. It’s been part of my working career for 30 years. You’re not just looking for an order today and then you forget them tomorrow.

“People want value. People want quality products. You’ve got to be there for them.”    ■

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