OTR industry: A positive outlook
The Tire Industry Association’s 57th annual Off-The Road (OTR) Tire Conference set an attendance record of 495 dealers, retreaders and suppliers. The conference took place Feb 15-18, 2012, in Rancho Mirage, Calif.
At the event’s opening session, Angie Jones, general manager, mining and strategic services for the Bridgestone Commercial Solutions Group, covered tire production numbers. Jones said that if commercial housing recovers in the U.S. this year, demand for OTR tires could exceed the peak year of 2007.
“When you compare statistics, in 2011 we almost got back to that 2007 level,” said Jones.
Mining tires should continue to see strong numbers as global demand increases. Global demand for oil, coal and steel will remain strong.
Jones said the U.S. industry has seen sharp unit sales growth, especially over the last three years. Total OTR unit numbers include construction, aggregate and mining equipment tires with 24-inch wheel diameters or larger.
Jones compared total OTR unit numbers for the last five years: 310,504 in 2007; 288,376 in 2008; 163,508 in 2009; 232,790 units in 2010; and 294,641 tires in 2011. Of those totals, OE sales represented 37% in 2007, 36% in 2008, 22% in 2009, 33% in 2010 and 41% in 2011. OE 2011 OTR unit sales were about four times what they were in 2009.
“If you look at the replacement channel in a little more detail, last year three-fourths of the units shipped were for vehicles used in the construction segment, with 11% for aggregates and 10% for mining,” she explained.
“If we take those same units and apply an approximate dollar value to them, we can take a look at our market on a dollar value basis. In that case, mining tires actually made up half of the dollar value in our industry last year. Construction was 30%, aggregates 18%.”
While there is plenty of optimism in the industry, Jones said some outside global influences are creating uncertainty. One of them is the eurozone crisis. Another is China, where there are indications economic growth is slowing down.
But other influences are right here in the United States.
“This year we have a presidential election, so a lot of major decisions will simply be put on hold until we get past this election and see who is going to be in office going forward,” Jones said.
OTR manufacturers key-in on pricing, technology
One of the highlights of TIA’s OTR Conference was the tire manufacturers’ panel discussion moderated by Modern Tire Dealer Publisher Greg Smith. The issue of pricing came up first, and the panelists were frank in their comments.
“We certainly feel that there will be price increases in 2012,” said Mike Baggett, southeastern sales manager, Yokohama Tire Corp.’s OTR division. “With the current oil situation, we’re going to see gas and fuel prices increase overall. If you look over the trends since 2000, there have been a lot of peaks and valleys. The price of natural rubber is $2.80 a pound. Like any commodity, you’ll see those prices fluctuate.”
“As you look at the cost of materials that are out there and natural rubber fluctuation in pricing, we have to be fiscally responsible,” said Roger Lucas, vice president of sales and marketing, Michelin Earthmover Tires. “We have to perceive price increases.”
“Since the end of last year, we’ve seen already about a 15% increase in the price of natural rubber,” said Shawn Rasey, vice president of Bridgestone Mining Solutions. “We’ll be under price pressures from the raw material standpoint.”
“We’ve watched the rubber price very closely,” said James Wang, marketing and sales director of Techking Tires Ltd. “ We see mixed messages in the rubber price and we feel for the next few months the rubber price will be increasing moderately and not as aggressively as we experienced at the beginning of last year.”
On the subject of using recycled tires and/or rubber as a raw material, Bridgestone’s Rasey said his company is doing a number of things in that area.
“The key issue for us — and I’m sure for the manufacturers as well — is to make sure that when we work materials back into our product, the performance is equal to or better.”
Rasey said that retreading is the first step in recycling, and Bridgestone continues to have a strong focus on that with its product lineup.
The panelists also discussed airless OTR tires. Baggett said Yokohama is not looking into that at this time. However, Paul Hawkins, vice president of OTR sales, Titan Tire Corp., said his company is currently experimenting with some smaller airless tires. Bridgestone’s Rasey said he expects research on airless OTR tires to be ongoing, but it will be a challenge.
“I don’t see an immediate solution on big airless tires,” he said. “There are a lot of difficult variables to try and manage and track that kind of research.”
On the subject of the shortage of natural rubber, Baggett said Yokohama’s challenge is to come up with a balance between synthetic rubber and natural rubber.
Rasey said Bridgestone has looked at options with synthetic and natural rubber alternatives. “We’ve looked at options to be able to switch them in and switch them out to substitute where we can.”
Wang explained Techking’s strategy for dealing with shortages: “For us to be prepared for shortage concerns, forecasting is very important.”
Titan’s Taylor: Mining is a priority
The keynote address at TIA’s OTR Tire Conference was delivered by Morry Taylor, CEO and chairman of Titan International Inc.
“There’s a shortage of tires and everyone is increasing capacity,” said Taylor. “This year we’re going to probably quadruple our capacity on the OTR side. We’re looking at a double-digit increase on the farm side this year.”
Taylor covered the status of Titan’s Latin American business, which the company purchased from Goodyear Tire & Rubber Co. last year.
Titan acquired Goodyear’s Sao Paulo, Brazil, manufacturing plant, property, equipment and inventories in an agreement that allows Titan to sell Goodyear-brand farm tires in Latin America and North America. Taylor said the plant will come on-stream this year, and he plans to increase South American revenue by 60% through added production capacity.
Taylor said Titan is still pursuing another Goodyear acquisition that fell through last year, the purchase of its ag tire plant in Amiens, France.
Taylor said that this year the company will continue development of a 50 x 56.5-inch wheel. Also in 2012, Titan plans to add 20 new sizes and new tires.
Taylor also expressed the importance of Titan Mining Services, established last year to offer complete tire, wheel and track services for end users. The company’s first location is in Fort MacKay, Alberta, Canada.
Taylor said the location was chosen to begin these services because of the great amount of equipment used in the region. Titan is partnering with Saskatoon Wholesale Tire Ltd., a company that has been in the area for a number of years and also represents Titan Tire.
“As we expand, Titan will be working with local businesses in all areas of the world,” said Taylor. “Titan is the only company worldwide who has the engineering expertise on wheels, tires and track components and we will be training many new technicians.”
Taylor also covered financial projections for Titan, which will likely reach $1.4 billion in sales for 2011. He said the company plans to have 2012 sales of $2 billion, with a goal of becoming a $3.5 billion company within 18 months.
One TIA/RMA voice echoes across the nation
The Tire Industry Association’s (TIA) Off-The Road (OTR) Tire Conference had a special guest when it took place Feb 15-18, 2012, in Rancho Mirage, Calif.
Charles Cannon, CEO and president of the Rubber Manufacturers Association (RMA), attended the OTR Conference for the first time. He was introduced by TIA Executive Vice President Roy Littlefield.
“Our two associations have had some high points and some low points in the past, but immediate Past President Mike Berra and current President Larry Brandt feel the industry must speak as one voice,” said Littlefield.
“We have had a mandate for a couple of years to work together,” Cannon revealed.
Cannon said he looks forward to TIA’s input and jokingly said he and Littlefield were “joined at the hip” as they march forward on the fuel efficiency topic.
Both associations put forth a consistent front in addressing a tire fuel efficiency ratings hearing in San Francisco in early February and to oppose the proposed Maryland tire aging bill. The voice of TIA and RMA combined was heard, and Maryland legislation HB 729, the tire aging bill, is now dead for the year.