On the record with off-the-road tire makers
Would you consider a 20% increase in sales big? Domestic replacement OTR tire sales were up that much in 2011 compared to 2010.
Pricing was up, too. The average price of an OTR tire in the United States rose 16.5%.
Coupled with the increase in tires, sales totaled $553 million last year.
Demand certainly outpaced supply. Bridgestone Americas Inc. broke ground on a radial OTR tire plant in South Carolina, and says it expects to produce large and giant tires in 2014. A number of other manufacturers have announced expansion plans for existing plants, including Titan Tire Corp. in Brazil.
Ah, but what will happen in 2012? To find out, Modern Tire Dealer asked top executives from OTR tire manufacturers to share their large and giant tire plans with you.
In addition, they boldly made predictions on what you can expect to happen in the OTR tire segment in the near term.
Six tire makers participated: Bridgestone, Double Coin Holdings Ltd., Yokohama Tire Corp., Goodyear Tire & Rubber Co., Michelin North America Inc. and Titan Tire. (See the sidebar on the next page for more on the executives who answered the questions.)
MTD: What are your company’s plans for the large and giant OTR tire market in 2012 in terms of new products?
Angie Jones (Bridgestone): Bridgestone has a number of new products rolling out in 2012. In particular for the large and giant OTR tire market, we will expand our line of the Firestone DuraLoad to include the 35/65-33 in both L4 and L5 depths.
The DuraLoad was first introduced in size 45/65-45, featuring a larger footprint, unique sidewall protection and a new design for extended wear life. Initial field results have been positive, with longer overall life and durability. The patented sidewall protector has demonstrated its effectiveness in reducing sidewall damage from rock cuts and snags, reducing expensive removals.
Our new Premium Pattern in the 27.00R49 size is the VREP (for V-steel Rock E-Premium). The VREP features a unique tread pattern to offer longer tread life combined with a high durability casing to provide reduced cost per hour compared to traditional rock patterns.
Aaron Murphy (Double Coin): In 2012, Double Coin is in normal production of all radial OTR products and sizes up to 49-inch rim diameters. We’re in testing modes on both 37.00R57 and 40.00R57 E4 products and should see them in standard production in 2012. With our testing procedures taking place in multiple applications with multiple compounds to develop performance driven products, we won’t release the product until it meets Double Coin’s quality standards. We also plan to announce new patterns and sizes for our grader tire in 2012.
Gary Nash (Yokohama): In bias, some size expansion continues in “niche” large and giant OTR markets... to meet the needs of our customers. Radial expansion is on-going in large radial tires, with new products added each year. Giant radial tire expansion, starting with 49-inch radials, is almost ready for mass production. New products currently under development are 51- and 57-inch radials, which will take some time. The 63-inch development is always a possibility.
John Hunt (Goodyear): We are proceeding with our conversion to our new RM line of large haulage OTR tires — 49-inch rim diameter to 63-inch rim diameter — which was introduced in 2010. We are adding molds to replace older designs. We also continue to ramp up production of our 63-inch rim diameter OTR tire, which was unveiled in 2011.
Bruce Besancon (Michelin): Last year, we unveiled the XDR2 haul truck tire at the CONEXPO-CON/AGG trade show in Las Vegas. In 2012, we expect to continue expanding this line by adding a wider range of sizes.
Paul Hawkins (Titan): We are expanding several of our giant OTR product lines in 2012 to provide a more robust set of sizes. Specifically, we are adding to our LDR 250 product line for the Caterpillar 994 loader. We are also adding the 46/90R57 to the MFT 007 line and a 33.00R51 and 40.00R57 to the DTH4 line.
MTD: Do you plan to increase large and/or giant OTR tire production?
Jones: Bridgestone Americas Inc. has recently announced the construction of a 1.5 million-square-foot Aiken ORR (off-road radial) manufacturing facility at a greenfield site in the Sage Mill Industrial Park in Aiken County, S.C. The facility will manufacture large and ultra-large ORR tires, size range 27.00R49 through 59/80R63.
Additionally, through our Kaizan process of continual improvement, Bridgestone plans to continually optimize production in all of our OTR facilities globally, including our OTR plant in Bloomington, Ill.
Murphy: As the global market dictates, Double Coin will respond with the appropriate production levels. As we review industry and internal indicators for large and giant tire demand, it tends to point to steady and strong demand in the future.
Nash: Yes, the market demand, both U.S.A.-Mexico and globally, has created a “severe shortage” in all large and giant OTR products, both bias and radial. The economic downturn in 2009 severely impacted production, which has been slow to recover due to re-training the work force that was reduced during the economic crisis. However, Yokohama has fully recovered, and now, production has improved dramatically — but not enough to meet U.S. and global demand. The production increase will come mostly in the radial sector.
Hunt: We do not disclose production capacity information.
Besancon: We are always evaluating the market and working to meet customer demand. In 2011, we announced a $200 million dollar expansion to increase tire building capacity.
Hawkins: Yes, we are increasing our capacity and will continue to do so every year until the demand is being met. In talking to the major haul truck OEMs, they see their fleet sizes increasing by 50% over the next five years, which, if true, means a significant growth in replacement tire sales. These trucks use 51-inch and larger tires, so we’re ramping up our capacity in these sizes.
MTD: How would you describe global demand for OTR tires entering 2012?
Jones: We are seeing a steady increase in tire demand in the large and giant sectors driven by strong commodity prices and continued growth in developing countries. Small and medium demand is also increasing. Bridgestone is investing over $2.5 billion in combined capacity expansions to help prepare for the demand in the OTR market.
Murphy: Global demand in both the OEM and replacement channels is strong for Double Coin products.
Nash: Extremely strong. The global demand is making it difficult to supply the needs of U.S.A. and Mexico customers. However, we have been able to manage due to customer loyalty.
Hunt: Demand for large haulage tires has been very robust globally, primarily due to the up-sizing of fleets to larger trucks and the expansion of open pit mining projects. Demand for smaller sizes has been strong, as well, driven by OEM forecasts for more mining production over the next several years.
Besancon: Global demand for all mined commodities was strong in 2011, which resulted in continued high levels of tire demand. As we move into 2012, we continue to see this trend but are always keeping our eyes and ears open to see which way the market is headed.
Hawkins: Global demand is very strong. The mining companies are ramping up a lot of new projects that were slowed down in 2009 when the recession first hit. So, it was a great year for us and everyone else that supplies products to the mining industry.
MTD: How about the demand for off-the-road tires here in the U.S.?
Jones: In some sectors, U.S. demand is higher than in other countries, but the best way to look at the issue is global demand. Tire manufacturers are all facing the same increasing global demand; U.S. needs are a big part of that demand.
Murphy: North American demand for small radial OTR products was steady through 2011. Based on our forecasts from Double Coin customers, it will stay that way in 2012. As for the large and giant tire needs, (demand is) good, and dealers/users are excited about our upcoming offerings.
Nash: It continues to be extremely strong, with back orders increasing each month. Our parent company, Yokohama Rubber Co. Ltd., continues to support the U.S. and Mexico markets. However, supply continues to be limited due to global demand.
Hunt: North American demand is following the same path as global demand. Open pit mining production is up in the United States, but the majority of growth has been in Canada.
Besancon: The U.S. market has rebounded from 2009 and, in 2011, continued to see demand rise.
Hawkins: U.S. demand is also very strong. Nearly all of the market segments we serve have shown a strong demand with the exception of home building and aggregates, but we’re beginning to see them rebound as well.
The major players in the U.S. replacement OTR tire market
Our distinguished “panel” of OTR tire company executives who participated in this article are:
Angie Jones, general manager, mining and strategic services, the Bridgestone Commercial Solutions Division of Bridgestone Americas Inc.;
Aaron Murphy, vice president of China Manufacturers Alliance LLC, the U.S.
subsidiary of Double Coin Holdings Ltd.;
Gary Nash, vice president, OTR sales, Yokohama Tire Corp.;
John Hunt, manager of sales and marketing, off-the-road tires, Goodyear Tire & Rubber Co.;
Bruce Besancon, director of marketing, North American earthmover tires, Michelin North America Inc.; and
Paul Hawkins, vice president of OTR sales, Titan Tire Corp.
OTR TIRE UNITS SHIPPED
Source: Modern Tire Dealer Facts Issues, 2009-2012.
An Akuret accounting: Del-Nat brands 25-inch OTR tires
Del-Nat Tire Corp. doesn’t participate in the large and giant OTR tire markets with its own brand, choosing to partner with Guizhou Tire Co. Ltd. (bias) and China Manufacturers Alliance LLC (radial) instead.
However, according to Randy Gaetz, vice president of sales and marketing, the company is heavily involved in the small OTR tire market with its Akuret line.
“We will continue to stock and sell a full line of 25-inch radial and bias OTR tires,” he says. “North American demand continues to be strong, especially in the 25-inch segments.”