Top Retreaders in the U.S.: ‘Tires Have Become a Commodity’
For the first time since Modern Tire Dealer began ranking retreaders in 1988, Goodyear Tire & Rubber Co. is not in the No. 1 spot. The company did not specify the reasons for its lower production totals, but the overall retreading industry has been affected by high volumes of low-cost tires from China.
For a while, it looked as if protective tariffs would give U.S. retreaders a chance to rebuild the markets devastated by low-cost Chinese tires. The possibility vanished in February 2017 when the U.S. International Trade Commission (ITC) voted to not levy duties on Chinese truck and bus tires. The ITC decision left many respondents to Modern Tire Dealer’s Top Retreaders survey incredulous.
“All of the information that I see points very clearly to the fact that Chinese tire companies are dumping their truck and bus products into the American market,” says Jon Langerak, president of Wonderland Tire Co. Inc., which ranks No. 69 in this year’s MTD’s Top Retreaders list.
Since the ITC’s vote, Langerak says his inbox has been filled with emails from Chinese tire companies offering new tires priced below the cost of a quality retread. He cited one advertising trailer tires for $104 and drive tires for $125, adding that such emails are a regular occurrence now
“This decision will definitely affect the tire industry and tire pricing negatively. New tire and retread pricing has been stagnant and even decreased from four years ago. This is almost entirely the result of the cheap Chinese truck and bus tires being imported into this country. I predict that most if not all of the new tire and retread price increases that were to take effect in March or April will not take place or be significantly reduced.”
Langerak sees no relief. “Most retread plant owners and sales people I have had communication with state that their number one concern today is the dumping of Chinese new tires into the marketplace. Jobs and retread plants are at stake in this decision, and there will be jobs lost and plants closed if this trend continues.”
Bob Majewski has been in the tire industry for 53 years. “I watched the passenger tire retreading disappear with low-cost tires. Now if the new tire companies have their way they will run truck tire retreading out also,” says Majewski, who is chief technical officer at Sumerel Tire Service Inc. Newport, Ky.-based Sumerel Tire Service is ranked No. 54.Noah Hickman, president of H&H Industries Inc., notes that in West Virginia and eastern Kentucky, the mining business has increased since the November election. “As we close February, retread and repair business in this area is better than it has been in the past two years and mining companies are more optimistic. Since January, the natural rubber price has increased, so our costs have jumped up. Almost all the major manufacturers have increased their prices, but the import tires and their cheap costs are now our biggest problem.” Hickman’s Oak Hill, Ohio-based company is in the No. 23 spot.
Central Tire Corp. President Terry Westhafer says a tariff would have helped his unit volume immensely. “Now that tariffs are removed I expect an ever-increasing flood of Chinese truck tire imports. The problem will become worse than ever.” Central Tire Corp. is based in Verona, Va.
A lot of tire manufacturers were counting on the tariff, according to Kevin Carr, director-tire division of TravelCenters of America LLC’s TA Truck Service Commercial Tire Network. “I think everybody was gearing up for a tariff. Without that I’ve seen a scramble. The number of vendors that have been calling us since this tariff was stricken has been unbelievable. Everybody who thought they weren’t going to be able to sell tires here is now calling us.”
The ITC decision will make the retread business tougher, according to Steve Theissen, an owner of T & W Tire and Retread Inc. in Oklahoma City, Okla., which is ranked No. 27. “Now you can buy a Chinese tire for as little as you can cap a tire. It will be much more difficult to sell a cap and casing.”
Jeff Lecklider, president of Gem City Tire Inc., says that while his cap and casing sales are down, his custom retreading business is up. “The tariff decision is concerning, but not earth-shattering. The part of our business where we pick up customers’ worn out tires and retread them is growing.” Dayton, Ohio-based Gem City Tire is ranked No. 40.
There’s a new No. 1
At the top of the rankings, Southern Tire Mart LLC took the No. 1 spot from Goodyear, which dropped to No. 2. Southern Tire Mart reported a nearly 6% increase in medium truck tire volumes while Goodyear’s medium truck tire retread volumes dropped 8%.
The acquisition of Cross-Midwest Tire Co.’s three retread plants pushed Pomp’s Tire Service Inc. up from last year’s No. 7 spot into the No. 4 spot.
New to the top 10 is Tredroc Tire Services LLC. The company landed in the No. 10 spot after Allen Park, Mich.-based Belle Tire Distributors Inc. merged its commercial division with Tredroc Tire Services Inc. of Elk Grove Village, Ill., in 2016. The “new” Tredroc has six Bandag-system retread plants.
McCarthy Tire Service Co. is in the No. 8 spot, unchanged from last year. The company opened a $3.5 million Bandag retread plant in 2016 in Wilkes-Barre, Pa. McCarthy Tire operates eight retreading facilities in Pennsylvania, New York, Maryland, Virginia and North Carolina.
Westhafer reports that Central Tire also invested in its operations. The company installed AcuTread mold cure press and matrices for super single 445/50R22.5 drive and trailer retreads as well as a shearography non-destructive casing inspection system. Its STT-1 trailer tread is now SmartWay-verified.
New on the MTD retreaders list is Monro Muffler Brake Inc., which debuts at No. 57. The company gained two retread plants when it acquired McGee Tire Stores Inc. and Clark Tire and Auto Inc. in 2016.
Monro increased retread sales about 30% in 2016 from the prior year, according to Joel Zaleski, vice president of acquisitions and operations support. “With the McGee Tire and Clark Tire commercial operations now integrated, we are moving forward with plans to strengthen and grow our commercial operations in Florida and North Carolina, and then into other states we operate in.”
He says Monro recently opened a new commercial facility in Fort Myers, Fla., and is currently expanding into the Pensacola, Fla., market with a new commercial facility, according to Zaleski. “We now operate 11 commercial locations in two states, and we look forward to continued growth of our commercial business with the addition of greenfield locations and acquisitions.”No. 6-ranked Best-One Tire Group also added a plant through acquisition. The company finalized its purchase of Becker Tire & Treading Inc.’s plant in Great Bend, Kan., in February 2017.
Several retread plants closed during the year. Singapore-based manufacturer Omni United (S) Pte. Ltd. acquired A to Z Tire & Battery Inc. in June 2016. After the purchase, Omni United closed A to Z Tire & Battery’s plant. Strouhal Tire Recapping Plant Ltd. in Hungerford, Texas, also closed in 2016 following the death of Don Strouhal in July. The Strouhal family, which continues to operate two retail stores in Texas, told MTD its retreading business was sold to Michelin Retread Technologies Inc.
Dealers try new approaches
Despite the challenging retreading environment, Langerak made significant investments in other parts of Wonderland Tire’s business. He says the company is pursuing acquisitions as part of its strategy for growth. The company purchased three locations from independent dealers who wanted to retire, increasing its commercial and retail tire locations to eight stores. Wonderland bought Reed’s Tire in Holland, Mich., in Sept. 2015, JIS Tire in Howard City, Mich., in Oct. 2016, and Root’s Tire in Ludington, Mich., in Dec. 2016.
No. 48-ranked Dorsey Tire Co. Inc. is also expanding other parts of its business to offset declines in retreading. “We’ve experienced a tremendous impact in our retreading business with declines above 8% to 10% across the board; our cap casing business has sustained a 20% decrease in business,” says Bruce Chamblee, general manager of the Pooler, Ga.-based company, which operates two commercial outlets.
He says Dorsey Tire is an anomaly in terms of tire sales. “We elected for a number of years to stay out of the Tier 3/Tier 4 battle because we didn’t sell an offshore tire other than the Dayton brand that Bridgestone made. We sold a little bit of Cooper Roadmaster but we really steered clear of fighting in that arena. We watched our business in our Tier 2/Tier 3 segment actually fall as well.”
With the ITC vote against tariffs, the company took a new approach and began carrying the Westlake brand. “We’ve had to start selling Chinese tires at the detriment to our own retread business because it’s the only way to bring profit into our company and be able to sustain ourselves,” says Chamblee.
Sales of Firestone brand truck tires, which are the bulk of Dorsey Tire’s Tier 2 business, fell 10% in 2016 versus 2015. When MTD spoke with Chamblee in March 2017, an 11R22.5 14-ply Westlake brand Chinese drive tire was selling for $230 to $240 and the Westlake trailer tire for $230 to $240 in his market. By comparison, a Firestone drive tire was priced from $370 to $390 and a steer tire from $385 to $390 (the Firestone prices are post-manufacturer price increase). Chamblee is selling retread drive tires with a premium casing for $220 to $230. His customers are choosing a new Westlake tire for $230. “That price point is why the vote was such a big deal to retreaders.”
There is also increased competition from outlets operated by Love’s Travel Stops and Country Stores Inc. and the TA Truck Service Commercial Tire Network. “I’m already dealing with company-owned operations from Bridgestone, Michelin, Goodyear and Continental,” says Chamblee. “Now I’ve got Love’s Travel Stops and TA putting programs together and competing against me as well. I don’t know a tire dealer in the country that can offer a tire buying program that can tie into fuel purchases.”
‘Tires have become a commodity’
Chamblee feels that dealerships like his will have to market themselves as service companies, not tire businesses. “Tires have become a commodity within the tire business.” Fleet operators are concerned with uptime and keeping the trucks moving. “It’s not who sells what tire brand but who can get a fleet up and going the fastest. To survive and continue to operate in our market, we’re not going to be a tire company anymore. We’re going to solicit our business through the service capabilities we have. It’s the same thing that Love’s and TA are doing,” says Chamblee.
Dorsey Tire currently offers 24-hour road service, on-site tire service, fleet checks, and a mounted tire program. The company is expanding its on-site truck and trailer repair, truck chassis repair, and in-shop major truck and trailer repair services. As part of a major expansion to its trailer repair service, Dorsey Tire just completed construction of an 18-bay trailer repair facility. Mobile truck and trailer repair services also are being added.
Atlanta Commercial Tire Inc.’s strategy also centers on service, according to Larry Faulkner, vice president of sales and marketing. “Some dealers in the Atlanta market adhere to a simple price-cutting strategy. This strategy is very disruptive to customers who need consistency in supply and timeliness of delivery,” he says.
“Our strategy has always been that we do not want to be the biggest; we want to be the best. Service is our number one priority. This strategy has allowed us to recapture business that may have been lost in the past due to price-cutting. Instead of being known as ‘the cheapest in town,’ we prefer to be considered as ‘the best servicing dealer in town.’ Based in Forest Park, Ga., Atlanta Commercial Tire is ranked No. 17.
TravelCenters of America has operated truck stops for over 40 years. The company says its new TA Truck Service Commercial Tire Network will allow it to meet increased customer demand for flexible, efficient sourcing of commercial tires. The TA network has contracted with over 140 company-owned and independent retreading shops to offer Goodyear and Bandag truck tire retreads. TA’s goal is to be a powerhouse in the industry while being able to give business to others, according to Carr. “Instead of us launching 30 retread shops, we’re able to use the retread shops that are out there as our own sources and keep those retread shops up and running.”
Carr says the use of existing shops will enable both TA and retreaders to succeed. “We have such a massive footprint for sell-out and a massive reach for fleet customers, we both can win that way. At the end of the day they are selling retread services to TA, and we’re selling the finished product for both of us. It keeps the circle of tire life flowing. Everybody prospers and no one gets hurt.”
TA sells small and medium fleets the advantages that a major fleet would enjoy, from service programs to tire programs, according to Carr. The company’s sales strategy is to offer one price per category of tires. For example, the company sells a Cooper Roadmaster tire or Dayton tire in any size and for any position for $324. “We try to structure everything so the driver or the small fleet or customer in general has more of a choice in what they buy, and then we can set them up on a program.”
Like Chamblee, Carr sees a greater emphasis on full-service capabilities in the tire business. “It’s becoming a solutions industry when it comes to tires, tire services and truck services. I think we’ll see more companies out there that offer full service — oil change, tires and fuel — taking more and more share of the business strictly because of the time savings and a volume purchasing savings for fleets and independents.”
Carr says TA’s origins are a major advantage. “We were in the service business before we got in the commercial tire business, so it keeps us a little bit ahead on that front. We feel very good about the industry as a whole. We see drivers of all size fleets down to independent owners willing to do the things they need to do to upgrade their trucks, and that’s a good sign.” ■
'The whole retread industry is being hurt’
Jon Langerak is president of Wonderland Tire Co. Inc., a third-generation family-owned company in Byron Center, Mich. He explains the impact of low-cost Chinese imports on his business, the industry and the environment, and suggests a next step for the retreading industry.
“The retreading industry in America is now in its fourth year of stagnation and decline in retread units — this will continue as long as the Chinese new tires continue to be dumped here at the prices they are. The whole retread industry is being hurt by the dumping of these cheap, low-cost tires into the U.S.
“Many fleets are buying the disposable Chinese new tires at rock bottom prices and throwing them away when worn out. This is because many of the Chinese tire casings are of very low quality and uniformity and are unable to be retreaded successfully. The retread industry serves an important role in the American economy by re-using quality casings multiple times, thereby extending the life cycle of a casing for up to seven years. This not only reduces the cost per mile for fleets but also is environmentally sound, keeping millions of tires out of landfills and scrap piles each year.
“Currently 43% of our sales come from retread and casing sales. In 2012 it was 53% of our sales. We own and operate our own AcuTread brand retread plant and have been in the retread business since 1983. We have always educated our customers on the good economic and environmental sense of retreading. For our customers, retreading has been and remains a very important part of their tire programs, and one of the important factors in getting lowest cost-per-mile results.
“We have certainly experienced erosion of retread sales as some customers opt for cheap, low-quality Chinese new tires. We always try to educate the customer but some are attracted to the cheap price of those tires. We sell very few Chinese new tires because of our commitment to retreading. We understand the good economic and environmental sense of buying a quality new tire and then utilizing that casing, once the original tread is worn out, multiple times for retreading.
“I believe it is necessary that retread plant owners, retread licensing companies, and the Tire Retread & Repair Information Bureau join together and let our voices be heard by our Congressmen and government officials on this issue. There is no doubt in my mind that China is dumping their tire products into America, and I believe the evidence clearly bears this out. One clear indicator of this is that tariffs were implemented some time ago already on both passenger and light truck tires coming from China and many of these same companies are producing and dumping their truck and bus tires in America as well.”
To see MTD's Top 100 Retreaders in the U.S. chart, click here.