Retreaders look for better year
It’s been a tough environment for retreading, and the numbers show it. According to Modern Tire Dealer’s 2010 Facts Issue, published last month, an estimated 13 million retreaded medium and heavy truck tires were produced in the U.S. last year vs. 14.7 million medium and heavy truck tire retreads produced in the U.S. during 2008.
Retread pricing also has been down. The average price of a truck tire retread fell 8% in 2009 compared to 2007, based on an MTD survey of retreaders.
Retreaded tire sales (without casings) totaled $1.64 billion in 2009, an 18% drop from the previous year.
Commercial Tire Dealer recently spoke with several independent retreaders to get their take on the market. We also asked them to discuss the challenges they’re facing and share their thoughts about what 2010 will bring.
John McCarthy, president, McCarthy Tire Service (Wilkes-Barre, Pa.): “Demand was our biggest problem last year. But from what I hear from our construction customers — road construction, especially — there is some work out there.
“The stimulus money has been very slow in getting out in some states, but some jobs have been (created) and some of our customers have secured them. These guys are going to start working. We’re forecasting a 10% increase (in retread sales for 2010).
“But you have to understand that if you call on the same customers you did two years ago, you’re not going to have as much business as you did. It’s getting your salesmen to get out there and call on new business.”
Jason Stewart, vice president, Action Tire Co. (Forest Park, Ga.): “The biggest thing is price-competitiveness. There’s always somebody who will do it for less right now. We’re going back to the manufacturer to get as much support from them.
“We’ve gone after more wholesale business — other, smaller tire dealers — which has kept our shop full and profitable. It’s keeping our cost-per-man-hour down.
“We feel like 2010 is going to be a flat year. So many people out there are downsizing their fleets, I don’t think it’s going to catch up.
“We’re going to watch costs, and we’re trying to expand our footprint. We’ve always focused on the small-to-medium-sized accounts. We’re now looking at large, national account business.”
Gene Graybill, president, New Holland Tire (Terre Hill, Pa.): “Our retread production is up 17% over last year. And I tend to think that retreading is going to get better. Some customers don’t have the money to buy a $400 new tire.
“The main thing (in the meantime) is watching our credit because a lot of customers who were once good are not good, even customers we’ve had for years. We’ve put about 25% of our customers on cash-on-delivery. But if you don’t do that, you’ll end up with bad debt. It’s a sign of the times.”
Mark Goodes, CEO, Craft Tire Inc. (Uniontown, Pa.): “Right now we have low demand and escalating raw material prices. We’re having a hard time finding good quality casings.
“I think everybody is (having a hard time) right now because there are so many Chinese and bias-ply tires being run… a lot of radial casings are still running.
“There are no (mining) permits being issued in Kentucky and West Virginia. The coal mining people are very skeptical about our government and its policies. Quarries have been shut down for several months because they have high stockpiles. There’s very little road construction in many of the states where we serve dealers.
“We’re watching our expenses. We’ve reduced our workforce and are trying to do things more efficiently as far as our curing and hours of operation. We’ve basically trimmed in all areas about as much as we can trim.
“I’m hoping in March and April we’ll see some kind of increase,” he adds. “Most of the dealers we talk to are anticipating slow growth until we get into 2011.” ■