Despite its size, Bridgestone Bandag Tire Solutions (BBTS) was not immune to the problems that plagued the retread market in 2009, says Scott Damon, BBTS vice president of marketing. In this exclusive interview, Damon tells www.moderntiredealer.com how BBTS dealt with those challenges, and why the company "is in a good position" moving forward.
This interview is the second in a series of in-depth question-and-answer sessions with executives from the country's four largest retread companies -- BBTS, Goodyear Tire & Rubber Co., Michelin Retread Technologies Inc. and Marangoni Tread North America -- exclusively available on www.moderntiredealer.com.
Abbreviated versions of these same interviews can be found in the April edition of Modern Tire Dealer, available now!
MTD: Last year was a particularly difficult one for the commercial tire sector. What was Bridgestone Bandag Tire Solutions' retread business like? What challenges did you face?
Damon: 2009 was a challenging year for the tire industry. I think we were in a good position. We were able to maintain our position in the industry, but since the overall industry was down, we were also down to the same degree.
We’re part of a chain of what happens out there, and it all starts with the consumer. On the tail end of it, truckers and fleets are facing difficult times and are running things more tightly. That effects us. Our challenge is, how do we help them reduce costs? I think we’ve been pretty successful at doing that.
We’re seeing fleets who are looking to retread more than in the past. We’re seeing some fleets who have started retreading. Those are positive things for us.
MTD: It appears to be a very competitive time in the retread industry with a lot of retreaders switching supplier allegiances...
Damon: Bridgestone, Michelin and Goodyear represent more than 90% of the retread industry, so it’s a very, very competitive environment. It’s been the nature of our business for quite a while now.
MTD: Are the major players fighting over a smaller pie?
Damon: I don’t look at it that way. With the three major players having both retreading and new tires, you have an overall market for tire products that’s going to grow over time. It’s mature, so it may not have hyper growth, but it will grow. And the mix between new truck tires and retreads is going to fluctuate within that overall growth. It’s a function of the economy and what fleets are doing.
MTD: Do you see a rebound in 2010 on the retread side?
Damon: I don’t have a crystal ball so when the market rebounds is really anyone’s guess. The indications are the economy is going to start turning around if it hasn’t started already, but it’s going to happen very slowly.
If people have some degree of confidence and start spending money again, the trucks will start moving more, and when they start moving more, our business will follow suit.
MTD: It looks like freight movement is increasing month over month.
Damon: We track that. The thing we also watch is the capacity situation in the trucking industry. If there’s still over-capacity, which there is, you have a lot of trucks sitting idle, and that will off-set tonnage increases.
MTD: Bandag remains the market share leader in truck tire retreading. How many Bandag franchisees are there in the U.S. and Canada?
Damon: About 300 (157 franchise owners).
MTD: How many do you plan to sign this year? Do you have an objective?
Damon: No objective. Those decisions, in my mind, are driven from the customer back to us. Where do we need to be to service the fleet customer and do we have the appropriate ability to do so?
MTD: What are fleets looking for in the current economic climate?
Damon: They’re looking for ways to lower their overall cost. When they look at who they’re going to do business with, that’s what they’re going to look for. When you get down to it, they want to partner with the right distributors who can provide not only quality products but the right services and management programs. It has to be delivered efficiently when they need it and where they need it.
There’s been consolidation for years in the trucking industry. Fleets want to work with dealers and manufacturers who work together and can provide (products and services) with consistency.
We recognize that the independent dealer is a critical piece in delivering whatever it is we want to offer a fleet. Independent dealers, being independent, will certainly make their own best decisions on who they are aligned with. It’s incumbent on BBTS to make their decision easier.
MTD: Going green has become a hot thing in the commercial tire market. Does BBTS see a viable, long-term market for eco-friendly retreads. Is this a fad or something that will be a long-term part of the industry?
Damon: It’s certainly a hot topic. There’s a part of me that looks at that and is a little amused because retreading has always been environmentally friendly. With all the focus on making fuel efficient products or reducing rolling resistance, the biggest thing a fleet can do environmentally is still to retread.
If someone is interested in going green, either retreading or retreading more can be the first step regardless of the other things that are incremental to that.
I think (the U.S. Environmental Protection Agency's) SmartWay (program) is going to keep the focus on it. We’re constantly trying to minimize the trade-off between rolling resistance and wear and all the other things that go into making a great product.
MTD: The EPA is looking at verifiying retreads through the SmartWay program…
Damon: Correct. They have wanted to do that for several years, but I think the challenge has been how do verify a retread? Is it a tread product hitting a certain target? Well, the casing has an impact on that.
Do you want to require that SmartWay-approved casings be used with fuel efficient retreads to make a SmartWay-verified retread? The industry, and we’re included in that, doesn’t think that’s a good way to go. If you start to limit retreading to only SmartWay-certified casings… if you want to talk about big shifts in the casing/retread market, that would be one of them.
When you net it all out, what’s the most environmentally friendly thing to do? If you reduce the amount of retreading, you’re working against it. Going green is a good thing but fleets and customers still expect it to make financial sense. What trade-offs are they going to accept to go green?
Stay tuned to www.moderntiredealer.com throughout the month of April for more exclusive retread executive interviews!
