Representatives from major OTR tire manufacturers share their thoughts on the U.S. OTR tire market in 2023 via this MTD exclusive.
Chris Rhoades, vice president, BKT USA Inc.: In the first half of 2023, the biggest impact on OTR tire market demand was available stocks with dealers, with higher freight subsidy costs. Average costing took its time for dealers to implement, which started 2023 very slowly. After a few months, raw materials started stabilizing, freight rates started normalizing and domestic transportation/shipping companies also started rationalizing costs. The second half of 2023 turned out to be much better and we were able to recoup lost sales from the first half.
Rob Seibert, president, off-the-road, U.S. and Canada, Bridgestone Americas Inc.: In 2023, we saw a continuation of the popularity of products that prioritize productivity and asset optimization. Customers want products engineered to lower total cost of ownership and increase productivity for their operations. Additionally, there is growing demand among customers for real-time updates on every aspect of their operation in the palm of their hand and technologies are coming to market with this ability. We also saw the global supply chain begin to recover in 2023 after backlogs challenged the OTR industry in 2022 — a welcome sight for market demand.
Tony Cresta, director of product management, CMA LLC: The start of 2023 was slower than the first quarter of 2022 from a manufacturer’s perspective. This trend relates back to the end of 2022, when dealers took in large amounts of inventory that had higher associated freight costs. Dealer sellout was slower at the start of 2023, but once the market thawed in April, we generally saw a nice uptick in sales and dealer sellout in the U.S. OTR tire segment. That trend carried us through much of the rest of 2023.
Matt Futrelle, head of global business field, earthmoving, Continental Tire the Americas LLC: In 2023, we saw a shift in higher market demand to a market that had more tires available than needed. As this occurred, many dealers had unfulfilled orders that started to fill all at once, eventually leading to an overstock situation. We saw many manufacturers and dealers resolving this issue at year end to start 2024 in the right position. Although challenging, we are satisfied with the performance of our earthmover tire business in 2023.
Loic Ravasio, general manager, global and Americas OTR, Goodyear Tire & Rubber Co.: One of the biggest trends Goodyear observed in 2023 was the challenging impact of external forces on the U.S. OTR industry and how we responded. After a 10-year high in 2022, driven by a surge in demand as a byproduct of the -19 recovery, our industry dealt with supply constraints and conflicting macroeconomic pressures in 2023. Rising inflation and interest rates lead to inventory reduction and dealer destocking so they could focus on cash impacting inventory and buying decisions. The different OTR segments experienced ups and downs during the year, but all of them had some positive momentum as we finished the year. Non-residential construction and infrastructure segments were up thanks to several bills passed by Congress and the president. Residential construction growth was slow during part of the second half of 2023, but rallied with a 20% surge in December, leading us into 2024 with momentum. The global mining segment grew year-over-year as the entire industry adapts to the changing demands of switching toward more renewable energy and that impacted the U.S. market positively. Geopolitical impacts also meant a steady year for the military OTR segment. All of these factors led to a challenging year for the U.S. OTR tire market in 2023, but two things continue to be clear: tire manufacturers found success by focusing on new products with innovative technologies and investing in solutions to keep OTR fleets up and running to maximize their tire investment.
Jimmy McDonnell, vice president of sales and marketing, Maxam Tire North America Inc.: Inflation, interest rates and general economic conditions. Projects were either delayed or canceled due to these economic impacts. We were expecting a large amount of infrastructure funding from the U.S. government, which has not been actualized in the expected amount. In general, we faced significant headwinds in the market that limited opportunities.
Jesse Burdett, market intelligence, OTR, Michelin North America Inc.: With limited supply of original equipment in 2020 and 2021, business owners were forced to run used equipment past normal economical maintenance cycles. As supply of equipment has improved, those same business owners have been purchasing new equipment to avoid the extended downtime and elevated maintenance costs of older equipment. With the majority of that new equipment coming with OTR tires already mounted, the need to purchase tires from dealers was negatively impacted in 2023.
Stephen Reynolds, OTR director, Triangle Tire USA: The OTR tire market remained steady in 2023, while the industry held its breath waiting for the infrastructure legislation that was passed to be funded and then converted into active projects. We never really saw the boom in projects, but rather than experiencing a decline, the market held steady. One major factor that influenced the market early on was overstock of product at the dealer level. We saw dealers try to shift their strategy for ordering inventory from a container purchasing model to more of a domestic warehouse ordering model, so that they could get product on an as-needed basis. Fortunately, we saw this coming and got out in front of it by ordering heavily for our new warehouse locations. While container ordering (of) OTR product remains a strong part of our business, this shift to domestic warehouse orders has been good for both us and our customers. We will continue to put emphasis on domestic stocking levels and refining our product mix to best service our customers in 2024.
Dhananjay Bisht, product manager — earthmoving, construction and industrial tires, Yokohama Off-Highway Tires America Inc.: The biggest influence on the 2023 U.S. OTR tire market was high inventory levels throughout the distribution and dealer chain. The shortages of the COVID-19 years were replaced by full shelves in 2023 — the result of dealers buying to restock and manufacturers’ renewed capacity to fill those orders. This left little room for new orders — a slowdown that was felt up the supply chain. In terms of utilization of tires and equipment, 2023 saw steady growth in construction, aggregates and mining, boosted by U.S investment in infrastructure and jobs.
Chan Phothisane, OTR national sales director, ZC Rubber America Inc.: ZC Rubber America had a strong year. We started off slow at the beginning of the year due to heavy rain in many parts of the country, especially the western region. Tire dealers were overstocked with high-dollar inventory from 2022. Freight rates started dropping in 2023 and there was a race to move out the high-dollar tires. Once the ground dried up and inventory started flowing, demand for OTR tires went up. New construction on apartment buildings and multiple housing units like duplexes is (being) seen across the U.S.
