OTR Tire Demand Will Be Moderate to Strong this Year

Feb. 22, 2019

The consensus coming from speakers at the Tire Industry Association’s 64th Annual Off-The-Road Conference is that the economy is strong and prospects for growth in 2019 are expected. All of this spells moderate to strong demand for tires in the OTR industry.

Ken Simonson, chief economist for the Associated General Contractors of America, told attendees the U.S. economy is still growing at a nice pace. He said 304,000 jobs were added in January, making the total 2.8 million during the last 12 months, the most since 2015.

Indicators at both the consumer and business levels are generally high, with construction employment at an 11 year high. Simonson did mention that trade and fiscal policies continue to linger in the background, and there is a labor shortage for the construction industry. He said there were 382,000 job openings in construction at the end of December, more than double from the year prior.

Of this amount, contractors were only able to hire 219,000 employees in December. As Modern Tire Dealer is reporting in our February issue, labor shortage issues are a major concern across the tire dealer community as well.

In looking forward, Simonson does not believe a federal infrastructure bill will be passed in 2019. But state highways funding and other projects, particularly in the public and private airport sector, are growing substantially. He is expecting residential spending to grow in the 3% to 4% range for 2019, a slight downturn from 2018.

Kevin Rohlwing, senior vice president of training for TIA, said U.S. coal production actually declined in 2018 by 20 million short tons. Appalachian coal production increased, but interior and western production declined. Rohlwing said the U.S. Energy Information Administration is predicting a decline of 3% in coal production for 2019.

Part of the reason for the decline is due to China’s decrease in importation of coal.

Commodity pricing for aluminum, copper, nickel, zinc and iron ore held steady in 2018, according to Rohlwing, with all segments, except for iron ore, looking at slight growth in 2019. Gold and silver pricing are both expected to increase between 7% and 10%, according to various sources that Rohlwing used for his research.

Rohlwing used part of his presentation to discuss Rare Earth Elements (REE) that are used for high tech devices such as magnets in cell phones, televisions, computers, automobiles, military equipment wind turbines and jet aircraft. In 2017, Rohlwing said China produced 116.9 million tons, or 86.6% of the global production of REEs.

According to a U.S. Geological survey, America is 100% dependent on imports for the 17 different REEs. Rohlwing said the U.S. possesses 13% of known REE reserves, particularly in California, Alaska, Idaho, Montana and Missouri, but at the present time, no processing is being done domestically. The Mountain Pass area of California is extracting REEs, but had been shipping them to China for processing.

However, after being processed and shipped back to the U.S., the finished product is subject to tariffs. Rohlwing said Mountain Pass owners are planning to start domestic production in 2020. Canada is also looking to bring production to its country, with six projects to start in the 2020-2021 time frame.

To highlight its OTR technician training program, TIA shot a live training demonstration that was being done on an articulating dump truck with a 29.5R25 tire being replaced on a five-piece rim.

A tire manufacturers’ panel discussion (moderated by MTD Publisher Greg Smith) presented a targeted look at how each manufacturer viewed the marketplace and what actions each company was taking to meet upcoming demand and issues facing them. Details of this will be presented in MTD’s March issue.

TIA also announced that the next OTR Conference would be held at the Renaissance Indian Wells Resort near Palm Springs, Calif., Feb. 19-22, 2020.

For more event highlights, check out the picture gallery.