Published on April 2, 2014

North American commercial sector — 'status quo'

Trucking Moves America Forward photo

AKRON — With the exception of a couple of high-profile tire brand allegiance swaps, the commercial tire business in North America last year was essentially status quo, with the known large players “holding serve.”

On the whole, U.S. demand for new truck tires fell short of expectations, ending the year 1.1 percent behind 2012 after the Rubber Manufacturers Association (RMA) predicted in late 2013 that demand would push shipments up about 2 percent in 2013.

The RMA cited a driver shortage that limited truck utilization as a key reason for the drop.

For 2014, the RMA is again forecasting a rebound of about 2 percent, or roughly 300,000 units, to 16 million units as truck tonnage and manufacturing continue to grow.

Domestically sourced tires reclaimed market share last year, although that shift was aided in part by the protracted, complicated labor strife at Cooper Tire & Rubber Co.’s Cooper Chengshan (Shandong) Tire Co. Ltd. joint venture in Shandong, China,

In large part because Cooper Shandong stopped supplying Cooper (Roadmaster) branded tires to Cooper from about September onward, truck tire imports from China slipped 1.4 percent last year, while imports overall were down 3.5 percent to 10.2 million units.

Despite the slip, imports still accounted for roughly 65 percent of the U.S. aftermarket, with Chinese tires making up more than six out of 10 truck tires imported, or roughly a 40-percent share of the U.S. aftermarket.

The average value of an imported truck tire dropped nearly 10 percent to $184.31. The values ranged from $141.27 for a tire from China to $370.11 for one from Italy, the data show.

The eroding value of new truck tires, at least in the lower tiers, is reason for concern for a lot of dealers, who see the price difference between a new offshore tire and a premium retread shrinking to the point that a lot of buyers—especially among independents and small fleets—are favoring the new tires increasingly.

Aftermarket shipments of medium/wide-base/heavy on-highway commercial truck/bus tires slipped 1.1 percent to 15.7 million units as a driver shortage limited truck utilization. Domestic production grew 4.6 percent to 13.8 million units and OE shipments fell 5.2 percent to 4.8 million units.

For 2014, the RMA is forecasting a rebound of about 300,000 units, or about 2 percent, to 16 million units as truck tonnage and manufacturing continue to grow.

Demand for new trucks and trailers in 2014 is expected to rebound, however, the RMA said, boosting OE demand for tires by roughly 5 percent to nearly 5.1 million units.

Starting out slow

The year started out relatively sluggish for most dealers, however, because of the extreme winter weather that beset the Midwest, near South and Eastern Seaboard, dealers reported.

Among dealerships, Eastern Iowa Tire/Heartland Tire Group of Davenport, Iowa, jumped 11 places to a tie for No. 26 on the list as sales advanced 48 percent to $64 million on the basis of a change in the company’s reporting to include all operations under its umbrella. Eastern Iowa and Heartland Tire — owned by Gary Van Blaricom and Mike Garrett, respectively — merged several years ago but hadn’t incorporated Heartland Tire’s business into the combined company’s reported sales data.

The group comprises 15 commercial locations in Iowa, Kansas, Missouri and Nebraska — doing business as Eastern Iowa Tire, Heartland Tires & Treads, Davis County Tire and Weldon Tire — and five Bandag retread plants.

The Group is 88-percent concentrated in the commercial tire/retreading segment, with about 7 percent retail and 5 percent wholesale, according to Mr. Blaricom, president.

Another dealership change worth noting was T&W Tire Inc.’s decision last spring to ally itself with Michelin Commercial Service Network and Michelin Retread Technologies (MRT), ending a 27-year relationship with Goodyear.

T&W Managing Partner Steve Theissen said the decision to switch was based on a number of points, including growth potential, common market strategy and supplier support.

The move added 14 key locations in Oklahoma and Texas to the Michelin service network and gave Michelin its first MRT retreader in the state.

The move also resulted in Good¬year’s decision to open four Commercial Tire & Service Center locations in the area in the months since the split, including one in Wichita Falls, Texas, in January.

The Wichita Falls center complements Commercial Tire & Service Center sites Goodyear opened last year in Oklahoma City and Tulsa, Okla.

Southern Tire Mart L.L.C. of Columbia, Miss., consolidated its No. 1 status among North American commercial tire dealerships last year, posting 3.5-percent higher sales of $725 million while opening four new service locations to bring its network to 64 sites in nine states stretching from Texas to Florida.

STM also operates 18 Bandag system retread plants and is considered the No. 2 retreader in North America. The dealership also has expanded its presence in retail and OTR the past few years, adding retail services at 17 locations and creating an OTR service division.

Kal Tire, Fountain Tire, Les Schwab Tire Centers Inc. and Pomp’s Tire Service Inc. round out the top five in North America.

Besides the top independent dealerships, the commercial sector comprises extensive manufacturer-owned distribution networks from Bridgestone Americas (GCR and TDS), Goodyear (Commercial Tire & Service) and Michelin North America Inc. (TCi Tire Centers L.L.C.).

Bridgestone has the most extensive network with 212 locations throughout the U.S. and across Canada. Goodyear’s Wingfoot unit, which is changing its identify to Goodyear Commercial Tire & Service Centers, goes to market with 175 locations in 37 states, and Michelin’s TCi business has 78 commercial service locations nationwide.

Goodyear and Michelin both launched initiatives recently to expand their influence in the marketplace.

Akron-based Goodyear is extending the Commercial Tire & Service Center identity it created last year for its company-owned commercial service locations to independent dealers, hoping to create a nationwide network of Goodyear-affiliated truck tire servicers.

Michelin, on the other hand, recently disclosed its plan to set up a national network of affiliated mechanical service providers for trucks under the Michelin Truck Care banner.

The tire maker is shooting to have more than 100 service locations — providing light mechanical work, etc. — in operation by year-end.

Among dealerships already committed to the Michelin Truck Care program are Allied Tire & Oil, Omaha, Neb.; Colony Tire Co., Edenton, N.C.; Raben Tire Co. Inc., Evansville, Ind.; Snider Fleet Solutions, Greensboro, N.C.; Service Tire Truck Centers Inc., Bethlehem, Pa.; Shrader Tire & Oil Co., Toledo, Ohio; Valley Tire Co. Inc., Charleroi, Pa.; and  Ziegler Tire & Supply Co., Massillon, Ohio, along with Michelin’s TCi Tire Centers L.L.C. subsidiary.

Together these businesses comprise more than 240 service locations, primarily in the eastern U.S.

As for brand preferences, Michelin remained the No. 1 brand choice among North America’s top commercial dealers, being offered by 36 of the 50 dealerships ranked.

Continental ranked second at 33 dealerships, followed by General and Yokohama at 32 each, Firestone at 27, Bridgestone at 25, BF Goodrich at 23 and Goodyear at 16.

Goodyear Commercial Tire Systems remained the No. 1 retreader in North America, despite an estimated 12.5-percent drop in production last year to 34.5 million pounds of tread rubber used and 4,810 units a day.

Southern Tire Mart solidified its No. 2 ranking, raising production slightly to 25.8 million pounds of tread rubber used, or 4,350 tires a day.

Bridgestone Commercial Solutions was No. 3 at just shy of 25 million pounds.

Snider Fleet Solutions of Greensboro, N.C., took over the No. 4 spot over Best One Tire & Service.

Royal Tire Inc. of St. Cloud, Minn., was the premier retreader in terms of growth, boosting output last year more than 60 percent, with the addition of a third retread shop via acquisition.

Of the top 50 truck tire retreaders, 22 are Bandag system licensees (including Bridgestone Commercial Solutions); a dozen are Michelin Retread Technologies licensees (including TCi); six each use the Marangoni RTS; Goodyear systems and Michelin’s Oliver Rubber unit have five affiliates each; and two have adopted the ContiLifeCycle system.

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To reach this reporter: bdavis@crain.com; 330-865-6145.

 

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