AKRON-The coming year should be a healthy one for tire makers, who stand to benefit from increased demand for original equipment tires and modest growth of the economy, some securities analysts predict. ``With the economic recovery going on, we expect it to be a very good year,'' said Scott L. Soffen, of Shearson Lehman Brothers in New York.
Mr. Soffen said he believes high consumer confidence and strong auto industry sales will boost OE shipments by up to 9 percent, while replacement shipments should increase about 3 percent.
Other analysts interviewed by TIRE BUSINESS agreed in large part with Mr. Soffen's expectations. They see tire shipments overall increasing by up to 3 percent and look for major growth of between 5 and 9 percent in OE shipments.
Growth will be more slugglish in the replacement market, with passenger tire shipments rising only about 1 percent, and those of truck and bus tires, 2-3 percent.
Each of four analysts interviewed agreed strengthened consumer demand will continue to bolster North American automotive sales during 1994, increasing demand for OE tires.
David Garrity of McDonald & Co. in New York, said he believes car sales will increase 7 percent this year. But Mr. Garrity said he believes longer-lasting tires will slow replacement sales enough to make 1994 a ``flat-ish year'' for tire shipments overall.
Although Mr. Garrity predicted replacement sales will dip in 1994, Wendy Beale Needham of Smith Barney in New York said she calculates the nation's trucking fleet is old enough to increase replacement sales by up to 2 percent.
Price pressures should lessen throughout the industry if OE demand proves to make gains in 1994-unless a major tire company decides to make a grab at market share, the analysts agreed.
``Pricing really took its toll on Cooper Tire and Rubber Co. and TBC Corp. Both still had profitable years in 1993, but not as profitable as had been expected at the beginning of the year,'' Ms. Needham said.
A return to full profitability will require a firming up of customer demand that allows companies to reduce price cutting, she said.
Although economic policies set by the Clinton administration during 1993 have increased consumer confidence, Harry Millis of Fundamental Research Inc. in Cleveland said he believes those same policies restrained economic growth.
``We could have been looking at faster growth in 1993 if the (administration's) actions weren't taken-particularly tax increases,'' Mr. Millis said. ``Right now, the economy seems to be on a fairly solid track.''
Mr. Millis predicted the economy would grow by 3 percent in 1994 with a ``relatively noninflationary atmosphere.''
The analysts said more shipments and low raw materials costs should make for a profitable year.
Most said 1994 would be more profitable than 1993.
No one foresaw major problems arising from this year's contract negotiations between the United Rubber Workers and Goodyear, Bridgestone/Firestone Inc. and Michelin North America, whose Uniroyal/Goodrich tire plants are unionized.
``It's always hard to predict with labor, but I'm not forecasting any'' problems, Ms. Needham said.
Mr. Soffen said plant and worker efficiency have increased during the past couple of years giving manufacturers ``more bang for the buck'' in terms of production costs.
All four analysts said market conditions do not seem to indicate the necessity for manufacturer cutbacks or plant shutdowns.
They also agreed that 1994 will be a better year for the industry than was 1993.