AKRON-Michelin North America Inc.'s plan to build an off-the-road tire plant in South Carolina should heat up competition in the OTR market. Michelin currently makes fewer than 2,000 OTR tires a day at its facility in Waterville, Nova Scotia, according to industry reports. The firm plans to manufacture an unspecified number of the large tires at a new plant in Lexington, S.C. Numbers from the Rubber Manufacturers Association indicate that large OTR tire shipments in the U.S. jumped 32.4 percent from 1992 to 1994-to 147,000 units from 111,000. The RMA said that number is expected to reach 160,000 units this year.
Among reasons for Michelin's move is the currency exchange rate between the U.S. and Canada, said Nick Colas, a CS First Boston analyst.
Michelin now imports OTR tires from Canada, but the new plant will eliminate the imports and reduce the firm's shipping costs, he said.
Rising demand for large OTR tires in the U.S. also played a large factor in Michelin's decision, others said.
``It's probably a good move for Michelin,'' stated James Pearl, a Denman Tire Corp. executive vice president.
``Is there room for another player? Yeah, I'd say so, but I would envision them being more radial and competing with the other larger companies rather than the smaller ones.''
The new OTR tire plant is a sound investment, said Dave Meyer, a University of Akron management professor who follows the tire industry. ``The OTR market is huge in terms of per-item pricing, and shipping's a huge deal,'' he noted.
Other tire makers are being cautiously optimistic about the market.
``There is a good demand for OTR tires,'' a Goodyear spokesman said. ``Goodyear is back-ordered on several radial sizes. Michelin's announcement that it will build an OTR tire plant in the U.S. indicates its outlook on the market.''
A Yokohama Tire Corp. spokeswoman said increased construction around the world has heightened OTR tire demand, outpacing industry production.