LOUISVILLE, Ky.—Competition in the already price-conscious retread market will heat up even more in this year, as new-tire manufacturers become increasingly active in retreading as a means of providing cradle-to-grave tire service to commercial accounts. That's the prediction of International Tire and Rubber Association Executive Director Marvin Bozarth, writing in his annual ``Retreadonomics'' forecast in the April issue of ITRA's Tire Retreading/Repair Journal.
Price cutting in 1996 marred an otherwise reasonably good year for retreading, Mr. Bozarth reported.
Whereas most factors contributing to the retreader's cost—labor, raw materials, overhead, delivery cost and insurance—increased last year, unit profit margins declined, he said.
U.S. retreaders, whose ranks continued to dwindle last year, have responded to the profit squeeze by looking for new ways to trim costs—including the purchase of new, more efficient production equipment.
Retreading equipment sales were ``exceptionally strong'' in 1996 and should continue to be so through the remainder of this year, he predicted.
Passenger tire retreading declined primarily due to plant closures. However, light truck tire retreading remained stable and medium truck and OTR/aircraft tire retreading showed the greatest growth.
Passenger retread production, which has been on the decline for many years, decreased 16 percent from the year earlier to 4.2 million units in 1996, according to Mr. Bozarth. He expects a further decline in 1997 to 3.9 million units.
The shuttering of Chicago-based Achievor Tire L.P.—the second largest passenger and light truck tire retreader in the U.S.—had a serious impact on the number of passenger units produced last year, he said.
The plant's equipment has since been acquired by Ray Carr Tires of Harrisonburg, Va., which had indicated plans to relocate the operation. However, this has not been accomplished to date.
The lack of an orderly distribution channel for processing retreadable casings also is a serious detriment to passenger retreading, according to Mr. Bozarth.
Despite the fact that there are many passenger casings available, retreaders still have difficulty locating the sizes and types they need. One reason, he said, is that some recycling programs pay nearly as much to dispose of the casing as it is worth to the retreader.
Meanwhile, the time spent gathering retreadable casings and disposing of the tremendous number that must be scrapped also is a negative factor for passenger retreading, he said.
Retreading of light truck tires declined 2.8 percent to 7 million units in 1996, according to Mr. Bozarth, who forecasts about the same number for this year. He said retreaders are experiencing a relatively high rejection rate for light truck casings—with the exception of all-steel radial casings which are in short supply.
Medium truck retread production increased to 16.5 million units, up 3.1 percent from 1995, Mr. Bozarth estimated. He looks for a 2.4-percent increase again this year to about 16.9 million units.
The ITRA said 1,327 retread plants were operating in the U.S. at year's end—a decrease of 3.2 percent from 1995. Of this total, about 1,200 shops process medium truck retreads.
The ratio of medium truck retreads produced by mold vs. precure methods in 1996 remained virtually unchanged from the previous year, with precure accounting for 74 percent and mold cure some 26 percent.
Better than eight in 10 medium truck retreads processed last year were radials. Of these, precure accounted for about 83 percent of the radial retreads turned out.
Off-the-road and aircraft tire retreading was up slightly in 1996, increasing to 680,000 units from 678,000 the year earlier. Mr. Bozarth is forecasting a total of 681,000 OTR/aircraft units for 1997.
As a group, U.S. retreaders in 1996 consumed 578.6 million pounds of tread rubber, up slightly from 573.3 million a year earlier, according to Mr. Bozarth, who placed the value of industrywide retread sales at $2.18 billion. For 1997, he is forecasting for a 3.2 percent increase in tread rubber consumption to approximately 596.8 million pounds.