LOUISVILLE, Ky.—The biggest factor limiting the growth of retreading during the coming year won't be competition from low-cost new tires, the scarcity of retreadable casings, the high cost of tread rubber or other problems that always have dogged retreaders. To be sure, some of those difficulties will persist. But the industry's toughest challenge—and its greatest obstacle to growth in 1999—is finding and employing enough trained and qualified workers to keep retread shops operating at optimum levels.
That's the opinion of Marvin Bozarth, executive director of the International Tire and Rubber Association, formerly the American Retreaders Association.
Mr. Bozarth, who foresees modest increases in most retreading segments, except for passenger and light truck, said many shops last year weren't able to keep pace with customer demand.
``Almost every retreader I talked to in the summer was having trouble getting orders filled,'' Mr. Bozarth said. ``They could have had improved sales if they had more people in production and more productive people.''
Retreaders are hardly alone in battling a labor shortage, he pointed out. Help-wanted signs are everywhere these days, as the nation's unemployment rate is the lowest it's been in decades.
Retreaders whose businesses are located in areas of heavy industry—where automobiles or trucks are produced, for example—find great difficulty competing with the wages and benefits offered by such employers, Mr. Bozarth said.
Some retreaders have begun offering profit-sharing programs or production bonuses to attract employees and maintain shop output.
``Incentive programs and benefits are the only way to keep people'' these days, Mr. Bozarth said. Employers always have found it advantageous to offer such enticements, he said, ``but now it's almost a requirement.''
The practice of paying workers a fixed wage is ``going to have to change,'' he said. These days, employees must share in the benefits when their employer does well.
Because of the shortage of labor, he said, many retreaders aren't able to take full advantage of their shops' equipment capabilities.
``Very, very few plants are operating equipment to capacity, whether it be curing equipment or buffing equipment,'' he said.
Most precure plants, Mr. Bozarth said, are running only eight hours a day. ``That can't be the ultimate,'' he said. ``Imagine General Motors or Ford operating only eight hours per day—they'd go out of business.''
Retreading plants need to operate more than eight hours per day in order to make their equipment pay off. Some need to go to multiple shifts, Mr. Bozarth said.
``I can see plants that will be running 24 hours a day,'' he said. ``They'll have to in order to be efficient.''
Overall, 1998 was a good year for most retreaders, and the coming 12 months promise to be just as good, if not slightly better, Mr. Bozarth said.
Shops turning out medium-truck retreads had a particularly busy year in 1998, he said. Approximately 17.7 million medium-truck retreads were produced in 1998, up slightly from 17.5 million the previous year. Mr. Bozarth looks for 18 million units to be produced in 1999, a 2.9-percent increase from the past year.
Passenger and light-truck retreaders didn't fare as well in 1998, however. Production of passenger retreads fell to 2.9 million units from 3.8 million in 1997, and should continue declining to an estimated 2.5 million units in 1999, he said.
Meanwhile, the number of light-truck-tire retreads turned out in 1998 remained virtually unchanged from the year before at 6.9 million units. Mr. Bozarth expects light-truck retreads to slip to 6.8 million in 1999, a 1.4-percent decrease.
The number of off-the-road retreads declined slightly in 1998 to 495,000 units, from 496,000 the year before. Mr. Bozarth looks for a modest increase this year thanks to the ``Transportation Equity Act for the 21st Century'' (TEA 21), which earmarked $175 billion for highway maintenance and construction—much of which remains to be spent.
Retreaders, who faced a 2- to 4-percent increase in operating costs in 1998, managed to get through the year without having to face a price increase on tread rubber. Moreover, chances appear good for a possible decrease in material costs during the coming year, Mr. Bozarth said.
``If the price of crude oil stays below $11 a barrel, I don't see why (rubber) companies won't possibly offer some special prices,'' he said.