HARRISONBURG, Va.—One of North America's largest retreaders has bid passenger-tire retreading adieu. Ray Carr Tires Inc. ceased retreading passenger tires Jan. 12 because of declining demand for the product, President Raymond Carr Jr. said in a prepared statement.
``This decision will allow the company to focus its resources and efforts toward continued expansion in truck-tire retreading, new-tire sales and retail/commercial locations,'' Mr. Carr said.
Ray Carr Tires' exit from passenger tire retreading comes only two months after EcoTyre Technologies Inc.—considered the nation's second-largest passenger-tire retreader as recently as 1997—officially went out of business.
Ray Carr's decision also comes at a time when passenger-tire retreading overall is in steep decline. Production last year fell nearly 24 percent to 2.9 million units and is forecast to drop another 17 percent this year, to roughly 2.5 million units, according to the International Tire and Rubber Association (ITRA). The number of shops retreading passenger tires fell 5.5 percent to 170 last year, the ITRA said.
Ray Carr Tires has retreaded all types of passenger tires since its founding in 1968. Last year it produced 60,000 passenger retreads, a stark contrast to the 350,000 units retreaded in 1982, said Tim Nicely, Ray Carr Tires' vice president of human resources.
With low new-tire prices driving the cost of retreads down, it's no surprise Ray Carr Tires could no longer turn a profit on passenger retreads, Harvey Brodsky, managing director of the Tire Retread Information Bureau, said.
``It's very difficult for a tire dealer to sell a retreaded tire to a consumer when the savings for the whole sale is going to be $4. There's not enough of a spread to make it interesting,'' Mr. Brodsky said.
The closing eliminates 20 jobs, but some the affected workers are expected to transfer to other parts of the company, Mr. Nicely said. Ray Carr Tires has offered all terminated employees severance packages based on seniority, he said.
The company hasn't decided yet what it will do with its passenger-tire retread facility in Harrisonburg, but it will sell most of the equipment, valued at approximately $1 million, Mr. Nicely said.
Ray Carr Tires conceivably could use the plant to expand its truck tire retreading unit, also in Harrisonburg, which is operating at full capacity, he said.
The dealership—already among the 20 largest truck tire retreaders in North America with daily production of 570 units—hasn't ruled out expanding its combination commercial/retail or retreading locations.
``We don't have anything planned right now, but certainly that's the direction we want to go in the future as we continue to have our locations and distribute our products through our locations,'' Mr. Nicely said.
In addition to the retread shop, the firm operates nine commercial, retail and wholesale locations throughout Virginia, West Virginia, Maryland and Pennsylvania. Two of these locations were opened during 1998.
The company wants to continue to expand its truck-tire retreading business, which experienced a 10-percent rise in sales during 1998, Mr. Nicely said.
He declined to disclose Ray Carr Tires' 1998 sales or how much sales passenger and truck tire retreading bring in annually, but he acknowledged that passenger retreading was a small part of the whole.
ITRA Executive Director Marvin Bozarth doesn't think Ray Carr Tires' exit will sound the death knell of passenger retreading.
``I think you're going to start to see some of the European retreaders set up dealerships in the U.S.,'' he said. ``I think we'll start to see imports coming in and selling to dealers in heavily populated areas.''
Retreaders who produce passenger retreads for niche markets, such as high-performance or snow tires, are more likely to remain profitable, Mr. Bozarth said.
However, Mr. Brodsky doesn't see a strong market for passenger retreads in the future because most people don't pay attention to the environment, but to their wallets.
``The days where millions and millions of retreads were sold—well, those days are over,'' Mr. Brodsky said, ``unless something drastically changes that I don't know about.
``If Raymond couldn't do it, nobody could do it, because Raymond ran a very lean operation and was retreading more passenger tires than anybody in the United States at one time.''