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June 07, 1999 02:00 AM

'98 GOOD FOR MOST RETREADERS—BOZARTH

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    LOUISVILLE, Ky.—1998 was a good year for most retreaders of truck and off-the-road tires, according to the annual ``retreadonomics'' report on the U.S. retreading industry by Marvin Bozarth, executive director of the International Tire and Rubber Association. Production of retreads for light trucks was off slightly, however, while passenger tire retreading continued its precipitous decline.

    The number of retread plants in the U.S. also continued to fall, whether through closure or consolidation. As of April, there were 1,256 retread plants nationwide, 70 (5.3 percent) fewer than in 1997, Mr. Bozarth reported.

    U.S. sales of retreaded tires, not including casing sales, rose $44.8 million (2.0 percent) last year to $2.29 billion, according to the report.

    Production costs increased only slightly, as the cost of tread rubber and other materials remained largely unchanged from 1997 levels, while overhead costs grew very little. Labor costs, however, increased an average of 3 percent, Mr. Bozarth said.

    Production of medium truck tire retreads rose 1.7 percent last year to 17.8 million units, and Mr. Bozarth predicted they would increase by a like percentage this year, to 18.1 million units.

    Though several mold-cure plants opened last year, most did not commence production early enough in the year to affect the overall ratio of precure to mold cure, which stood at 75:25 last year for all truck tire retreads, Mr. Bozarth reported. For radials alone, the breakdown was 83 percent precure vs. 17 percent mold cure.

    Medium truck tire casings generally were in good supply last year, Mr. Bozarth said, and prices of most imported casings dropped.

    An exception was the 10.00-20 bias and 10.00R20 radial tires used on intermodal trailers. These remained scarce, he said, but the shortages were not as serious as last year due to a moderate downturn in intermodal retreading and to competition from inexpensive new-tire imports from China and South Korea.

    Prices also held for 22.5-inch low-profile casings, due to strong demand and the fact they tend to be available only in the domestic market, Mr. Bozarth said.

    Production of light truck tire retreads slipped 1.4 percent to 6.8 million units last year, a decline Mr. Bozarth attributed to a lack of all-steel-cord radial casings.

    Many vehicle manufacturers fit less-expensive, fabric-cord, steel-belted radials as original equipment in a effort to reduce new-vehicle costs, Mr. Bozarth said.

    Fabric-cord light truck casings tend to make poor candidates for retreading, Mr. Bozarth said, and many operators of commercial light trucks have found all-steel radials a better investment, despite the higher initial cost, when the total lifetime cost, including multiple retreadings, is calculated.

    Light truck retread production will fall nearly 3 percent this year to 6.6 million units, Mr. Bozarth forecast.

    Compared with 1997, U.S. production of passenger tire retreads plunged by nearly one-third in 1998, to 2.6 million units, and will plummet another 27 percent this year, to 1.9 million units, Mr. Bozarth said.

    The departure of two of the nation's largest passenger tire retreaders had a major impact. Financial problems drove EcoTyre Technology Inc. in Holtsville, N.Y., the nation's second-largest passenger tire retreader, out of business. Meanwhile, declining demand persuaded No. 3 Ray Carr Tires Inc. in Harrisonburg, Va., to discontinue passenger tire retreading and focus on other areas of its business, including truck tire retreading.

    Several smaller passenger tire retreaders also went out of business in 1998, Mr. Bozarth reported, while many others reported significantly lower production.

    One bright spot was in sales of M&S-rated passenger retreads for winter use, which were ``significantly better in 1998 than in 1997, but still left something to be desired,'' Mr. Bozarth wrote.

    Mr. Bozarth's entire report, ``Retreadonomics 1999: The Tire & Retread Industry Forecast,'' appeared in the April issue of The Tire Retreading/Repair Journal.

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