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February 14, 2000 01:00 AM

Expect more radials, larger sizes

Larry Wingert Tire Business staff
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    AKRON—The state of the off-the-road tire business is closely tied to conditions in the industries it serves, and the robust U.S. economy generally has been good for business, especially in the areas of home-building and highway construction. However, depressed commodity prices—especially for coal, copper, iron and gold—slowed some large mining operations last year, reducing tire demand in that sector.

    In addition, economic problems in other parts of the world, including Asia and Latin America, slowed the export of U.S.-made equipment. The resultant drop in demand for original equipment OTR tires freed up a lot of capacity that got diverted to the replacement market, said Mike Long, national marketing manager for Bridgestone/Firestone Off Road Tire Co.

    The good news for dealers was that there generally was a good supply of most OTR tires; the bad news was that good supply led to price competition.

    OTR tire makers agreed that the popularity of radials has continued to grow. Goodyear sold out of radials in 1999, according to Tom Ford, global general manager for OTR tires, who said the company continues to convert capacity at its OTR tire plant in Topeka, Kan., to radial from bias-ply as needed to keep pace with demand.

    The container-handling equipment used in ports is converting rapidly to radials, Mr. Ford said, but in the underground mining segment of the business, radials have been introduced only recently, and it's still too soon to tell whether or how quickly they'll catch on.

    Maurice Taylor Jr., president of Titan International Inc., pointed out that radials have thinner sidewalls than bias-ply tires and, unless they use steel cords/ belts, may not hold up as well in certain applications.

    The stiffness of bias-ply sidewalls also offers a stability advantage in applications such as material handlers, man lifts and loaders with high centers of gravity, and these types of equipment generally have resisted radialization, Mr. Long said.

    The manufacturers also agreed that one segment exhibiting particularly strong growth is articulated haul/dump trucks—smaller (25- to 50-ton capacity) trucks that pivot between the cab and the load. Some of the growth in this segment is coming at the expense of traditional scraper trucks, said Larry Tucker, Goodyear's product manager for earthmover tires.

    Another trend the tire makers agreed upon is that OTR tires will continue to get larger. The largest tires, those for giant haul trucks, recently have reached 63 inches in diameter and 55 inches wide—a leap from the previous record-holders, which were 57 inches in diameter and 40 inches wide—and 69-inch diameter tires are on the drawing board, Mr. Long said.

    The companies that operate the large, open mines where this equipment is used are extremely cost-conscious, Mr. Ford said, and seek larger equipment—both haul trucks and the loaders that feed them—as one way to lower their costs, by moving more ore with fewer drivers, Mr. Ford said.

    These large tires represent a significant investment—as much as $30,000 to $50,000 apiece—and obtaining the maximum possible service life is a high priority.

    Electronic tire-monitoring technology is in development to aid in the management and maintenance of large OTR tires. An electronic chip or "tag" embedded in the sidewall will transmit data on the tire's operating conditions—pressure, temperature and perhaps other information.

    One of the technical challenges to be met before this technology is introduced commercially, Mr. Long said, is overcoming the interference caused by the large amounts of steel in the sidewalls of giant OTR tires.

    And while commodity prices may have put a crimp in some large mining operations for now, Goodyear sees plenty of reason to be optimistic about the future in North America, Mr. Ford said.

    Large diamond mines are being developed in Canada, which should take off within the next decade, he said, and there are huge deposits of tar sands in Alberta, which the major oil companies are beginning to exploit. One in every four new 240-ton haul trucks is destined for tar sand mining, Mr. Ford said.

    Whatever the trends, independent dealers will continue to play an important role in the sale and servicing of OTR tires, manufacturers agreed. "Dealers have incredible relationships with the customers we seek," Mr. Long said.

    Those relationships are built by strong customer service, said Tim Good, Goodyear's national sales manager for OTR tires. "Dealers are able to do surveys, tracking tires and their performance," he said. Goodyear dealers have access to proprietary software they can use to determine a customer's true running costs, Mr. Good added.

    Because of the specialized knowledge and equipment needed, dealers who get involved in OTR tires often tend to specialize in that segment of the market, manufacturers agreed.

    In large mining operations, it's not uncommon for a dealer to put people and equipment on the site full time to perform all tire management functions for the mining company.

    Many of these large mining companies operate globally and negotiate global tire contracts with the tire manufacturers, who nonetheless rely on local dealers to service the companies' various operations.

    Certain other large contractors and/or construction firms that operate on a broad geographic scale may have a national account with a tire maker. Otherwise, dealers are free to negotiate sales and service.

    Though the OTR tire business, like other industry segments, tends to be very competitive, margins are "fairly good," Mr. Ford said. Products that have unique applications or deliver particular cost benefits offer the greatest profit potential.

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