AKRON (April 24, 2000)—Retreaders supplying North America´s intermodal transportation system have been reeling under an onslaught of low-cost imported new tires, causing some to seek more profitable retread markets elsewhere.
One such operation, McGriff Treading Co. of Culman, Ala., has seen its intermodal retread business fall off nearly 40 percent due to competition from imported tires priced uncomfortably close to—and sometimes even less than—comparable retreads.
"What they´ve done is come in below the retreading price for cap and casing," said McGriff´s General Manager Randy Drake. Currently, he said, the going price for a new 10.00x20 bias-ply import, complete with tube and flap, is between $95 and $105.
From the perspective of many intermodal tire buyers, that makes new tires more attractive than similarly priced retreads. As a result, inexpensive imports may have captured as much as half the bias-ply segment of the intermodal retread market, Mr. Drake said.
McGriff, for one, has responded by de-emphasizing intermodal retreading and offering its own line of inexpensive new tires imported from low-labor-cost countries such as China and India.
Prior to the import-tire invasion, the intermodal market as a whole accounted for about one in every 10 truck tire retreads—or approximately 1.7 million. Bias-ply casings—which still dominate the intermodal market—probably account for 90 percent of the tires retreaded for such purposes, Mr. Drake said.
Marvin Bozarth, executive director of the International Tire and Rubber Association, of which Mr. Drake happens to be president, estimates there are fewer than 100 companies involved in intermodal retreading in the U.S.—and probably fewer than 50 doing volume production of such retreads.
Mr. Bozarth said the intermodal industry is beginning to move away from the traditional 10.00x20 bias-ply tires of the past and toward increased fitment of 11R22.5 tubeless radials. Because changing over to radial tires from bias also requires new rims that can facilitate tubeless tires, most radials—including retreaded radials—are being installed as original equipment on new trailer chassis. "As the old equipment wears out, they´re replacing it with 11R22.5s," he said.
In fact, a significant portion of McGriff´s work these days involves helping intermodal fleets—particularly equipment leasing companies—make such conversions. "We go in and help convert fleets over to radial from bias and help manage some tires in the fleets," Mr. Drake said.
Part of the diminishing role played by intermodal retreading in McGriff´s overall operations was by design, Mr. Drake said. "At one time we depended too heavily on that industry."
These days, the dealership is placing greater emphasis on new tires, having opened two additional truck tire centers in Tupelo, Miss., and Memphis, Tenn., in the past year for a total of eight. The company also is running higher-profit, over-the-road retreads in all four of its plants.
McGriff, Michelin Retread Technologies Inc.´s inaugural franchisee in North America, hardly is alone in such efforts.
Farmingdale, N.Y.-based Ranger Tires, another intermodal retreader serving an East Coast market stretching from Virginia to Boston, similarly has cut back on its intermodal retreading operations in favor of more lucrative market segments.
Ranger Tires President John Roefs said intermodal retreading accounted for approximately 10 to 15 percent of the company´s sales before the new-tire invasion began and year or so ago. Today, intermodal retreading has dwindled to 5 percent or less.
"Our sales are up a little bit from last year," he said. "But they would have been up quite a bit more up if we hadn´t been hit with the intermodal loss."
Mr. Roefs said retreading´s biggest marketing obstacle is the inflated price of 10.00x20 14-ply bias casings, most of which are imported from Japan. That is virtually the only place such casings can be found in quantity these days, and the price has become pretty stiff. "They´re starting to get scarce over there, too," he said.
Typically, the casing runs $35, and when the $45 cost of the cap is added in "you´re within 10 bucks of a new tire and they (intermodal tire buyers) just consider anything new to be better than something used or rebuilt," he said.
Unlike McGriff, Ranger Tires, handles no new tires; nor does the company do much direct selling to the end-users of its retreads. "We´re strictly a wholesale recapper of truck tires," Mr. Roefs said.
Recently, in an effort to increase its emphasis on markets less price-sensitive than intermodal, Ranger Tire also took on Marangoni´s RTS circular precured system in addition to its more traditional Hercules-based precure retreading operations.
"We´re not going to go out of (intermodal retreading) 100 percent," Mr. Roefs said. "We still get people who buy 10 to 20 retreads at a time. But the big shipments—the ones where we´re picking up a trailer load and capping 200 out of the 300 (it contains)—those days right now look like they´re shot." But the situation could change in time, he said.
A lot of those cheap new tires are likely to wear out rapidly, he said. When they do, intermodal buyers should begin to appreciate the quality of retreads and demand could improve. If so, Ranger Tires will be ready to step up its efforts in the market.
As far as John Morrone Sr., owner of PGT Retreading in Philadelphia, is concerned, that´s already beginning to occur. Mr. Morrone said his company´s intermodal retread sales are picking up, as some of the inexpensive imported tires bought as new by intermodal customers are starting to come in for retreading. In addition to Oliver pre-cure and Hawkinson mold-cure retreads, PGT also offers Apollo and J.K. new tires, imported from India.
Joanne "Joni" Casey, president of the Intermodal Association of North America, with headquarters in Greenbelt, Md., said tires are "the most expensive operating item in the intermodal business, from a motor carrier perspective."
Ms. Casey, whose 640-member association represents the combined interests of intermodal freight transportation companies, such as railroads, intermodal marketing companies and highway motor carriers, said the industry is concerned about the future availability of quality bias-ply tires. She said subcommittees within the association also are working to develop a set of recommended industry practices for retreading of intermodal tires.
The Institute of International Container Lessors, a Delaware-based organization that monitors intermodal equipment usage, estimates that approximately 639,000 trailer chassis are used for intermodal transport in the U.S.