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April 24, 2000 02:00 AM

Passenger retreading not dead, but vitals fading

Chris Collins, Tire Business staff
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    AKRON (April 24, 2000)—Remember former "Tonight Show" host Johnny Carson´s "telepathic" character, "Carnac the Magnificent," who would answer unknown questions "hermetically" sealed in envelopes?

    Imagine Mr. Carson´s longtime announcer and sidekick Ed McMahon handing Carnac the envelope.

    Carnac holds it to his forehead, winks and says: "Affordable health care, Elian Gonzalez and passenger-tire retreading."

    He then opens the envelope and reads: "Name three things in danger of disappearing from the U.S."

    Although passenger tire retreading probably won´t become extinct in the near term, the rapidly shrinking market has put it on the "endangered species" list.

    The International Tire and Rubber Association has forecast the production of 950,000 retreads for U.S. passenger cars in 2000—a 50-percent drop from last year.

    That total equates to only about 2.5 percent of the 40 million passenger retreads produced in 1975.

    Earlier this year, ITRA Executive Director Marvin Bozarth speculated that only about 100 out of more than 1,200 retread shops in the U.S. currently retread passenger car tires.

    That segment´s decline is primarily the result of two factors.

    First, consider the heavily advertised low-price new tires from national mass merchandisers—for instance, four tires for $99 at Pep Boys—Manny, Moe and Jack. Such deals have siphoned off budget-conscious drivers who may have formerly purchased retreads.

    Second, finding suitable passenger tire casings for retreading has become much more difficult. The rejection rate these days for those casings is "deplorable," said Rick Hawkins, owner of High-Tec Retreading in Edgemont, S.D.

    Three of the top five retreaders of passenger tires in 1997 have since left that market.

    EcoTyre Technologies Inc. in Holtsville, N.Y., ranked in 1997 by Tire Business as the nation´s No. 2 retreader of passenger tires, went out of business a year later.

    Fifth-ranked White´s Tire Service of Wilson Inc. in Wilson, N.C. stopped retreading them in 1998.

    Ray Carr Tires Inc. in Harrisonburg, Va., ranked third in 1997, pulled the plug on passenger tire retreading in early 1999, citing the declining market for the product.

    Prineville, Ore.-based Les Schwab Tire Centers Inc., the industry´s long-time passenger tire retreading leader, cut its daily production of them by 87 percent between 1997 and 1999—from 1,200 to 156 units per day. Over that period, Schwab´s light truck retread production dropped 51.7 percent, to 266 tires per day from 551.

    Les Schwab officials declined to comment on the future of passenger tire retreading. However, in response to the annual Tire Business survey of retreaders, the company said it planned to "expand truck tire retread facilities to meet additional volume."

    But several passenger tire retreaders have found success in two niche markets—winter tires and high-performance tires. Other former passenger tire retreaders also have successfully switched to light truck tire retreading, including providing replacement tires for local delivery or courier vehicles like the U.S. Postal Service. (See story on page 19.)

    On a unit basis, North America´s most prolific passenger tire retreader is Eastern Tire Service Ltd., New Glasgow, Nova Scotia, with daily production of 725—a 16-percent increase over the previous year.

    The Canadian firm´s daily unit production is more than three times that of Techno Pneu Inc. in Rimouski, Quebec, and Mt. Morris Tire Service Inc., Mt. Morris, Pa., each of which produce about 200 units per day.

    "We sell quite a few (winter passenger tire retreads)," said Mt. Morris President Jack Holbert, although the recent mild winter weakened sales. The company also makes all-weather and high-performance retreads.

    "May it (passenger tire retreading) rest in peace," said Donna Puskar, president of A Major Tyre Co. Inc. in Bridgeport, Conn.

    A Major produces about 60 passenger tires a day, down from about 80 per day a year ago.

    "Our biggest market is still snow tires," she said, bemoaning the state of passenger tire retreading due to the lack of quality casings and the sales of low-cost tires by mass merchandisers.

    "It´s a shame," she said, "Everybody´s letting it (passenger tire retreading) die."

    At Gossco Inc. in St. Johnsbury, Vt., production of retreaded passenger winter tires dropped slightly due to the mild winter, said President Sally Goss. "In our area you really need winter tires," she said. "The worse the weather, the better they sell."

    Still, all-season tires represent only about 20 percent of retread sales, Ms. Goss said, even though there isn´t much competition in rural northern Vermont from mass merchandisers.

    Mass-merchandisers "don´t sell aggressive winter tires anyway," she added.

    Mt. Morris´ Mr. Holbert said high-performance passenger retreads provide excellent profit margins for his company and the wholesalers that distribute them. He sells 60- and 65-series high-performance retreads—which may fetch as much as $100 at retail—to wholesalers for about $25.

    For Retread Systems Inc. in Anderson, S.C., the dominant product is high-performance tires for racing, according to President Sydney McDowell. His company retreads about 18,000 tires a year for "entry level racing," which is about 75 percent of his company´s total passenger tire output.

    He said passenger tire retreading in his market has been damaged by vendors who sell low-cost tires at area gas stations.

    "These guys make $5 to $7 a tire," he said, "and that´s what kills dealers of passenger retreads."

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