AKRON—This is a fairly good time to be in the industrial and specialty tire business: A generally strong economy has resulted in strong demand, and most suppliers are running flat out to meet it.
But nothing is perfect. Like most of the tire business, several segments of the industrial and specialty tire market are extremely price-competitive, making it difficult for suppliers and dealers alike to fully pass on increased costs to their customers.
In a survey of industrial and specialty tire manufacturers and suppliers, conducted for this issue of Tire Business, a majority of respondents said their costs had risen over the past 12 months, some by as much as 15 percent, but few were able to recoup more than half their higher costs though price increases.
Strong demand at the original equipment level, while good for tire manufacturers, has resulted in backorders and shipment delays for dealers/distributors serving the replacement market—especially for lawn and garden and ATV (all-terrain vehicle) tires.
Andy Ondo, in sales at North Gateway Tire Co. Inc. in Medina, Ohio, called the supply situation for ATV and lawn and garden tires "horrible." The major domestic manufacturers are "heavily back-ordered" in their replacement business, he said, as the lion's share of their production goes to meet OE demand.
Peter Parik, general manager of Pilote Rubber Products in Etobicoke, Ontario, concurred, saying that two- to three-week delays are the norm with orders of these tires.
And for these highly seasonal products, a delay in availability can mean a disproportionate loss of sales opportunities.
"It doesn't help, if you are in the specialty tire business, to be out of stock, because then you've missed the season," said Victor Li, director of marketing at Nankang USA Inc. in Compton, Calif.
The specialty tire business comes in waves, said Bryan Austin, sales and marketing manager for Duro Tire & Wheel in Springboro, Ohio. For tire makers, "the need is to prepare to meet these waves and supply demand."
For ATV tires, there is an increase in business in February and March, Mr. Austin said, as people prepare for spring, with the big push coming August to October for the hunting season.
For lawn and garden tires, he said, the push is in February and March, in advance of the spring/summer growing season.
All this seasonality makes forecasting crucial, Mr. Austin said.
"It's vital that we receive forecasts from our customers so we can plan production in the factory and so we can supply the tires and wheels when we need them," he said.
Good forecasting and product availability are critical, Mr. Li agreed.
"Retailers and wholesalers look to the suppliers for assistance in maintaining the right product, at the right price and at the right time of year," he said.
As the business has become increasingly competitive, cost-conscious dealers and distributors have begun monitoring their inventory more carefully, Mr. Li said. As a result, they have reduced their inventories and shifted responsibility to their suppliers for maintaining adequate product stocks.
"Distributors don't want to sit for a period of time on a particular product or product line that may not be entering its peak season," he said.
Some products are in such heavy demand, however, that getting stuck with excess inventory would almost seem to be a luxury.
As already mentioned, both lawn and garden tires and ATV tires are hot sellers, as are high-speed, ST-designated trailer tires.
The are a growing number of applications for these types of tires, Mr. Ondo said, and more people are getting involved with the vehicles and equipment that use them.
Pointing out that ATVs and trailers (as well as the vehicles and equipment they carry) often are discretionary purchases, Mr. Parik put it succinctly: "People have money to spend on toys—and they're spending it."
ATV applications are changing almost quarterly, Mr. Ondo said, with the tires getting bigger and beefier. ATV owners are concerned with a tire's looks and its durability, he said.
They're also interested in differentiating their vehicles, he added, which led North Gateway's parent company, Dunlap & Kyle Co. Inc., to introduce a rugged ATV tire—the Outlaw—with an orange-and-yellow logo on the sidewall. It has proven to be a popular feature, he said, and he predicted the use of color will grow.
ATV tires are becoming more diverse, more application-specific, such as for mud or for sport, echoed Scott Griffin, sales manager-specialty tires for Maxxis International in Suwanee, Ga.
"More specialization of the lines continues to be the trend," Mr. Griffin said.
One need only look at some of the ATV lines from Greenball Corp. in Long Beach, Calif., to get a sense of this specialization. The company's lines include names such as: Dune Hopper, Dune Slider, Dune Tracker, Ground Buster, Mud Shark, Shredder, Pro Trak, Mud Buster, Dirt Devil, Gator, Sand Devil and Sand Shark.
Applications for high-speed trailer tires also have grown, including use on fifth wheels, cargo trailers and boat trailers, including higher-end trailers, such as those for bass boats, said Nankang's Mr. Li.
In this last category, especially, customers again are seeking a different look, Mr. Ondo said, and tire makers are adding raised lettering—black or outline white—to premium trailer tires, and dealers are offering styled wheels.
Jenny Tsai, vice president of Greenball Corp., agreed that owners of high-end trailers want something new and different when it comes to tires.
In response, Greenball is developing a performance-type radial trailer tire with a directional tread design, which should be available early next year. Ms. Tsai said she believes this tire will be the first of its kind.
Radials vs. bias
Radials are rapidly taking over the high-speed trailer tire segment, but are making slow to no inroads into other segments of the industrial and specialty tire market.
Depending on the size, radials already account for 40 to 50 percent of the trailer tire market, and their share is growing, said Duro's Mr. Austin.
The reasons are much the same as for radial dominance of the passenger, light truck and medium truck segments: At highways speeds, radials run cooler with less rolling resistance and therefore wear considerably longer than bias-ply tires.
Traditionally, bias trailer tires have cost less than radials, but the gap is narrowing, Mr. Ondo said. As it does, radials increasing become the better value.
Bias-ply construction, with its thicker sidewalls, also causes bias trailer tires to track better than their radial counterparts, Mr. Austin said. However, Mr. Ondo said, radial manufacturers are putting heavier plies into their trailer tires to counter that bias-ply advantage.
Because radial trailer tires have a greater tendency to swerve or sway in use, James Pearl, executive vice president, marketing and sales for Denman Tire Corp., a small tire maker in Leavittsburg, Ohio, said he believes they have been oversold and that, given all the facts, more customers will choose bias trailer tires.
Denman makes both types of trailer tires and has them equally available in the same sizes, Mr. Pearl said. Last year the company sold 15,000 more bias units than radial.
As for other types of industrial and specialty tires, which generally travel at low speeds over relatively short distances, the consensus among those interviewed for this story was that radials generally don't offer significant enough advantages to overcome their higher price.
Special circumstances could yield some exceptions, however. In the skid-steer category, a radial can offer a little better load capacity in some instances, Mr. Austin said, which could be a determining factor if a much larger load-carrying capacity is needed.
Similarly, in the forklift/material handling segment, the use of radials is growing slowly due to their lower rolling resistance, greater puncture-resistance and longer life, said Charles Cohen, president of Industrial Tire Brokers Inc. (ITB), a small Chicago dealership that specializes in industrial tires.
However, radials face strong competition from resilient solid tires, whose market share is growing at a much faster rate, Mr. Cohen said.
" If there were a need for a (radial) forklift tire, we'd be leading it," said Al Harker, president of Solideal Group's distribution company in Lebanon, Ind. "Our customers dictate to us what they need, and we haven't seen it yet, though I suppose that could change."
While radials haven't had much effect on the industrial tire business, the increasing popularity of vehicle leasing programs has had a major—and detrimental—impact, Mr. Cohen said.
Many forklift suppliers offer leasing programs that include planned or guaranteed maintenance, which tends to send the lessee to the vehicle dealership for service and parts, including tires, Mr. Cohen said.
If an industrial tire account—a warehouse operation with a number of forklifts, for example—decides to switch from owning its vehicle to leasing them, the tire dealership's business with that account usually is substantially reduced, or cut entirely, Mr. Cohen said. The impact can be especially severe on a smaller dealership, he said.
Lessees often take the course of least resistance, and do most or all of their maintenance and repair business with the vehicle dealerships—even if it's not always the best value, Mr. Cohen said. Trying to persuade them otherwise can be a struggle.
"ITB can save lessees money on their tires, but it's a constant reselling job," he said.
One bright spot, Mr. Cohen said, is that large equipment rental companies are starting to offer lift trucks, and dealers can compete for their replacement tire business.
Solid tires still dominate the industrial tire business, Mr. Cohen said, with cushion press-ons holding sway for indoor use and resilient tires for outdoor applications. Resilients are pneumatic-shaped solid tires designed to replace foam-filled pneumatic tires.
The growth of so-called "big box" buildings with sealed floors has spurred a couple of developments in the industrial tire segment, Mr. Cohen said.
Most such facilities use electric battery-powered forklifts to meet indoor air quality standards. These vehicles require energy efficient tires with low rolling resistance and tire makers have developed black rubber cushion press-ons to meet this need, Mr. Cohen said, as well as non-marking "white" tires (they're usually more gray) that substitute silica for carbon black in their compounding. Also cushion press-ons, the non-marking tires recently have been improved to be more resistant to wear and provide longer life.
Looking ahead, Mr. Cohen said the trend in pneumatic and resilient solid industrial tires is for lower-profile, wider sizes that offer greater stability. For cushion press-ons, the trend is toward greater use of polyurethane (PU) tires, he said.
Polyurethane tires are harder than rubber tires, but a smaller tire can carry a greater load, Mr. Cohen said. PU tires are finding increasing use on large electric pallet carriers and stacker loaders, he said.
Tire makers are successfully addressing heat build-up, which had been a problem with PU tires, Mr. Cohen said—in part through the use of advanced compounds, such as Vullkollan from Germany's Bayer A.G.
Other new products developed in response to new equipment or new applications of existing equipment include the Denman Omni-Trax for large four-wheel-drive scissor lifts (a.k.a. aerial lift platforms), whose sharp turns put unusual stress on tire lugs, and a new golf car/utility cart tire from Nankang with a tread compound and design for increased on-road service, such as occurs in planned communities.
Duro is considering developing larger tires for the mobile home industry, to meet a need for increased load-carrying capacity, Mr. Austin said.
Editor Dave Zielasko and Senior Reporter Sigmund Mikolajczyk contributed to this report.