AKRON (March 13, 2001)—At most tire companies, folklore does not weigh heavily in the process of determining how many tires—especially winter tires—to make.
Little heed is paid to the predictions of The Farmer´s Almanac, the groundhog or the wooly bear. How earnestly woodland critters stock up on food for the winter also is not much considered.
So, how then do the various tire manufacturers plan winter tire production for each upcoming period of cold, snowy weather?
The process, it seems, is not highly scientific. After all, if tire production planners could accurately forecast long-range weather, they likely would be doing that for a living, and would be making a lot more money. On the other hand, the planning process does take into account several factors that help predict what winter tire demand will be.
Among those factors are:
* Weather trends over the last several years, such as the coming and going of seasonal fronts like El Nino and La Nina.
* Long-range forecasts for the coming winter, often using statistical models.
* Inventory levels at company warehouses, distributors and dealers.
* Rubber Manufacturers Association (RMA) and auto industry data.
* Distributor and dealer orders.
Sometimes these factors enable the tire companies to be pretty much on target, with the number, sizes and types of snow tires produced closely matching marketplace demand in a given year. And then there are the years when the weather turns out to be much warmer or colder or more or less snowy than expected.
"Our forecasts for this year were right on," said Mark Cherveny, product manager for broad market tires at Akron-based Goodyear. "We got good information and were in excellent position to supply our dealers."
Good thing, too.
The winter of 2000-2001 came early and in many regions of the country, it looks as if it will stay late. Witness the Washington´s Birthday storm that dumped as much as eight inches of snow between Virginia and New England.
All U.S. tire makers start their snow tire production planning process months before the next winter. At Goodyear, it begins a year in advance. "We begin in the fall of the preceding year," Mr. Cherveny explained. "We look at the early orders from our dealers from previous years and then we solicit early orders beginning in March and continuing through May. Those orders give us an idea of what they will need. We also compare orders to inventories, weather forecasts and weather patterns."
When determining the sizes and types of winter tires to build, Mr. Cherveny said that Goodyear considers the kinds of vehicles that are popular, and whether or not their owners are using winter tires on them. Much of this information comes from data gathered by the RMA.
The process at Cooper Tire & Rubber Co. is similar, a company spokeswoman said. The production planning process begins early in the year and is based on historic production and weather trends, statistical models, customer commitments, new product plans and inventory levels.
At Michelin North America Inc. the planning process is continuous. The first forecasts are completed in December—almost a year before the next winter. It then is adjusted several times during the following spring, according to a company spokeswoman.
Long-range weather forecasts are not heavily considered, except as a part of industry trend information. The company also uses RMA data, inventory data and the preference trends of drivers. Michelin, the spokeswoman said, also pays close attention to vehicle sales, which helps the company determine what sizes will be in demand.
Also important to Michelin are special winter tire promotions, and the expected results of those promotions are factored in, as well.
Continental Tire North America Inc. is planning to increase its currently limited offerings of winter tires in the U.S. and Canada, according to Jim Mayfield, national director of mass retail sales and product marketing. (See story on page 10.)
"We are a dominant winter tire provider in Europe with various Continental brands," he said, "but we are fairly new at winter tires in North America. We are developing a program for 2001 that will include the premium Continental and the mid-range Semperit lines of winter tires—all made in Europe." The longer-range plan, he said, is to produce the tires in North America to meet the needs of U.S. and Canadian customers.
To get the program up and running, Mr. Mayfield said Conti will rely heavily on forecasts and orders from key dealers to determine production rates and sizes. Planning for the 2001-2002 winter began last November, with production and shipment of the tires to North America occurring over spring and summer.
In Finland, where winter can seem nearly perpetual, snow tire planning and production is a year-round process, said Sami Jarske at Nokian Tyre Co. headquarters in Nokia. Mr. Jarske is manager of sales planning and logistics for that company´s car and van tires.
"We have production going all year," he said, "but right now the capacity (dedicated to snow tire production) is small. It will pick up again in about April."
Nokian markets winter tires throughout Europe and in the snow-belt regions of the U.S. and Canada. Production forecasts are based on individual country and pooled statistical data.
In addition to the tire manufacturers, tire marketers and wholesalers also have a vested interest in accurate winter tire demand forecasts. Independent Tire Sales (ITS) of Wheeling, W.Va., is a marketer of Mohawk and Gislaved tires. The latter, a European product of Continental, is a major winter tire brand in Europe and some regions of the U.S.
Mike LaHood, vice president of sales for ITS, told Tire Business the firm solicits bulk orders from dealers early in the year. A key factor in determining orders is remaining inventory.
"Next winter should be a banner year for winter tire sales," Mr. LaHood said, "because this year there is very little inventory left." The orders that ITS receives for Gislaved tires are sent to Continental headquarters in Hanover, Germany, by mid-April. Production of Gislaved winter tires tends to be a continuous process, he explained. While they are made at plants throughout Europe, one in Sweden is primarily dedicated to winter tires.
Of course, regardless of how much data goes into winter tire production forecasting, it is tough to be right on target year after year. That is why most of the tire companies make some allowance for adjustments in production levels.
"If there is an early heavy snow, production can be extended," the Michelin spokeswoman said, "so distribution can be shifted to particular geographic areas within North America, if needed.
"Michelin works hard to anticipate consumer needs and provide adequate supply, and our proprietary C3M process allows us additional flexibility."
At Cooper, the company also will adjust production as the season unfolds and demand levels change, the spokeswoman said.
Goodyear also tries to "backfill" when shortages occur because of weather and market demand.
Regardless of how much time, effort and data goes into forecasting demand for snow tires, the Michelin spokeswoman said one thing with certainty: "Winter tires continue to be the most difficult to forecast."