AKRON-In a nutshell, retreading in 2001 is all about prices.
New truck tire prices, impacted by the near collapse of new tractor and trailer sales, have fallen to a point where fleets are rethinking their new tire-retread mix.
At the same time, costs are rising. Raw materials costs are up, pushing up tread rubber prices, and rising energy costs impact every retreader across the continent.
The casualty could be margins.
One positive-prices for casings have dropped considerably, in part because the lower profile sizes are more plentiful, increasing their availability, according to Marvin Bozarth, executive director of the International Tire & Rubber Association (ITRA).
The deceleration in market growth didn't really take hold until late in 2000, hence the majority of this year's Top 50 truck tire retreaders reported production gains over 1999.
This scenario is not likely to repeat in 2001, however, based on a sampling of first-quarter reports from around the country. In the snow belt states, the long winter put an even deeper chill on many retreaders' business activities the past few months.
Rising fuel prices have retreaders worried on two fronts this year: No. 1, the effect on truck traffic; and No. 2, the effect on energy costs. Already this past year, a third or more of those companies responding to the Tire Business survey cited energy costs as a troubling development.
Retread production was down last year in all categories, according to the annual Retreadonomics market overview published by the ITRA. The downward trend should continue in passenger and light truck tires, but medium truck should stage a slight rebound, although output will still fall short of record production of 17.4 million units in 1999.
Tread rubber use fell 7 or 8 percent to about 560 million pounds last year, and the value of retread sales in the U.S. slipped 4.4 percent to $2.17 billion, according to ITRA data.
Calculated according to data provided by respondents to a Tire Business survey, the average cost last year of a 295/75R22.5 retread was $93.40 with customer's casing, and $159.87 without-measurable dips from the $97 and $175 reported a year ago. The selling price range was $66 to $110 with customer's casing, and $79 to $215 without.
By comparison, the average cost to produce and distribute an 11R22.5 was between $77.38 for a mold cure and $110.58 for a precure, the ITRA data show.
The dip in selling prices monitored by Tire Business contrasts with increases in production costs. According to the ITRA data, the cost of retreading a truck tire last year went up 6.2 percent for both mold cure and precure. The costs should increase a like amount this year, especially, when escalating natural gas and electric costs are factored in.
The 50 largest truck tire retreaders ranked this year operated a total of 363 plants and turned out on average 42,000 tires a day. From an annual point of view, this calculates out to about 10.5 million tires and more than 260 million pounds of tread rubber consumed.
Goodyear, the perennial leader in truck retread production, increased output last year 17 percent over 1999. Meanwhile, the merger of the Goodyear and Treadco networks-into Wingfoot Commercial Tire Systems-will create an entity with retread capacity more than twice that of the No. 2 competitor, Bandag Inc.'s Tire Distribution Systems.
Among the 10 largest retreaders, Snider Tire Inc. of Greensboro, N.C., jumped four places to seventh, based in part on its acquisition last year of South Carolina retreader Cate-McLaurin.
The 10 largest retreaders of off-the-road tires last year were the same as in 1999, in the same order. Purcell Tire & Rubber Co. posted the largest gain of any of the OTR retreaders, based in part on its acquisition of Heartland Retreaders midway through 2000.
One trend worth reporting: Radials continue to grow steadily in the new tire arena, making investment in radial retreading capabilities necessary. Community Tire Co. Inc. of St. Louis reported it's shifting all new investment into radial molds and phasing out most if not all bias-ply capacity, because the prices of new bias OTR tires have sunk to-and in some cases below-the level of retreads,.
Passenger tire retreading edged even closer to extinction last year. Mr. Bozarth, in his annual Retreadonomics address, said he expects U.S. passenger tire retreading production to fall to 550,000 units this year, after dwindling to 650,000 units last year from 1.9 million in 1999.
Les Schwab Tire Centers Inc., the perennial car tire retread leader, phased out that segmnt last year after cutting production in half the year before. In addition, A Major Tyre Co. of Bridgeport, Conn., shut its doors after the 1999-2000 winter season and didn't reopen for the past season.
Three of the five passenger tire retreaders still listed on this year's passenger and light truck tire Top 10 are from Canada, led by Eastern Tire Service Ltd. of New Glasgow, Nova Scotia, now the undisputed leader in this field. Winter tires make up the majority of passenger tire retreads.
Bandag, which commands about 45-percent share of the light and medium commercial truck tire retread business in North America, is the franchisor of retread systems for 30 of the 50 largest retreaders ranked this year. All told, Bandag claims 430 shops operating in North America, down about 15 from a year earlier.
Six of the Top 50 truck tire retreaders use the Goodyear Next-Tred system. Overall, Goodyear claims 188 retread plants across North America-including 21 Treadco plants converted to Next-Tred since the creation of Wingfoot-use its retreading technologies. All together, Goodyear's own and its licensed retreaders account for about 20 percent of North American truck tire retread production.
Oliver Rubber Co., which claims 200 customers in North America for its tread rubber and related materials and equipment, suffered the loss of its largest customer, Treadco, which accounted for more than 14 million pounds of tread rubber annually. Six other Top 50 retreaders list Oliver or Long Mile as their supplier.
The loss of Treadco combined with other market conditions to prompt Oliver's parent company, Cooper Tire & Rubber Co., to close half a dozen Oliver facilities, including the company's headquarters in Athens, Ga., and a tread rubber plant in Dallas.
Oliver President Larry Enders was promoted to president of commercial products for Cooper-a new position that grouped responsibility for new truck tires with that for inner tubes and retread products. He relocated to Cooper headquarters in Findlay, Ohio, prior to the Athens site closing.
Now in its fourth year as a supplier of retreading technology, Michelin Retread Technologies Inc. has expanded to 42 shops across the country-including 13 operated by its own Tire Centers L.L.C. subsidiary.
Combined, the 20 companies operating MRTI plants-including seven in the Top 50-produce about 6,500 retreads a day, giving MRTI an approximate 10 percent market share.
Among individual dealers making news this past year:
Bauer Built Inc. of Durand, Wis., opened its sixth MRTI plant, in Waukesha, Wis.
Becker Tire & Treading Inc. closed a satellite plant and consolidated all retread production at its main plant in Great Bend, Kan.
Cross-Midwest Tire moved its Kansas City, Kan., plant to larger premises, with the expanded output contributing to a 14.2-percent overall jump in production.
McGriff Treading Co. Inc. added Marangoni RTS capacity to its mix of retreading capacities, which include an MRTI plant and Hawkinson and Hercules lines.
Don Olson Truck Tire Centers is planning to add a retread plant and new wholesale site this year to its existing two-plant operation.
Parkhouse Tire Inc. closed its Colton, Calif., plant and consolidated production at its four remaining plants; overall capacity of 800 units a day did not change.
Valley Tire Co. Inc. of Charleroi, Pa., closed its Oil City, Pa., plant and replaced it with a new facility in Tonawanda, N.Y. Production dropped slightly last year, but the firm is planning to expand capacity in 2001.