Trelleborg Wheel Systems Americas Inc. executives are optimistic that the Pirelli farm tire line, introduced to North America two years ago, will see brand sales double in the near future as the agricultural sector rebounds and the firm rounds out its distribution base.
Since launching the Pirelli brand to North American farmers in 2002, Trelleborg has seen its sales of agricultural tires increase ``on the order of 30 percent,'' according to Bill Haney, a technical customer service support executive at Hartville-based Trelleborg Wheel Systems Americas.
He declined to discuss exact figures, but parent Trelleborg Wheel Systems S.p.A. reported that sales of farm and industrial tires and wheels in North America amounted to about $60 million in 2002. Recently, the company said farm tire sales in North America improved in the second half of 2003, ``partly due to a rich harvest and subsequently increased income in the agricultural sector.''
``Pirelli has helped the sales tremendously,'' he said. ``It's very exciting.''
Rami Bitran, vice president of the U.S. unit, said the firm's sales were up 40 percent last year and are on target for a 25-percent increase in the first quarter of 2004. The recovery in the agricultural sector was made even stronger for the tire suppliers because of pent-up demand for tires from 2001-2002, Mr. Haney added.
While a lot of the firm's emphasis is on the Pirelli brand, Trelleborg by no way is ignoring its own brand. ``Sales there have also been very good, comparing them from two years ago,'' Mr. Haney said. Sales growth in certain sizes of Trelleborg-brand ag tires has been ``tremendous,'' he said, particularly in the 960x32 size that goes on combines and other large equipment.
Trelleborg created a joint venture in 1998 with Pirelli S.p.A. to jointly operate Pirelli's agricultural tire plant in Tivoli, Italy. Three years later it bought out Pirelli, securing rights to the Pirelli trademark for the farm and forestry markets, and has concentrated since on making tires for both brand names at the facility.
Pirelli's name recognition and the growing need for high-capacity, high-performance farm tires have allowed the operation's business to burgeon, Mr. Haney said. ``I don't know how we're doing in relation to our competitors, but we have a very large range in these tires,'' he said.
The Pirelli brand focuses almost exclusively on radial drive tires, whereas the Trelleborg line is a mixture of bias and radial tires, with an emphasis on superwide, low ground-pressure flotation tires and forestry tires. The company makes about 25 percent of the Trelleborg-brand tires it sells in North America at the former Monarch Industrial Tire plant in Hartville, Mr. Bitran said.
To cover the North American market, Trelleborg envisions a network of about 20 strong regional distributors, Mr. Bitran said.
To date the company has about a dozen distributors in place in the U.S.-including its latest recruits, the Independent Tire Dealers Group in Arizona, California and Nevada and Wold Rim & Wheel in Iowa-along with two in Canada and is in talks with others.
One key piece of the distribution strategy changed late last October when Trelleborg signed Eagan, Minn.-based Universal Cooperatives Inc. to be its U.S. stocking distributor, replacing Hercules Tire & Rubber Co., which had carried out the task since early 2002 through its Hercules Tire Distribution Services business unit.
Trelleborg chose Universal Cooperatives because of its larger distribution footprint, said Mr. Bitran, who emphasized that Hercules' dealer network still has access to the Pirelli farm tire line.
Universal Co-ops, a farm supply cooperative providing manufacturing, distribution and purchasing services for its members in the U.S. and Canada, now stocks and redistributes the Pirelli farm line from its distribution centers in Albert Lea and Roseville, Minn., Draper, Utah, Jacksonville, Ark., Scottsbluff, Neb., and Wichita, Kan.
Trelleborg has been busy updating its farm and OTR tire lines. It has just unveiled a radial harvesting tire, the Pirelli TM 2000, and also plans a revamped line of forestry tires featuring new tread designs and higher load capacities.
Trelleborg Wheel Systems claims to be the second-largest farm tire supplier in Europe, as well as the world's largest supplier of solid industrial tires.
Operating earnings for the division in 2003 were $16 million on sales of $334.7 million. In its financial statement, Trelleborg Wheel Systems said its earnings were affected negatively by low demand for farm tires in Europe and the high price of raw materials.
In September 2003, reports came from Europe that Trelleborg was negotiating with Continental A.G. on a cooperative effort in the ag tire business. Mr. Haney, however, said he had no information on those negotiations, and a spokesman in Sweden declined comment.
Special Projects Reporter Bruce Davis contributed to this report.