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April 11, 2005 02:00 AM

Red-HOT: OTR tire market exploding

Edward Noga
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    Jack Fenner, tongue in cheek, has found a way to supply off-the-road tire dealers with product during this period of extreme shortage.

    ``In 2002, we had tires coming out of our ears. The whole industry did. We had warehouses full of tires,'' the director of dealer sales for Continental Tire North America Inc. said at the Tire Industry Association's OTR Tire Conference, held Feb. 24-26 in Tucson. ``They were just lying around in the warehouse, so we donated a whole bunch of tires to the city of Akron to use in a playground.''

    Fast-forward to 2005. ``As I speak today, we are digging up those tires, and they will be available to dealers shortly,'' he said. ``The little kids are going to be in for a big surprise.''

    A joke, certainly, but the point-that demand is going through the roof-was obvious and demonstrated by industry statistics presented by the Conti executive.

    ``2004 was a year that has been good for everyone in this room,'' Mr. Fenner told the audience of dealers and their tire manufacturer suppliers.

    Demand was hot in the civilian replacement market, nothing like the dog days of 1999 through 2002.

    ``Back in 2002 demand was 124,778 tires. That's all we sold,'' Mr. Fenner said. In 2004, it was 149,208 units, up 14.4 percent from the previous year. Bias tire consumption grew 13.3 percent from 2003 to 67,484 units last year, and radial demand climbed 15.3 percent to 81,724 units.

    Looking at OTR tire demand by civilian original equipment manufacturer customers, he said overall consumption jumped 33.1 percent to 78,009 units last year. Radial demand increased 20.9 percent and bias 70.8 percent.

    The top-selling OTR tire to this market, by far, was size 20.5R25 E-2/L-2/G-2. Customers bought 7,910 radials in this size and 4,927 bias tires.

    Mr. Fenner said the biggest driver in the increase in consumption of OTR tires has been for defense purposes. In 2002, defense accounted for 24,632 OTR replacement tire shipments; in 2004, it was 75,211.

    ``I tell you what, that's a big number,'' the Conti executive said.

    The recovery for the OTR business began in the second half of 2003, Mr. Fenner said.

    In the first six months of that year, consumption was down 3.4 percent for both radial and bias, he said. But demand rose 16.4 percent for bias and 8.1 percent for radial in the second half compared with the corresponding period of 2002, for a total average gain of 12.4 percent.

    There's been no looking back since then.

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