Another event that impacted the trucking industry occurred on July 29 when Congress finally approved the Safe, Accountable, Flexible, Efficient, Transportation Act: A Legacy for Users, which is a comprehensive $286.4 billion highway spending plan. The previous highway act, called the Transportation Equity Act for the 21st Century, or TEA-21, expired in September 2003 but Congress continued that law with 12 extensions.
In addition to funding highway and transit projects over the next six years, the bill also:
* Provides millions of dollars for commercial vehicle safety enforcement;
* Authorizes several exemptions to federal hours-of-service rules;
* Allows states to toll portions of the interstate highway system;
* Eliminates the Single State Registration System; and
* Mandates that intermodal equipment owners take responsibility for the maintenance and care of that equipment.
Funding for U.S. highways, transportation projects and transit systems comes from an 18.4 cents-per-gallon federal tax on gasoline as well as other transportation-related fees such as a tax on truck tires.
Commercial tire biz
The commercial tire industry certainly benefited from the robust economy in 2005, but it also was dogged by high raw material costs and disruptions from Hurricanes Katrina and Rita.
For commercial truck tire sales, it was the best of times. Shipments in the U.S. to truck and trailer makers increased about 10 percent in 2005 to 6.3 million units, while replacement shipments are expected to hit 17 million units-an increase of about 4.5 percent.
Most tire companies controlled their costs, increased productivity, raised prices and improved their product and price mix to improve their bottom lines. Retreaders had a solid year as well with about 17 million retreaded tires sold in the U.S., an increase of 1.5 percent over last year.
Continuing price hikes
While it was a good year for sales, with the escalating price of oil as well as of natural rubber, raw material costs continued to dog tire makers. The devastation of the hurricanes exasperated this situation, as several raw material suppliers' production facilities were damaged.
Indeed, the real and continuing costs of the hurricanes likely will come in the form of higher raw material and energy costs as well as higher transportation costs that will affect all tire companies significantly.
Tire prices have continued to climb all year due to the increases in petroleum prices that have driven up the cost of synthetic rubber and carbon black along with natural gas. Natural rubber and other raw material costs have increased as well due to high global demand. As a result, all commercial truck tire manufacturers have raised prices two to three times this year-and the year's not over yet.
What's different about these price hikes is that they are sticking. Tire dealers are passing along the higher prices because they have to maintain their already thin profit margins.
And with original equipment sales at near record highs and replacement sales strong, tire shortages are inevitable this coming year.
Fleets understand that when the cost of petroleum goes up, tire prices have to go up as well. Combine this with a shortage of available replacement tires and you have fleets that are grateful for getting the tires they need to keep their trucks rolling.
To deal with the tire shortage, tire dealers increased their inventory of tires on hand when tires were available. Many took on new tire lines including Chinese or other off-shore offerings they hadn't considered before in order to keep truck fleets rolling. Those with retreading facilities stepped up retread production and increased their output of stock caps and casings to fill customer tire demands, which in turn created a casing shortage.
There were plenty of other activities that made headlines this year. Goodyear's Wingfoot Commercial Tire Systems L.L.C. subsidiary signed an agreement with Pilot Travel Centers to operate eight Pilot Truck Care Centers located in five states. The Wingfoot-operated centers provide new tires, retreads, limited mechanical service, preventive maintenance and roadside assistance.
BFS narrowly averted a strike at its Warren County, Tenn., truck and bus tire plant in August when a new contract with the United Steelworkers Local 1155 was approved after it was initially turned down by the members. The tire maker reached contract agreements affecting more than 5,000 workers at seven other company tire and rubber plants in July.
Michelin expanded output of X-One wide-base truck tires by adding a dedicated production line for them at its Spartanburg, S.C., plant. Further, it invested in molds to increase capacity for precured tread rubber for these so-called "super singles" tires.
Goodyear launched its DuraSeal technology, with built-in tire sealant that repairs crown area punctures instantly in G287 MSA and G288 MSA waste and construction truck tires.
Like new truck tires, the retreading area of the market was not immune to price increases either this year. Michelin, Goodyear and Bandag Inc. raised tread rubber prices 6-7 percent on most of their retreading materials and repairs in the spring.
Marangoni Tread North America Inc. and Michelin Retread Technologies Inc. (MRTI) worked on expanding their tread rubber production capacity. Marangoni doubled production of Ringtread circular tread rubber at its Madison, Tenn., plant while MRTI brought a second precured line at its Covington, Ga., tread rubber plant on line, doubling its annual capacity to 2 million treads.
In new developments, Bandag launched a line of precure retreading materials called Continuum for the off-the-road tire market. The Continuum line includes two tread designs and is targeted to construction and material handling equipment.
A new technology that may be emerging was announced by Amerityre Corp., which said it has begun development of a polyurethane tire compound and manufacturing process for retreading medium commercial truck tires with a polyurethane elastomer tread compound.
The Tire Industry Association (TIA) also made a few noteworthy contributions this year. It held its first Commercial Tire Executive Industry Summit, introduced its Tire Pressure Monitoring System (TPMS) Training Program for passenger and light truck tire technicians, and announced three new health benefit programs for members.
Two are health benefit plans and the third is a workers' compensation insurance plan. All three are designed to reduce TIA member insurance and health care costs.
At the year's beginning, TIA also announced a new name for its proposed tire industry checkoff program. It is now called the Tire Initiative for Research, Education, and Safety (TIRES). In May the U.S. Supreme Court upheld the constitutionality of the beef industry's checkoff fund.
That decision laid to rest the legal concerns that had been raised concerning checkoff funds.
As you remember 2005-with all its challenges, disasters, and increased costs that accompanied record sales, philanthropic deeds and technological innovations-it may not be the stuff that makes a great novel. But it certainly did keep us enthralled and captivated.