Titan International Inc., which got into the large off-the-road (OTR) tire sector seriously only 10 months ago, is expanding the scope of that business considerably by deciding to add capacity for 57- and 63-inch radial low-profile OTR mining tires.
After studying the market situation for several months and engaging financial management and advisory firm Merrill Lynch & Co. Inc. to assist in the process, Titan's board of directors recently approved funding to add the capacity for the larger sizes, which fit the current generation of massive dump trucks being used increasingly by the world's mining operations.
The undisclosed funding will allow Titan to produce as many as an estimated 6,000 giant radial OTR tires a year at the Bryan, Ohio, plant it acquired from Continental Tire North America Inc. last year. That level of production would generate up to $240 million in sales, according to Titan Chairman and CEO Maurice Taylor Jr.
The expansion will create 100 to 150 new jobs in Bryan and perhaps up to 30 at Titan's wheel plants in Saltville, W.Va., and Quincy, Mr. Taylor said.
Titan did not disclose the value of the project, but Mr. Taylor said it will be the company's single largest capital investment ever and one the company should be able to amortize within four years.
This expansion comes as Titan is wrapping up work on expanding capacity for smaller OTR tires at its plants in Freeport, Ill, and Des Moines, Iowa. These changes include additional building drums, molds and services to produce different, mostly larger tires and shifting some tire-building equipment among the sites.
Titan did not quantify the cost of this earlier expansion but did say in its fiscal 2006 10-K filing with the Securities and Exchange Commission it expected to invest $16 million to $18 million this year-almost double what it spent in 2006-on projects that were to include additional OTR tire capacity.
For comparison, Titan invested $8.3 million, $6.8 million and $4.3 million respectively the past three years in capital projects.
The company expects to produce its first 63-inch radial tire in the first quarter of 2008 and be in start-up production by the end of the second quarter. Titan will use its proprietary 15-degree technology for the new tires and wheels, Mr. Taylor said.
``We are very excited about this newest venture since there are only two manufacturers in the world that produce 63-inch radial tires-Michelin and Bridgestone,'' he said.
``...Titan has assembled a great team, and we believe that we have a better way to produce these giant tires,'' he added. ``We believe radial tires perform better on 15-degree wheels, which is what cars and trucks now utilize. Titan has developed these wheels and we plan to produce our new tires on a 72.5-inch 15-degree wheel at the same time as we produce 63-inch radial tires.''
The added sales volume would benefit the bottom line markedly since the new tires-to be marketed using Titan's LSW, or ``low sidewall,'' identification-are expected to be higher margin products, Titan said.
The approved funding also will allow Titan to build a 24-foot bull wheel, a specialized wheel used to test tires, at its Quincy headquarters. The bull wheel, which Titan claims will be the world's largest, will have the capacity to load tires up to 300,000 pounds and run them at speeds up to 42 miles per hour.
In approving the funding, Titan's board looked at several issues, including the outlook for various forms of mining and the hazards of operating equipment in those environments, Mr. Taylor said.
``A lot of mining operations are only getting six to eight months of life out of a set of 63-inch tires,'' he noted, ``at a cost of a quarter of a million dollars or more.''
He said a large percentage of tires taken out of service at mines are removed because of sidewall damage, not because they're worn out. He claims Titan's LSW technology will help reduce this cause of failure, especially in dual fitments because stones don't get trapped between the lower profile tires as easily.
In addition, he said, the larger rim diameter provides more brake clearance, which leads to better brake cooling and less heat transfer into the rim, thus yielding less stress on the tire.
Earlier Titan said it is increasing its selection of radial tires made at its Bryan plant through size 51-inch using both old and 15-degree tire/wheel technology.