New products, a mail-in rebate program and a dedicated Web site are among the things that will keep Goodyear's off-the-road (OTR) tire business profitable in 2009, Goodyear officials said at the firm's annual dealer meeting Feb. 1-4.
The OTR market, like the rest of the tire industry, is facing an uncertain future, according to Brian Bondarenko, Goodyear general manager for OTR tires. While the company's next generation of OTR tires will help, he said, so will its sound business practices and solid relationship with its dealers.
“We don't want to walk away from the things that make our OTR tires successful, but we also want to prepare for the future.”
Through the first half of 2008, the mining industry and commodity prices were on “supercycle,” and so OTR tires were in demand, according to Mr. Bondarenko. The second half, however, saw the real estate bubble burst, putting a damper on new construction, as well as the banking and liquidity crisis with a resulting decrease of world trade.
The price of gold was the one bright spot for the OTR tire industry, according to Mr. Bondarenko. “Gold topped $900 an ounce this week,” he said. “The flight to safety makes for decent mining tire demand.”
Goodyear achieved a 98-percent fill rate in OTR tires in 2008, and has set a fill rate goal of 100 percent for 2009, Mr. Bondarenko said. Only a flood that inundated its Topeka, Kan., plant prevented the company from achieving 100 percent in 2008, he said.
Goodyear also increased the size of the tires made at Topeka to 26- to 29-inch rim diameters from 20 to 23 inches to meet demand, Mr. Bondarenko said.
Both he and Tim Good, Goodyear manager of OTR global customer accounts, said the company placed a new emphasis on customer service in 2008, an emphasis it plans to strengthen in 2009.
“We need to refocus on who the customers are and what they want,” Mr. Good said. “Each of your salespeople should be more of a sales consultant, giving advice and not just prices.”
Site surveys and site audits are necessary parts of an OTR dealer's job, even if that means working nights and weekends, Mr. Good said. It's the only way to know what conditions your customers are working under, where they're doing well and where they need to improve.
“Our job is to show them information and move them if necessary to another Goodyear tire that meets their applications,” he said. “We need to be the most cost-efficient tire, and to help them make the right choice.”
He also noted it's necessary to explain to customers that a blown tire is not necessarily a bad tire. “When a customer walks out and sees his scrap tire pile, he sees all those unused treads, and he thinks your tire is no good.” While it's true that only 7 percent of OTR tires are taken out of service because they're worn out, the causes of failure for 85 percent of them—cuts, impacts and separations—have much more to do with conditions on site than the quality of the tires, he added.
OTR dealers need to focus on enhancing tire life for their customers, particularly ensuring that air pressures are optimum, Mr. Good said. “Have a before-and-after chart for them. Tell them, 'Here's where you were six months ago, and here's where you are now.' It makes a big difference with these customers.”
Goodyear is changing its OTR product mix to offer customers better quality and performance, according to Dan Gartland, Goodyear manager of OTR global marketing.
The company is expanding its 65 Low Profile series for enhanced stability, longer tread life and enhanced traction, Mr. Gartland said. It also is introducing the TL-3A+ tire with a tread design that promotes self-cleaning and reduces vibration. The firm also is working on a new line of haulage tires, the RM-4A+, for release early in 2010, he said.
Meanwhile, the Akron-based tire maker is gearing up a new sales and marketing approach for the next generation of OTR tires, said John Hunt, Goodyear OTR account executive.
“Customers are not going to buy as many tires, so how can we grow?” Mr. Hunt asked. “We can increase our existing market share by displacing competitors' products, and we can bring in new customers.”
One thing that will help in both efforts, Mr. Hunt said, is Goodyear's new OTR Mail-In End-Use Rebate Program, which the company operates through its Web site, www.goodyearotr.com. “The rebate program broadens market reach and generates new business,” he said.
The rebate program offers money back of up to $6,000 per tire for existing customers and $4,000 per tire for new customers, based on tire type and size, Mr. Hunt said.
“We want you to use this program as a sales tool. Print out the rebate list, hand it to your sales associates, and make cold calls with it.”