In a year marked by weak replacement demand and an imploding OE market, the commercial tire aftermarket was dominated by mergers, acquisitions and strategic realignments.
Headlining the changes were three deals involving Tire Centers L.L.C., Michelin North America Inc.'s commercial, retreading and wholesale distribution business unit. The dealswith Snider Tire Inc., Colony Tire Corp. and Service Tire Truck Centers Inc.turned over nearly all of TCI's commercial business on the East Coast to the independent dealers.
Snider Tire's deal with TCI to acquire 10 TCI locations in Georgia and North and South Carolina coincided with its decision to switch its retread plants to the Michelin Retread Technologies (MRT) process.
Since the acquisition, Snider consolidated a number of the locations.
Snider also expanded by taking over Consolidated Tires Inc., a Michelin dealer and MRT retreader based in Greenville, S.C., and opening retread plants in Texas and Indiana.
The transactions boosted Snider to 35 commercial and retread outlets nationwide.
Colony Tire's deal in May to take over three TCI centers in Virginia also coincided with the Edenton, N.C.-based dealer's switching its retread process to MRT. The arrangement doubled Colony's retread capacity and solidified the firm's presence in Virginia's Tidewater area.
TCI saved the biggest deal for last, selling 16 commercial outlets and one retread plant along the Eastern Seaboard to Service Tire Truck Centers Inc. in late Januaryexpanding STTC's network to 42 locations in eight states.
The deal extends Bethlehem, Pa.-based STTC's reach into New England for the first time, will boost the dealership's annual sales by about 50 percent initially and lays the foundation for even more growth longer term, STTC President Ron Bennett said at the time.
Michelin Americas Truck Tires (MATT) COO Francois Corbin said the TCI deals are in line with MATT's overall strategy to provide the highest quality products and best service to the firm's fleet customers, regardless of whether it's from TCI or from an independent tire dealer.
With the divestitures, TCI's network shrank to 60 outlets and 10 retread plants in 15 states, mostly throughout the Sun Belt from Florida to California.
Another deal worth noting was Bridgestone Americas' takeover of four service locations and two retread plants from Fort Smith, Ark.-basd Trans-American Tire last April. The locations, which at one time were part of Bandag Inc.'s Tire Distribution Systems unit, now operate within Bridgestone's GCR Tires commercial distribution subsidiary.
Among North America's largest dealerships, 30 of those reporting 2009 sales showed declines, on average by about 8 to 10 percent.
These declines reflect the overall market drop of nearly 2 million medium truck and bus tire units in the U.S., to 12.9 million, according to the Rubber Manufacturers Association's (RMA) data. Demand should rebound this year, however, to about 13.5 million units as the economy picks up and more goods are shipped, the RMA said.
OE demand also is expected to recover from last year's implosion, but only about 8 percent, according to the RMA, after dropping nearly 37 percent to 2.4 million units.
The drop in trucking activity is also reflected in a 28.3-percent plunge in imports of medium truck and bus tires and a down year for most retreaders.
According to the U.S. Department of Commerce, imports of medium truck tires fell to 6.72 million units, the lowest level in more than a decade. China remained the No. 1 source for imported truck tires, registering a decline of only 14.1 percent to 3.22 million units.
The trucking business appears to be looking up in the first months of 2010, according to some data on the industry.
The American Trucking Associations' (ATA) for-hire truck tonnage index jumped 3.1 percent in January to climb to its highest level since September 2008.
The improvement, coupled with anecdotal reports from carriers, prompted ATA Chief Economist Bob Costello to say the industry and the economy are recovering.
While I don't expect tonnage to continue growing as robustly as it did in January, the industry is finally moving in the right direction, he said. Although there are still risks that could throw the rebound off track, the likelihood of that happening continues to diminish.
Another indicator of a recovery is sales of medium- and heavy-duty trucks, which rose in January for the first year-over-year gain in three years.
Sales rose 3 percent in January from the year-earlier level to 17,557 trucks. The last rise in commercial-truck sales was in January 2007.
Supporting this trend is a recent report from ACT Research Co., which forecasts strengthening demand for new trucks later this year and into 2011.
In its latest North American Commercial Vehicle Outlook, ACT projects heavy-duty (Class 8) vehicle production will grow 18 percent year-over-year in the first half of 2010, due in large part to stronger orders late in 2009 in advance of new Environmental Protection Agency emission mandate engines.
Kal Tire retained the title of North America's top commercial dealership last year with sales of $495 million, ahead of Southern Tire Mart L.L.C., which closed the gap to No. 1 with 6-percent higher sales of $444 million, according to Tire Business' annual analysis of the commercial scene.
Les Schwab Tire Centers Inc., Best One Tire & Service L.L.C. and Pomp's Tire Service Inc. rounded out the top five again.
The average top 50 dealership carries between six and seven brands, with Michelin the most prevalent brand carried, listed by 36 of the top 50 dealers. Continental is next, listed by 33 dealerships, followed by Bridgestone and Yokohama at 31, Firestone at 28 and BFGoodrich and Goodyear at 25.
All of the top 50 commercial tire dealerships are also retreaders. Of these, 19 are Bandag system franchisees, operating 107 shops; 12 are MRT system franchisees, operating 33 plants; nine are Goodyear system affiliates with 18 shops; and three operate Marangoni Ringtread System plants.
Individually, Goodyear's Wingfoot Commercial Tire Systems unit was again the largest truck tire retreader last year, easily outdistancing Bridgestone Bandag Tire Solutions L.L.C.
Southern Tire Mart inherited the No. 3 retreader rank based on its 18-percent growth and TCI's reduced capacity.
Purcell Tire & Rubber continues as the largest OTR tire retreader, especially after acquiring Wingfoot's OTR-related assets. Eastern Tire Service Ltd. is the largest passenger/light truck tire retreader.
Copyright 2010 Crain Communications Inc. All Rights Reserved.