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Rocket science, it ain't Going beyond the sale

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RIO GRANDE, Puerto Rico—Selling OTR tires isn't rocket science—in fact, it may be harder, if you believe Bruce Besancon, director of marketing, North American earthmover tires for Michelin North America Inc.

“Rocket science is easy compared to what we do. Rocket science is all about physics and what happens,” he said. “What we deal with sometimes are emotions—how we deal with a client—so it's actually a little more difficult.”

In his keynote address at the Tire Industry Association's 2013 OTR Tire Conference, Mr. Besancon addressed several key market trends impacting the OTR industry today and going forward. But it was his final point that may also have been the most salient: 2013 is the year of choice.

“Everybody in here is going to be making choices about who they work with. There's a lot more availability than there has been in the past, so all of our customers are going to be looking at who they want to do business with,” he told attendees.

“They're going to be looking at a variety of prices, they're going to be looking at a variety of services and they're going to be looking at a variety of options. We've got to be the people—you've got to be the person—that provides that right option for the end user.”

Mr. Besancon said one of the leading trends in the OTR tire industry, or in any industry, is that of change.

“Times changed quite a bit inside 2012,” he said. “When we look at our customer base and we talk to many of the dealers out there...particularly in 2012, a lot of things were occurring.”

Many of Michelin's customers have adopted a wait-and-see attitude as a result of uncertainty in a market that is increasingly impacted by global factors, Mr. Besancon said, and many OEMs adjusted their production schedules down as 2012 went on.

“It doesn't mean that they're way down below historic levels, but they had anticipated very high levels, and as we went into the later half of the year some of these things cooled off,” he said, adding that he expects the cautionary approach in North America will be the norm for the short term.

The tires themselves are changing as the percentage of radial OTR tires in the market increases and as performance standards grow in step with the size and power of equipment on which they're being used. As a result, manufacturers have to focus on making better tires, Mr. Besancon said.

“Each of us in here has something different to offer, but it always starts with the product,” he said. “When we look at things as a tire manufacturer, we're going to have to look at the end user.... None of us are in this for the heck of it. (End users) want to make money.”

Enhancing the performance of a tire can take a variety of forms, such as improved safety features.

“We've changed some of the bead design of our tires—particularly in the underground mining designs—so that we have a wider bead and more contact so there's less chance of a slip on the rim,” Mr. Besancon said.

Increasing the speed at which a tire is able to operate can make a huge difference as well, he noted, as “speed has always been a limitation.”

“If as an industry we can get a tire to go one mile an hour faster or one kilometer an hour faster even, in many of these mining accounts that more than makes up for the cost of all the tires in their operation,” he said. “They can make more profit if they can go a little bit faster.”

Speed also is important on the manufacturing end.

“We're always working on the newest technologies. We have over 6,000 people that are involved in a day-to-day basis on research and development,” he said.

“We have a very large budget dedicated only to R&D, and we've just gone through the last couple years with a whole new process on how we bring tires from initial development to final commercialization. What we've tried to do on that is shrink the amount of time it takes to get a new product out.... We have to get something out there, and we have to get it out on a quicker basis.”

Improving the fuel economy of a tire and reducing impact on the environment during manufacturing also will be important trends going forward, Mr. Besancon said, as gas prices rise and customers themselves become more focused on sustainability.

While higher standards of performance are important, Mr. Besancon said respondents to a blind study Michelin conducted with its client base over the last few years pegged reliability, availability and value as the three most important considerations when selecting tires, with performance coming in fourth.

Reliability, from a manufacturer's standpoint, means “the product we put out there has to be the most reliable product we can offer,” he said. In addition, the tire needs to be readily available—a problem that has plagued the industry over the last decade.

Along with several other OTR tire manufacturers, Michelin recently made investments in OTR capacity to keep up with global demand. The company has more than doubled its earthmover tire capacity in the last seven years, Mr. Besancon said.

Developing and supplying the right kinds of products for OTR tire users is important, but Mr. Besancon said going forward it will be more important than ever for manufacturers and dealers to be involved with their customers after the sale is complete.

“We've got to get better because our clients are asking us to get better,” he said. “...We have to know what's happening on their site, we have to be able to interact with the site conditions they have, not just to change the tire but to help them understand how they can change those site conditions to become more profitable.

“Are they optimizing everything? This isn't about going in and telling them what to do, but (it's about) giving them different value options.”

Mr. Besancon emphasized the im-portance of being on-site with regards to maintaining relationships with customers.

“We have to be on-site. We can't just drop a tire off and think that everything's going to be OK,” he said. “(Customers) want that on-site analysis. They want you to be the pro because they are not tire professionals. They are not total equipment professionals. They want us to be the professionals in the market, and we've got to show them that.”

Along with the need for an on-site presence, Mr. Besancon said the industry is trending towards higher standards of tire repair, as customers ask for consistent quality and traceability.

Announced at the conference, Michelin is partnering with Tech International Inc. to launch the Michelin Earthmover Repair Accreditation Program (see story on page 19), a certification/audit program designed to cover training, technical support, inventory control, quality products/procedures and traceability involving earthmover tires.

In addition, Michelin recently launched Michelin OperTrak, a Web-based, tire-and-rim management system that monitors earthmover tire activity, providing users with features such as budgeting, forecasting and fleet data consolidation.



To reach this reporter: wschertz@ crain.com; 330-865-6148.
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