FORT MILL, S.C.—While the early months of the year started out perhaps a little too soft for comfort sales-wise, a commercial tire executive with Continental Tires the Americas L.L.C. sees the industry heading into a second half that holds promise for improvement.
Paul Williams, executive vice president of commercial vehicle tires for Conti, recently spoke with Tire Business on how the Fort Mill-based tire maker expects the commercial market to pick up after what he described as a lackluster first half.
Mr. Williams said the beginning of 2013 started a little soft, but began picking up in March, with April seeming “pretty robust.”
He referenced the Rubber Manufacturers Association's expectations of a flat U.S. replacement tire market—something that Conti had planned on.
“We took a pretty conservative view on 2013 development overall,” Mr. Williams said.
“I think we planned that the market might improve by 1 or 2 percent over last year, so we thought it would be fairly flat anyway. So it wasn't too much of a shock.”
Mr. Williams said that purchasing has been “fairly stable” on the commercial fleet side, whereas tire dealers are a little more, as he put it, “forward and backwards...depending on stock levels numbers” and whether “there's any program in the marketplace.”
He noted one reason he thinks some dealers are a little more hesitant to purchase is because they hope the pricing of raw materials might soften. However, “raw materials are now quite stable and we don't foresee any change in tire pricing.”
Mr. Williams said he foresees the second half of 2013 being stronger than last year's because “the first quarter started weaker than 2012,” so he does “expect the market to at least recover.” Conti expects a better second and third quarter this year than last, he said, though he doesn't see the company hitting 2011 numbers.
One area that is doing well is the original equipment market.
“The OEs are doing surprisingly well,” Mr. Williams said. “It's still going to continue to be fairly strong this year.”
And, he added, “I don't see, unless there's a major economic meltdown, any reason why the OE shouldn't continue to grow.”
Another area that is seeing growth is the retread market, which saw a drop off in 2009 and a significant rebound in 2010 and 2011, he said, before falling flat last year.
“Overall, there's been quite a pick up on retread business,” Mr. Williams said. “We will continue to see a fairly robust development I think of the overall retread business.”
He added that people credit “casing availability as pulling that back” and that Conti is getting “heavily invested in the retread business” so its growth is “expanding exponentially.”
Mr. Williams said that with many fleets focusing on the “lowest overall driving costs,” tire makers put a lot of technology into new tires—in terms of wear, fuel efficiency and robustness of the tire—but an important aspect is also a tire's retreadability. It makes “a lot of sense to retread tires,” he said, because tires can be retreaded two, three, sometimes four times “yet the retread only cost(s) 50 percent of the cost of the new tire.”
“So the fleets that tend to run most efficiently tend to utilize the retreads quite well,” Mr. Williams said.
Some markets, such as Brazil, have a really booming retreading business, he pointed out, because the prices of new tires are so high.
“We expect the retread business will continue to grow,” Mr. Williams said.
“The ratio is roughly 1:1 now, but there's no reason why it couldn't increase to 1.2, 1.3, 1.4 retreads per new tire ultimately—as long as you have a very good quality casing and a very good quality retread product.”
Mr. Williams said Conti has a philosophy to “take all the technology” it puts into a new tire and put “that into the retreads because there's no reason why a certain tread pattern that is working now on a new tire isn't going to work on a retread.”
Conti recently convened a council with select fleet customers to hear their concerns. Mr. Williams said the customers explained that drivers want more information about their trucks and the road while en route. He said they are currently able to monitor alarms, positions on GPS, etc., but they want more instant information and this is what Conti is aiming to do with the ContiPressureCheck System.
“We've taken the first stage now with our new ContiPressureCheck System to give instant feedback to the driver just as you do with your normal car,” Mr. Williams said.
He said this system will allow a driver to know if there is low pressure in any tire instantly.
Mr. Williams added, “There (are) a number of issues you have if you don't air up the tire correctly. So the first stage for us is feeding that (information) back to the driver.”
The second stage, he said, is “to communicate out to the vehicle” so a fleet can more regularly monitor what it has on the road.” They may only see their truck once a month or a trailer every three months, so it is putting a lot of trust on the drivers.
“We are able to put all that technology together to help the fleets improve the utilization of the vehicle, and more importantly, the utilization of the tires on their vehicles,” Mr. Williams said.
“The more information you can pull out of the vehicle, and allow the fleet's visibility of that, the better,”
Mr. Williams said he foresees more such technology coming out in the future.
“My prediction is there will be more information systems that communicate higher performance tire wear, tire pressure, tire temperature or whatever it is, to the drivers and then ultimately to the fleets as well.”
Some fleets also are starting to experiment with wide-based tires. Mr. Williams said these types of tires are great when weight is an issue, with the only drawback being the “serviceability of those tires in the long run.”
He said that with wide-based tires, a special tire configuration with the vehicle is needed, “which makes it a little less marketable in the second-hand market.”
Overall, Mr. Williams thinks the wide-based tire market will continue to grow and that it may “overgrow the market generally, but not by a huge margin.”
He added that many “manufacturers now have wide-based tires so there's a decent selection available.”
However, Mr. Williams said he has heard there are a lot of fleets that have tried wide-based tires but have gone back to twins. “There's some success stories out there and the tires are continuing to get better and better,” he noted.
Ultimately, Mr. Williams said fleets using wide-based tires are still “sort of a unique market” that tends to be focused on bulk-haulers because of the tires' fuel efficiency.
“We have (those) products available. They are selling very well; they run very well,” Mr. Williams said.
Conti markets the HDL2 Eco Plus WB drive tire and the HTL1 trailer tire as its wide-based tire selection.
Mr. Williams said that truck tire distribution is very fragmented, unlike the passenger side of the business, but Conti is finding that dealers are “recognizing the need” to join with “the right manufacturing partner.”
He added that “they need that support” and “fleets are requesting the matching product” because they only want to deal with one dealer, one tire supplier and one matching retread supplier.
This way, if a driver “sets off from New York and is heading to Dallas and has a breakdown somewhere on the road, then he's able to get the same tires that he's picked as part of his tire program.”
Mr. Williams said that Conti is working hard and “doing very well” at finding ContiLifeCycle dealers.
Dealers licensed to retread and sell truck tires with ContiTread flat precure treads are: King Tire Service Inc., Bluefield, W.Va.; Bergey's Tire, Souderton, Pa.; G&G Tire, Plattsburgh, N.Y.; Hill Tire Co., Forest Park, Ga.; Rovince International Corp., Compton, Calif.; and Y Tire Sales Inc., Los Angeles.
Tallmadge Tire in Binghamton, N.Y., Tallmadge Tire Service of Geneva, N.Y., and Tallmadge Tire Service of Cortland, N.Y., also distribute the ContiTreads produced at G&G.
Conti said it soon will announce several additional licensees in the U.S. and Canada.
To reach this reporter: [email protected]; 330-865-6143.