MARCO ISLAND, Fla.—Shipments of OTR tires in the U.S. are expected to rebound this year after two years of decline, including a 21-percent plunge last year.
That's according to Tim Easter, director of OTR sales at Yokohama Tire Corp. (YTC), who delivered the industry's annual OTR tire trends report during the Tire Industry Association (TIA) 2014 Off-the-Road Tire Conference on Marco Island.
Mr. Easter based the forecast on expectations that the U.S. and Canadian economies will show signs of growth this year—even if growth is limited to just a couple of percentage points.
He said shipments should rise about 4.3 percent this year after two years of decline—13 percent in 2011 and 21 percent last year. The market should keep growing through 2017, Mr. Easter added, but only by a few percentage points a year.
The YTC executive did not provide actual shipment data, but said 25-inch tires make up nearly 46 percent of the 29 percent, with radials at 29 percent and bias-ply at 16 percent. He said 24-inch tires make up 21.6 percent, while those 49 inches in rim diameter and larger represent 13.3 percent.
In a separate presentation, Dick Gust, president of national accounts for Liberty Tire Recycling L.L.C. and co-chairman of TIA's Environmental Advisory Council, put the market at about 3 million units a year, with the construction segment accounting for more than three-fourths of the market.
In general, the market breaks down roughly 68/32 radial/bias, Mr. Easter said, with only marginal growth in favor of radials.
In terms of specific market segments, tires for port materials-handling equipment should be a bright spot, Mr. Easter said, based on government expectations of a record year in international trade.
Depending on how—or whether—Congress resolves the pending funding crisis in highway infrastructure funding, road construction could yield some unexpected gains, Mr. Easter noted.
As it stands, however, estimates show the U.S. should have about $67 billion available this year for transportation infrastructure work—far short of the $200 billion needed for road and bridge maintenance and improvements, he said.
Looking at market dynamics that will affect demand in the coming years, Wade Gatlin, vice president of mining tires for Bridgestone Americas' OTR tires business unit, said mining operations are undergoing a fundamental change in the way they do business.
“It's a different mentality today than in the past,” he said. “It used to be growth at all costs. Now they're shrinking. This new management CEO is usually MBA-educated and is focused on expense control in a down market, and working smarter, spending money more wisely in an operationally efficient manner.
“The focus is not to get the ore out of the ground fast but to increase profits and shareholder value as they remove the ore.”
These changes mean tire makers and their dealers are working increasingly with procurement offices that more and more are decentralized, working at the individual mine site level, Mr. Gatlin said.
“These new procurement personnel want to understand how a tire dealer and a manufacturer can work together in order to reduce their cost and increase their operational efficiency,” he said, adding more legal personnel are also being hired by the mines in order to set up and work with contract negotiations.
Dealers also have to consider the increased emphasis on safety, with increased regulatory efforts from both the Occupational Safety and Health Administration and Mine Safety and Health Administration.
“Safety compliance is no longer a choice,” he said, “it is a mandate.”
In addition, the Compliance Safety Accountability (CSA) standards mean tougher regulations for all construction companies and mine companies that have employees traveling over the highway system in the U.S.
“If you have a service truck which has a DOT number on it, you are under the CSA standards,” he said.
The Bridgestone executive also noted that demand and supply in the housing market is starting to equalize and housing prices have started to rebound, but OTR tire sales likely won't recover until this transition moves more into roads and bridges and commercial construction.
These market dynamic changes mean those wanting to service customers using OTR tires will need to step up their game in terms of value-added, Mr. Gatlin said.
“Basic tire services, mounting, dismounting, change-outs, are entry-level services and will get you in the door sometimes,” he said, but “if you want to stay in, you have to provide more.... (The customer) wants 'best in class.'”
What do OTR customers count as value-added? Mr. Gatlin suggested things like quality of new tires, repairs and retreads a dealer provides, the extent of wheels and rims, on-site service, intelligent tire tags or tire tracking, heat studies, weight studies, road studies, run-out information, etc.
In short, he said, “service plus solutions equal value.”
To determine whether one's business fits the new criteria, Mr. Gatlin suggested a number of questions to ask: Does your service technician or manufacturing representative add the value that represents your company's brand and allows you to be best in class to the total service provider? Are you best-in-class in the eyes of the customer? Are you viewed as a supplier or a vendor, or are you viewed as a trusted adviser? Does your end-user look forward to you coming to visit them to help them solve a problem, or are you viewed as just another vendor who is taking up their time?
Do you perform jobsite evaluations and look for opportunities to save them money, or are you just selling them a product? Do you offer training programs for their employees? Do you offer retreading, repairs, foam fill and other services to your customers that add value to the end-user and also to the products that you sell?
“Our industry is rapidly changing. The question is, 'Are you changing?'” he asked those in attendance.
“The business world and the animal world are similar in one aspect: Those that adapt to the environment survive. Are you the chameleon or not?”
To reach this reporter: bdavis@ crain.com; 330-865-6145.