WASHINGTONRetreaders that supply tires to the U.S. Postal Service (USPS) are watching closely as the agency prepares to select vendors for a new commercial van to replace its current Long Life Vehicles, (LLV) which have been in service more than 25 years.
At stake is business valued at nearly $12 million last year but which could require affected retreaders that use mold-cure systems to invest tens of thousands of dollars in new molds. That would be the case if the USPS should specify that newly designed vehicles use tires larger than the 14- and 15-inch diameter tires used now, which some observers consider a likely possibility.
Greenville, S.C.-based Oliver Rubber Co. L.L.C. has been the exclusive supplier of retreads to the USPS since 2004, and the agency renewed the contractworth more than $41 millionwith the Michelin North America Inc. subsidiary last November. The length of the contract was three years, with two two-year extension options for a potential total of seven years, the agency said.
Oliver declined to comment for this article.
The USPS reported it procured in fiscal year 2013 more than 200,000 retreaded tires, in sizes 195/75R14 and 215/75R15, worth $13.9 million.
According to the Smithsonian National Postal Museum, the last LLV was built in 1987.
As the agency eyes new vans, the new design the USPS is considering likely will involve a change to a larger tire size16- to 19-inch rim diameters vs. the current 14- and 15-inch sizesaccording to Marvin Bozarth, a consultant with the Tire Industry Association (TIA) and executive director of its predecessor organizations, the American Retreaders' Association (ARA) and the International Tire & Rubber Association.
The change to the new vans also likely will involve tires of high quality with stronger beads, similar to the tires used on Federal Express and UPS vehicles, Mr. Bozarth said.
The retreading will probably get better, he added.
The beads are pretty flimsy on the Long Life Vehicle tires, and they get a lot of abuse, Mr. Bozarth said. But we can get them retreaded if they know how to dismount them.
The new tire sizes should not be a problem for retreaders using Oliver's precure products who could handle them immediately, Mr. Bozarth said. Mold-cure retreaders, however, would probably have to invest in new molds and equipment.
Tommy Ford, president of Tire Recappers of Nashville Inc. in Nashville, Tenn., agreed the changeover will be both a big one and an expensive one for his operation.
We've been retreading for the Postal Service since 1991, and this is the biggest change since we started, Mr. Ford told Tire Business. The cost will be about $14,000 per mold, and we have 21 postal molds.
Mike Berra Sr., CEO of St. Louis, Mo.-based Community Tire Co. Inc. and a former ARA president, agreed with most of what the other commenters said. Retread procurement, according to Mr. Berra, is an integral part of the USPS's operations.
The Postal Service is one of the most environmentally conscious agencies of our government, he said. They are concerned about cradle-to-grave treatment for scrap tires.
But at the same time, Mr. Berra said, the agency's LLVs were so named because they were designed to last 25 years. With 150,000 to 175,000 LLVs currently on the road, any replacement of them is likely to be gradual, he said, noting that whatever happens at the Postal Service probably won't happen any time soon.
David Stevens, managing director of the Tire Retread & Repair Information Bureau (TRIB), said the trade group's members have taken a wait-and-see approach to the news from the USPS.
Until the vehicle is chosen, it's hard for them to plan their next steps, Mr. Stevens told Tire Business. However, our members are confident that their relationships with the Postal Service will remain strong and they will continue to successfully retread the tires being used on delivery vehicles.
The USPS released potential specifications on the proposed commercial van to potential bidders Jan. 20, then met with the same bidders in Washington in mid-February, according to Automotive News, a Detroit-based sister publication of Tire Business.
The USPS plans to choose vendors this summer to build prototype vans, which the agency will test in 2016 before awarding a contract in early 2017, Automotive News said. The Jan. 20 specifications state that the agency will buy 180,000 of the new vans at $25,000 to $35,000 apiece, making the contract worth a potential $4.5 billion to $6.3 billion.
For decades the USPS has retreaded thousands of used tires from its fleet annuallyboth to save money and to follow the federal government's Buy Green initiatives. By all accounts the agency has been very happy throughout this period with the performance and cost savings provided by retreads.
We're getting more for our buck, saving money, using fewer resources and putting fewer scrap tires into the environment, said William E. Messitt, a USPS vehicle maintenance analyst, in a 1994 interview with Tire Business. Mr. Messitt drafted the original retread procurement order for the Postal Service in the early 1990s.
Though exact current numbers or dollar figures for USPS retread procurement weren't immediately available, the USPS strongly encouraged retread procurement in a Sustainable Acquisition and Purchasing document on its website at www.usps.com.
Daily stop-and-start curbside delivery wears tires out quickly, the document said. We established a national contract service to retread our used tires, which have been cost-effective and durable, dependable and safe.
A fleet of 212,530 vehicles uses a lot of tiresretreading saves a lot of green, the document said.
The agency said it gets 10-percent savings per retread tire on LLVs, 25-percent savings per retread tire on two-ton vehicles, and 50-percent savings per retread tire on seven-ton vehicles.
A USPS spokeswoman said little about the projected new vans, except to note that all the vehicles initially would be equipped with new original-equipment tires.
The ability to retread the original tires will be based on the tire size and type, the spokeswoman told Tire Business. We are committed to continuing to retread used tires to the extent practical moving forward.
TRIB's Mr. Stevens noted that the new vans are designed to accommodate the USPS's plans to transition more into package delivery, as opposed to pure letter carriers.
Those larger package-carrying vehicles will move away from some of the current sized tires being retreaded, he said. Some of our members may need to invest in equipment if they want to keep serving that segment, while some of our members feel confident they already have the right equipment.
Bridgestone Bandag L.L.C. did not respond to questions from Tire Business about its retreading program.
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