QUINCY, Ill.Titan International Inc. is frustrated by the slow acceptance of its LSW low-sidewall agricultural tire concept by the large OE farm equipment makers.
So frustrated that the company is plowing resources into a pull-through marketing scheme that attempts to influence the OE decision makers by generating demand at the replacement level.
Titan Chairman and CEO Maurice Taylor told financial analysts recently that the firm's efforts to create pull-through demand from big farmers, large contractors and mining companies is allowing it to gain momentum with key vehicle makers and to convert new customers daily.
Looking forward, Mr. Taylor said Titan is counting on these efforts to get customers to adopt its LSW low-sidewall tire concepts, which Titan touts as a low-pressure alternative to conventional radials.
Titan's initiative comes at a time when the Quincy-based manufacturer of farm and OTR tires and wheels is struggling with lower sales.
For the quarter ended June 30, sales fell 28.2 percent to $376.1 milliona plunge Titan attributed to the negative effects of lower agricultural equipment sales, competitive pressures and unfavorable currency translation figures.
At the same time, though, Titan reported its gross profit more than doubled and the firm returned to the black for both income from operations and net income, performances Mr. Taylor said demonstrate that Titan is on the right track.
A key element of Titan's LSW initiative is to focus attention on the reality of how farmers work in their fields day to day vs. theoretical advantages of using IF/VF (increased flexion/very high flexion) tires, according to Scott Sloan, agricultural products manager for Titan.
IF/VF tires are designed to allow farmers to run them at lower pressures for greater efficiency, Mr. Sloan said, but Titan's research shows very few farmers are disciplined enough to adjust tire inflation pressures on a regular basis when equipment is used for different applications. Not operating IF/VF tires at the proper pressure, he contends, essentially negates the performance advantages of these types of tires, which sell at a premium.
At the same time, he said, customer surveys indicate farmers' top two complaints about tires are road lope and power hop. Road lope is defined as the physical swaying and bouncing of a tractor or other piece of farm equipment during road transport at speeds above 18 mph, which is laid to the inherent damping effect of tires. This can result in extreme rider discomfort and inhibit the grower's productivity between fields, Titan maintains.
Power hop is when a tractor starts to hop under load, again tied primarily to improper tire pressures.
Titan claims the lower sidewall profile of its LSW radials minimizes both of these effects at the unit's recommended pressures, thus relieving farmers of the need to adjust inflation pressures to meet conditions or application.
Titan also claims the LSW's improved traction properties allow farmers to save money on fuel due to the efficiency gains.
As part of Titan's work to generate data to support its claims, teams led by Mr. Taylor have visited in the past couple of years more than 100 farmers who work 15,000 to 20,000 acres, Mr. Sloan said. The tire maker has offered to convert some of their higher-powered (300-plus horse-power) equipment to LSW tires and wheels.
This grass roots campaign seeks out influential farmers whose opinions and actions are watched by others in the farming community, Mr. Sloan said.
Another aspect is to get farm equipment dealers involved, Mr. Taylor told the analysts.
We are in discussions with equipment dealers to offer a program by which traditional tires/wheels are exchanged for new LSW technology, Mr. Taylor said. We believe this program will potentially drive customer loyalty and ultimately improve their bottom line.
This program involves the dealerswith Titan's assistancebuying back a farmer's tires and wheels and swapping them out for an LSW tire/wheel package. There's enough of a market for used wheels, Mr. Sloan said, to provide dealers with sufficient revenue to help fund the buy-back program.
At the same time, Titan has just released its largest farm tire to date, a 12.50 35R46 that provides a wider footprint.
Mr. Taylor also said Titan is working with customers in the construction industry to purchase their new equipment without tires/wheels, and then buy LSW tires and wheels separately. This potentially could yield tax benefits in addition to performance enhancements, he said.
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