Triangle targets late summer for U.S. plant groundbreaking

FRANKLIN, Tenn. — Things are progressing nicely for Triangle Tire USA, according to CEO Manny Cicero, who responded to a questionnaire provided by Tire Business. Even though sales aren't as strong as the company expected, Mr. Cicero expects demand to increase in the second half of the year, as Triangle moves closer to breaking ground at its new tire facility in North Carolina.

Q: With the year nearing its halfway point, how would you describe business thus far in 2018?

A: Stronger than last year but not quite as strong as expected. All economic indicators point to extra heavy tire demand, especially in commercial tires. Sales have increased year-over-year as we continue to grow our distribution footprint. But it's definitely been a challenge to consistently achieve our budgeted numbers.

Q: What are some of the pleasant surprises you are seeing in the industry?

A: One of the really bright spots this year is strong OTR tire demand, especially in larger-diameter sizes. Nothing in this industry can surprise me much anymore but I guess what surprised me most was the joint ventures between Michelin/Sumitomo and Goodyear/Bridgestone.

Q: Where do you see the industry markets heading during the last half of 2018?

A: As dealers deplete their inventories, we expect the second half of the year to be much stronger than the first.

Q: What kind of trends are you seeing in the marketplace? How is your company reacting to them?

A: Consolidation of national distributors by Tier 1 manufacturers (Michelin and TBC, Goodyear/Bridgestone with Tire Hub). Our strategy has been to target regional distributors in favor of national players. In that sense, these consolidations have not had that big of a direct effect on Triangle.

In fact, there seems to be a movement by strong regional distributors to consolidate into groups to combat what they see as competition by their own Tier 1 suppliers.

Q: What sectors look to be strong? Are they sustainable for the future?

A: 1. Large OTR; 2. Specialty tires; 3. Light truck; 4. UHP. We think they're sustainable.

Q: What tire sectors are struggling?

A: We don't see any segments struggling. Just some doing better than others.

Q: Can you provide an update on the new plant scheduled to be built in North Carolina?

A: The plant is progressing on schedule with all necessary contracts with North Carolina officials signed and the project management team firmly in place. More important, Triangle has secured permission from the Chinese government to make the necessary investments in the U.S.

Q: Has any work begun at the site? Is there a target date set for groundbreaking?

A: Preliminary work has already started on the site. Drones will be utilized to chronicle the construction process. Groundbreaking is pending all necessary permits. We anticipate late summer for the official groundbreaking to occur.

Q: What kind of impact has antidumping and countervailing duties had on Triangle?

A: AD/CVD duties have had been a major barrier to the successful marketing of our passenger and light truck lines. The duties were a key factor in the decision to build tires in the U.S.

Q: What was the thinking behind the new all-position fleet tire?

A: The TRS02 is a world class product and it is engineered to fit dual applications to help both regional and urban fleets lower their cost of operation. There is very high demand for this type of product and is the first of several new products we have on the drawing board.

Q: You have said you are revamping your tire lineup. How long of a process will that be?

A: Our global product development team has done a clean sweep of the existing Triangle product line, and we are now planning an entirely new product architecture, rationalizing our line and making it much easier for our customers to understand our product line. Customers should start seeing evidence in the second half of 2018 and continuing on through 2019. For Triangle, the next step is the design and manufacture of tires specifically for the North American market, designed at our Akron tech center and manufactured beginning 2020 in our new, state-of-the-art smart factory in North Carolina.

Q: Has the threat of tariffs affected business? How so?

A: Yes and no. If there is one thing we've learned the past decade is that tariffs are unpredictable and illogical in their application. In that sense the threat of tariffs alone has not changed our day-to-day approach to the market. The best way to eliminate tariffs from affecting our future business is to produce in the U.S.

Q: Do you foresee any price hikes in the second half of the year?

A: Price hikes are a possibility due to some shortages of raw materials and increased freight and logistics costs. So far, manufacturers have been absorbing these costs, but I'm not sure how much longer this can last until they are passed on to the consumer.

Q: What are some of the industry challenges going forward?

A: Our industry is being challenged now more than at any point I can remember. New changes in vehicles (autonomous and electric) call for changes in the tire construction and design with smart tires and connectivity becoming more important. The tire distribution landscape continues to evolve with the recent entrance of Tier 1 manufacturers into the national distribution arena. Also, the rise of online tire buying, spurred mostly by millennials, is challenging the traditional brick-and-mortar model that has been prevalent for as long as I can remember.

Q: How have the tax cuts affected you do business? Are customers more willing to buy because of the tax cut?

A: No real effect on how we do business. We have not seen it change our customers' buying behavior, though we expect downstream demand to increase as a result (construction and mining companies with more money investing more in their equipment and tires).

Q: Do you expect any major investments in the next six months?

A: 1. People (talent acquisition); 2. Bricks and mortar (N.C. factory); 3. Brand support (improving awareness for Triangle brand); and 4. Channel support (making Triangle the value brand of choice for dealers/distributors).