Manley: Not quite business as usual — yet

While there are plenty of changes happening in the world of tires so far this year, none may be wilder than the dramatic swing in demand.

Domestic production — in some segments — dropped to a level in 2020 not seen in decades. A year later, manufacturers can't make enough tires.

Boy, what a year makes.

The industry was stunned in March and April 2020 — shutting production and watching demand nosedive. We all went into survival mode to keep everyone safe.

It seemed after the initial screeching halt of a terrible second quarter, the rest of the year saw pent-up demand ooze out. And maybe, just maybe, the start of recovery.

After all, people had a bit of extra cash in their pockets via stimulus funds, and they really had nowhere to spend it because most everything was closed. Plus, many had put off vehicle maintenance, and consumers are looking to keep their vehicles longer.

It kind of felt like the tide was turning this year.

"Business this year really has started off as one of our strongest on record. Service has been the driving force on this," Dustin Dobbs, vice president and director of retail sales at Dobbs Tire & Auto Centers Inc., told Tire Business in our Mid-Year Report focused on the aftermarket.

"Let's face it, no one was using their cars with the pandemic, and that has started to pick up and, for us, it really started to pick up in the middle of last year, in July, and continued through this year as well. In January and February this year, which in our industry is a down part of the year, this year it was not. It was very good for our company."

Editor Don Detore, Special Projects Reporter Bruce Davis and I hosted a livestream recently to talk about some of the themes looking back at the first half of 2021 as part of our annual Mid-Year Tire Report.

The Tire Business livestream, which also features a great segment talking with Atturo Tire President Michael Mathis discussing antidumping duties on certain Asian-sourced tires, is available for free — as are all of our livestreams — at tirebusiness.com/events.

When it comes to supply and demand, the demand is doing just fine. It's the supply part that's the worry.

"It's certainly the tightest market we've seen in several decades," Mr. Davis said during the discussion. "You can't overlook the fact that domestic production — at least in passenger tires — tanked last year. It dropped 25% to a level that we hadn't seen since the 1950s."

The manufacturing shutdown of 2020 created a gap, and the industry just can't get those days of production and shipping back.

When demand did return, the gap left by domestic production was being filled by imports, until that, too, became problematic.

Tire dealers and wholesalers reported to Tire Business that they had shipments stuck at ports waiting to get into the country. And those were the lucky ones, as many importers are having trouble just getting space on a vessel.

"We've added more vendors than ever before, and we've kind of changed our buying habits. We buy tires more by size than by brand. That'll be temporary," Northwest Tire Inc. President Dan Pearson told Senior Reporter Kathy McCarron.

He said the Bismarck, N.D.-based company, which operates 23 stores in three states, expects the supply issues to persist at least until the end of the year.

"When all the manufacturers get full, we'll go back to the ones that we want to support."

Sam Jakabcic, general manager at Conrad's Tire Express & Total Car Care in Cleveland, said the shipping issues have changed the way that everyone works.

"We've had more dialogue, trying to procure fitments. Where maybe you'd be interacting with your direct manufacturer on a monthly basis or bimonthly basis, now it's almost like a weekly basis," Mr. Jakabcic said. "So there's more conversations. Sometimes you feel like the squeaky wheel gets the grease. But things are so different. It's not business as usual yet."

It's going to take some time for the supply chain to straighten itself out, but as it does, domestic production will start to close the gap, and hopefully low-fill rates will soon be rectified.

One good thing we've seen in the first half of the year is that instead of tire dealers talking about Paycheck Protection Program loans, face masks or safety protocols, they are talking about, well, tires.