Q What type of practices has your company implemented in light of COVID-19? Do you expect to continue these for the duration of the year?
A We've asked the team members to work from home that can work from home. Some of that will continue. We're providing masks and hand sanitizer for our delivery, office and warehouse employees. We've changed how will-call business is conducted at our locations.
We've stepped up our cleaning regimens to CDC guidance. Most of these practices will continue as long as they are recommended. Some will become permanent.
Q Have you cut back on the number of daily deliveries to your customers? By how much?
A We have not for the most part. One location of ours in a highly populated city did alter its delivery schedule, but otherwise we have mostly kept the same service schedule. We did not over commit ourselves before this, and that made it easier for us to maintain a consistent presence.
Q Do you expect to return to your pre-pandemic delivery schedule?
A Yes. The question we have for the urban distribution center is when do we go back to what we were doing before. We don't have that answer yet.
Q Do you expect any tire supply difficulties in the second half of the year?
A It's tough to say. On one hand, we're seeing some issues now with tires coming on a similar frequency as before, but that seems to be more logistics related than capacity or inventory.
Some of the slowdown in production in Asia might influence this. OE greatly impacts the replacement market. So any drop in OE demand creates surplus inventories and that might offset any shortages later this year. It will depend on new vehicle sales, most likely.
Q The USW has petitioned for antidumping and countervailing duties on passenger and light truck tires made in South Korea, Taiwan, Thailand and Vietnam. What is Zurcher Tire's reaction to that?
A Production in America is important, but I don't think imports from these countries rising is related to anything other than a shift in production from China. These aren't units that were in America in 2018, and now they are in those countries instead of China.
The tariffs pushed these units into those countries, and there is nothing to support that these countries are subsidizing production of tires the way China was. I understand protecting manufacturing in America, but tariffs are never the answer. Smoot-Hawley (Tariff Act) taught us this lesson in 1930. Tariffs only hurt the American people.
Q How might additional duties impact the industry?
A They will cause price increases through each channel of the industry. They might shift more production to other countries not listed in the petition. Short term, we might see some brands in America pick up, but long term the producers will try to find ways to lower their input costs. That means not producing in the most expensive countries.
Q What kind of trends are you seeing in the wholesale business for the rest of the year? How is Zurcher Tire reacting to them?
A Technology continues to be an important piece of the wholesale industry. We are working on some exciting ways to make it easier to do business with Zurcher Tire. We're increasing levels of automation in our computer systems and trying to remain a resource for our dealer base.
Q What tire sectors look to be strong? What sectors are struggling?
A Consumer continues to be lower than we expected. Commercial tires and construction are fine now. We'll be closely monitoring commercial and construction tires in the second half. That will give us a barometer for 2021.
Agriculture is essential. America must eat. So we look for ag tires to be consistently in demand. We might just continue to see farmers look at alternative brands for value options.
