What is driving the resurgence in ag sales? How long do you anticipate the surge to last?
There are a few contributing factors driving the resurgence in ag sales, including low inventory levels across all channels of distribution in 2020. Also, we're beginning to see an increased demand within the large equipment segments (4WD tractors and combines).
Favorable commodity prices have also lent themselves to the increased demand. An expected rebound within the construction segments could be on the way and would likely be sustainable for a reasonable period.
What would you like customers to know about how your company tackled the challenges brought on by the pandemic?
The health and well-being of all Titan's essential employees remains a focal point for us. In fact, in April, we continued our dedication to employee health and safety by offering onsite COVID-19 vaccination opportunities free of charge for employees at our Des Moines, Iowa, facility. This clinic was part of a larger company initiative to provide accessible vaccination opportunities to employees at our other U.S. locations as well.
Titan facilities have continued to practice social distancing and other preventive measures to reduce the spread of germs as well as uphold our own internal safety and cleanliness protocols.
We have been and will continue to increase production to assist with the high market demand with an important focus given to our dealer partners within the aftermarket.
Do you expect any supply difficulties in the second half of the year? If so, what sector is most in short supply?
As management stated in our Q1 earnings release, many companies around the world are facing supply chain and logistics shortages, but we are managing well to this point, due to well-coordinated supply chain management that requires continuous attention and action.
What are some of the pleasant surprises in the industry?
A pleasant surprise that we've seen in the industry is a continued effort on sourcing manufactured goods from North America. The recent commodity prices are also assisting with the stabilization of the farming community.
In addition, we've seen continued resilience of our Titan dealer network across all market segments throughout the pandemic. Lastly, we are proud and thankful for our employees' commitment during this challenging time.
What kind of trends are you seeing?
As stated above, we're seeing more volume on the OE side of the business which will in turn help the aftermarket business. In addition, many farmers have aging equipment that has resulted in decisions to make upgrades with bolt-on technology instead of trading in that equipment. This lends itself to our Low Sidewall (LSW) Technology, which remains a differentiator for us because of the superior performance attributes they offer our customers.
What sector offers the most growth potential?
Large equipment segments in agriculture, such as 4WD tractors and combines, are showing the highest growth potential. One of the ways we address that is through product innovation.
Earlier this year we introduced the new Titan AgraEDGE tire line, which you ask about below. This cutting-edge, cost-competitive tire line is available in front and rear row crop MFWD tractor sizes, but we're planning to add a range of additional sizes throughout the next year for 4WD tractors, combines and grain carts.
The irrigation segment has also been in high demand, resulting in Titan adding more mold capacities as well as introducing the first non-direction radial to serve this industry with the Titan Hi-Dration Lug Radial.
Titan recently added an R-1W drive tire to its portfolio. How is that product being received?
The Titan AgraEDGE is our new radial R-1W line currently available in 17 row crop sizes. A total of 40 sizes will be introduced this year and early in 2022 including the most popular sizes for MFWD tractors, 4WD tractors, combines and grain carts.
The tire provides excellent traction, self-cleaning and roading capability, backed by an eight-year warranty, two-year stubble damage protection plan and a one-year field hazard protection plan.
This will be an incredibly price-competitive tire coming out of our U.S. plants — providing consistent, reliable supply where there may be gaps in supply with other price-competitive manufacturers.
The product has been very well received within the aftermarket segment. Initial sales are above forecast resulting in the need for additional molds within this product line.
Do you expect to roll out any additional products in 2021?
At Titan, we continue to focus on product development and innovation for our current product lines and new products to meet market demands. Given the current market conditions, the release of new product offerings will coincide with the available capacity within our facilities.
What has been the overriding factor in price increases?
The volatility of the supply chain and other inflationary pressures directly impacts costs, which result in the need for price increases as experienced across our industry.
At Titan we continue to evaluate price increases and monitor the market so we can adjust quickly, as needed, to remain as competitive as possible and efficiently communicate those changes to our customers.
Do you expect any major investments in the next six months or year, in either personnel, distribution facilities or capacity expansions?
Titan has the facilities and the capacity to increase production. The challenge is more about staffing for expanded production. We are actively recruiting for increased staffing levels at each of our facilities.
At the same time, we continue to implement initiatives that improve plant efficiencies and that optimize our product portfolio.
There are also some investments being made into automation so we can reallocate staffing to other strategic production within the facilities.
What did the company learn from over the last year, and how can it use those lessons?
One of many takeaways is that Titan understands the importance of focusing on its core business and core dealer partners. It was a challenging 2020; however, we will never lose sight of our employees' and dealers' commitment to our company during the pandemic.