According to President and CEO Roy Bromfield, Toyo Tire U.S.A. Corp. has weathered the COVID-19 pandemic successfully and is looking ahead to the start of a "new regular." He addressed the pandemic as well as other industry issues recently with Tire Business.
Q How has your company reacted to COVID-19?
A At Toyo Tires, we tightened our belts, starting in March, primarily through budget reductions to bring projected expenses in line with what we anticipated revenue declines to be. We have kept our team intact as we plan on emerging from this pandemic successfully and will need all hands on deck for that.
We are so impressed with the ability of our Toyo team to react quickly to working remotely and often under challenging conditions at home, and to continue to deliver, in all our organizational disciplines, at high levels.
Although the rapid market declines starting in mid-March did have a negative impact on sales, looking back at our March, April and May sales, we are grateful to our dealers and distributors for the performance we have had, which has dramatically outperformed the market.
We have tried to stay in close touch with our dealers and distributors during this crisis. Communication is critical in a time of uncertainty, so we have urged our sales and management teams to be a friendly voice and a sense of calm.
Q What type of practices has your company implemented in light of COVID-19?
A First and foremost, the health and well-being of our employees is most important; which is why our office and field staff have been working remotely from their homes and avoiding travel since mid-March. Now, as parts of the country open, some members of our sales and technical teams are beginning to visit dealers while following local orders and health guidelines.
Q What are some of the pleasant surprises you are seeing in the industry?
A Although rushing out to buy tires is not top of mind for most mass market buyers, but for those who need them, the Toyo brand provides an excellent price/performance value proposition, so we think that we are in a sweet spot for both retailers and the consumer. We also hear from "enthusiast" consumers that the time at home has allowed them time to work on their cars and trucks (in particular), so there is still relatively strong demand for our Open Country line of light truck products.
Q The USW has petitioned for antidumping and countervailing duties on passenger and light truck tires made in Thailand, South Korea, Taiwan and Vietnam. What is your company's reaction to that?
A Our company does not manufacture in any of those countries.
Q How might additional duties impact the industry?
A It is too early and not appropriate on our part to speculate. But from a lessons-learned perspective, we certainly all have the recent experience of similar actions relative to China-manufactured products.
Q Where do you see the industry markets heading during the second half of 2020?
A Commercial segments have remained relatively strong during this crisis, so we expect them to be even more robust as we come out of it and business heats back up across the broader economy.
We believe the pent-up demand will be in consumer segments, certainly in the mass-market areas where drivers have limited their travel and postponed purchases, but also in enthusiast segments where people will be happy to go camping and racing and off-roading once again.
We are already beginning to see more vehicles on the highways than just weeks ago, which means miles driven will begin to accelerate, as will traffic into tire dealers.
Q What kind of trends are you seeing in the marketplace? How is your company reacting to them?
A What we're seeing is that our mass-market product segments (highway and all-season type categories) slowed the most, but this being said, our Toyo Tires product value proposition has allowed us to still be an attractive option for our dealers to propose to consumers who need tires for their sedans, CUVs/SUVs and light trucks. Our "enthusiast" segments, especially in larger diameter A/T, R/T and M/T, seem to be holding their own despite the significant overall market declines. Our newly launched Open Country A/T III is doing especially well in this category.