Mid-Year Report: U.S. plant positions Giti to meet demand

As supply chain issues hinder the tire industry, Giti Tire USA continues to add products to lines produced at its plant in Richburg, S.C., helping to satisfy increasing consumer and commercial demand.

Kenny Lee (KL), vice president of sales, consumer tire sales, and Armand Allaire (AA), executive vice president of commercial tire sales, told Tire Business that the tire maker and its U.S. technical center are focused on engineering and producing the right products for the American market.

How would you describe business thus far in 2021?

KL: As pandemic restrictions ease, more people are driving, and there is a greater demand for tires. The overall market is robust this year.

As individuals and families seek an escape from the COVID-related restrictions, we see a return to work, road trips, Sunday drives and overall miles being driven trending to levels closer to normal.

This is a pivotal moment in America when we are rethinking how we will live, work and enjoy life. Rather than running to and from various stores to acquire items, we now order online or by phone for the items to be delivered.

Businesses are rethinking meetings and travel since virtual face-to-face meetings and group discussions can be accomplished all online. Therefore, not all prior commuters will return to their daily routines.

How does this change in behavior affect the automotive and tire industries and their dealers?

KL: It creates an opportunity for those who see the direction and can meet the shift in customer expectations as their customers use vehicles more for pleasure and excursions rather than for work or commuting; yet they are driving as much or more as before.

As a global company with domestic manufacturing, Giti is well positioned to take advantage of this opportunity. Where demand exists, in those emerging or expanding segments, we will endeavor to fill that demand, whether in OE, replacement or aftermarket channels.

AA: The North American commercial truck tire market had very healthy demand for the first half of 2021, and we see more of the same in the second half, with increase in last-mile deliveries keeping demand on intermediate and short-run trucks and drivers. Giti addressed this trend with the introduction of our Cross Regional and Cross Urban TBR product lines.

What would you like your customers to know about how Giti tackled the challenges of the pandemic?

KL: Markets and operations were heavily disrupted globally and regionally to a degree no one could have adequately predicted. The pandemic presented unprecedented challenges to our organization like many others, and our team members rose to the challenge.

We are very proud of our resilient team of dedicated tire professionals who have persevered through the pandemic to fulfill the needs of our customers and consumers.

Do you expect supply difficulties in the second half of the year?

AA: The huge issues for the industry right now are disruptions to the supply chain and logistics. Of particular concern: the availability of containers; steam ship space to move the containers; and port congestions, both loading and unloading.

Logistics cost increases, both ocean freight and domestic, combined with raw material cost increases, will be a constant challenge for the remainder of this year and possibly into 2022.

How has the difficulty at ports impacted business?

AA: We are impacted by the port congestion and availability of shipping space. Key ports delays, exacerbated by logistics and transportation, human resource constraints, are definitely part of the overall logistics problem.

It appears the current freight issues will continue through the rest of 2021 and probably will not be fully resolved by Q1 2022.

Giti has achieved a pair of international quality management certifications at its Richburg factory. What does that say for the quality of work, as well as the workers, there?

KL: The amount of hard work by our team members in gaining these two certifications in such a short time was really amazing. It was a Herculean task, but well worth the effort. These two certifications demonstrate to our OE and replacement tire customers that our quality standards are among the best in the world.

The local workforce was one of the deciding factors in Giti choosing Chester County, S.C., for the company's first plant outside of Asia. They have proven to be just as hard working and dedicated as we had anticipated.

How much of an impact do you expect import duties to make on your company and on the industry?

KL: The proposed CV duties will not affect Giti directly. We are proud that a significant percentage of our consumer tires sold in North America are rolling out of our South Carolina plant. The duties will have the overall impact of increasing costs for consumers.

We are seeing more interest from dealers to source their tires domestically to mitigate trade risks between nations and the ocean freight disruption risks that we are experiencing now

What kind of trends are you seeing in the market?

KL: The OE (vehicle) market is temporarily lagging due to chip supply concerns; however, the demand from OE is up considerably over 2020 YTD, yet still off the pace of 2019. The demand for vehicles is still very strong, and as supply issues resolve, the OE market should return.

On the technology front, auto manufacturers continue to request lower rolling-resistance tires. Giti has the technology to deliver these tires now, and we continue to improve our technology for the future of low rolling resistance, especially for the EV market.

The replacement passenger and light truck markets continue on the path of larger rims, lower aspect ratios and higher speed ratings in general. Our plant in South Carolina was built around these trends. We continue to expand our lineups to meet these emerging sizes.

The passenger tire segment is returning to levels above the 2019 year-to-date. The strength is still in CUV growth, with consumer expectations centering on comfort and safety. Our GT Radial Maxtour lines, and in particular the Maxtour LX, fulfill the expectations for this group of consumers. The Maxtour LX delivers a premium ride and all-season performance with a 70,000-mile tread life warranty.

In the light-truck category, the GT Radial Adventuro HT, with a 60,000-mile tread life warranty, addresses the strong growth rate for SUVs and light trucks used for street travel and the expanding delivery markets.

For those who desire to get off the beaten path, the GT Radial Adventuro ATX line provides the look and the ability to venture off-road and travel back home in comfort and style. The Adventuro ATX, with a Three-Peak Mountain Snowflake (3PMS) rating, offers excellent balance between on and off- road performance.

The GT Radial Maxmiler Pro is designed specifically for the greatly expanding delivery segment and the range of delivery vans in the market today, including the Ford Transit, Nissan NV and RAM ProMaster.

AA: The North American commercial truck tire market had very healthy demand for the first half of 2021, and we see more of the same in the second half, with increases in last-mile deliveries keeping demand on intermediate and short-run trucks and drivers. The trend toward consumers wanting goods immediately will continue to change distribution and haul lengths.

Giti addressed this trend with the introduction of our Cross Regional and Cross Urban TBR product lines. The tread patterns and compounding innovations in these new GT Radial product lines are designed to operate efficiently in long-haul, regional and urban routes.

Giti recently added a range of 11 Cross Regional and Cross Urban truck tires, designed for fleets that perform a combination of long-haul, regional and urban. What are you hearing from customers about it?

AA: The feedback from our dealers and end users on our new comprehensive lineup of next generation GT Radial commercial truck tires has been very encouraging.

The GT Radial branding of our new TBR products aligns our extensive passenger and light truck tire products produced in both the U.S.A. and Indonesia — very important for brand recognition for all our products.

What has been the overriding factor in recent price increases?

AA: Global supply chain disruptions and the shipping/transportation- related costs, as well as increased raw material costs, have significantly impacted the cost of producing tires and bringing them to market. Tire manufacturers and everyone up and down the supply chain are experiencing very volatile and large swings in transportation capacity and costs since the start of 2021.

What are some of the challenges of the industry?

KL: Mitigating global supply chain disruptions will require much attention for the remainder of 2021 and possibly into 2022. We need a balance and flow of raw materials and tires for the U.S. market to fulfill the needs of customers: OE customers, our dealers and distributors, and the consumers, the driving public.

Anything you would like to add?

KL: The U.S. has an inherent freedom of mobility, yet that movement has been held back for over a year. As the freedom to roam continues to gear up, Giti is well-positioned to assist our dealers and consumers by delivering the right tires at the right time.

The tire market continues to evolve as consumer expectations of cars, light trucks and trucks evolve. Giti strives to consistently design, engineer, produce and deliver the products our American OE, replacement and aftermarket customers and consumers desire, with the goal of exceeding their expectations.

With our domestic manufacturing facility, we are able to minimize some of the logistics and supply disruptions affecting the industry.