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March 17, 2006 01:00 AM

Big gains common in OTR industry, but shortages exist, too

Miles Moore
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    WASHINGTON-Here´s the good news for off-the-road tire retreaders: The market remains on fire.

    And the not-so-good news: There´s a lack of retreadable casings, and retreaders can´t always increase capacity fast enough to meet demand.

    "I think the industry is retreading all appropriate casings," said John Buettner, OTR consultant and chairman of state executive directors for the Tire Industry Association. "The new tire end is completely sold up this year. Those who haven´t tried retreads before have become custom-ers, largely out of necessity."

    Dennis Bull, president of BR Retreading Inc. in Glasgow, Ky., said his company has seen a 50-percent increase in its OTR business over the past couple of years. BR is adding new OTR retreading equipment, he said, including a 120-inch autoclave, some segmented radial molds and a Marangoni tread builder ordered from Italy.

    "We also have a new boiler," he said. "There was nothing wrong with the old one-it just wasn´t big enough."

    Walters Tire Service Inc. in Somerset, Pa., also has seen about a 50-percent increase in its OTR retreading business over the past year, according to President Jim Walters.

    "It´s wild," Walters said. "We´re extending our curing hours, trying to keep the second shift manned, though it´s hard to train new OTR retreaders. We have 40 workers out in the plant, and we could use another 10."

    "Business has been excellent, and I think it´s going to be that way for a while," said Bob Purcell, CEO and president of Purcell Tire & Rubber Co. in Potosi, Mo.

    Purcell Tire´s OTR business is up about 15 percent across the board, and its plant has been on a 24/7 schedule for a long time, he said. "It used to be you could buy a $10,000 or $18,000 tire, use an inch of rubber off the tread and throw it away. You can´t do that anymore."

    The OTR retreading market is bullish not only for economic factors, but for conservation and environmental reasons as well, according to Purcell. That should keep demand for OTR retreads strong, even after the availability of new tires increases, he said.

    "I think in the past that people turned to retreads when new OTR tires were scarce, then returned to new tires when the shortage was over," he said. "But I don´t think that will happen this time. Demand for retreads should last even after Bridgestone, Goodyear and Michelin get new capacity on-stream."

    At this point, the biggest difficulty OTR retreaders face is in obtaining sufficient casings to fill customers´ orders. As demand increases-and the supply of new OTR tires remains flat-retreaders have to cast an ever-wider net.

    BR Retreading now scouts for casings in 20 states-"everything east of Minnesota, from Florida to Maine," Bull said.

    The company runs routes and picks up casings from as many dealers as it can. "We emphasize a dealer watch," he said. "Dealers are keeping more of their used tires than they used to."

    Purcell Tire pretty much sticks to North America for its supply of casings, although it did make one casings trip to Africa. "We didn´t do very well there," Purcell said.

    He also said he knows of some retreaders who have gone as far afield as China, India and Australia for casings.

    "A lot of product that used to be sold in North America now goes to other places where tire makers can get more money," he said.

    Casings are very scarce, and getting very expensive, according to Walters, who said Walters Tire Service seeks casings throughout the U.S. and Canada.

    "We´re able to secure a little more in used tires than in casings," he said. "A lot of casing sizes are completely unavailable. I would think this situation could last another couple of years, though it´s hard to tell."

    Bull agreed that the market situation would last at least another year.

    "I don´t see any more new tires coming off the production lines in 2006 than in 2005," he said.

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