QUINCY, Ill. — Tire and wheel maker Titan International Inc. plans to take advantage of a strong off-the-road tire market by increasing OTR capacity at two of its traditional farm tire plants.
Maurice Taylor Jr., Titan chairman and CEO, said he´d like to double the company´s OTR business in 2007. Adding new equipment and reconfiguring production at the man- ufacturer´s three tire plants is the first step.
Conversely, the company expects to report its 2006 farm tire business — tire and wheel revenues combined — fell at least $75 million from 2005 because of a down agricultural market. Titan posted sales of more than $310 million in its agricultural segment in 2005.
Titan has capacity constraints at its Bryan, Ohio, OTR tire facility-purchased from Continental Tire North America Inc. in July-so the company is adding capabilities at farm tire sites in Freeport, Ill., and Des Moines, Iowa.
The changes include additional building drums, molds and services to produce different, mostly larger tires, and the shifting of some tire-building equipment among the sites, Taylor said.
The cost of the expansion projects wasn´t disclosed. They began in the fourth quarter and will continue into the first half of 2007.
The Freeport plant-acquired in December 2005 as part of the purchase of Goodyear´s farm tire business-already had the basic equipment to produce OTR tires up to 35 inches, and the company projects the facility can manufacture more than $60 million in OTR tires in 2007, Titan said.
The factory already is producing a steel radial 17.5R-25 tire and expects to make another tire size sometime this month.
Tires produced at the Freeport plant generated more than $200 million in revenue in 2005, while tires made in Bryan produced in excess of $100 million, Titan said. In August, Taylor said the Goodyear/Conti purchases-for which Titan spent about $153 million-would add an estimated $340 million in annual revenue.
At that time, just after the Bryan plant acquisition was completed, Taylor said the company would make changes at its tire facilities to improve its efficiency, including mixing up production of tire types.
Those alterations began in the second half of 2006 and negatively affect the firm´s gross margin for the fourth quarter because labor costs normally dedicated to production were instead utilized for retooling, retraining and moving equipment.
Taylor also said the combination of reorganizing and a lighter farm market probably left Titan short on its expectation of $720 million to $735 million in corporate sales for 2006.
"Much of that is our own choice," he said.
The company posted net sales of $513.9 million through three quarters of 2006. It will reveal its year-end and fourth-quarter financial figures in late February, he said.
However, Taylor believes the company´s goals of $800 million to $825 million in 2007 are achievable, although he expects the farm sector to be flat compared to 2006. "We have already seen strong demand for January and February," he said. "If this continues, 2007 will be Titan´s best year ever."
Even if Titan doesn´t reach its goals in 2006, it may still approach its best year sales-wise: the company recorded its highest net sales in 1998 with $660.8 million.
In 2005, Titan had net sales of $470.1 million.