RANCHO BERNARDO, Calif. — The addition of off-the-road tire production capacity this year should ease shortages of small- to medium-sized OTR tires, according to a panel of tire makers.
As for large and giant OTR tires? Not so good, said the participants in the Off-The-Road Tire Conference, sponsored by the Tire Industry Association, held in Rancho Bernardo.
"We do see small- and medium-sized tires...25.5s and down loosening up a bit," said Nelson Richards, OTR national sales manager for Yokohama Tire Corp. at the event. "By the end of the year, we really don´t expect to be allocating them. Of course, large and extra large are going to continue to be that way."
The slumping housing market in the U.S. also should improve OTR tire supply, as should the resolution of the United Steelworkers strike against Goodyear, the panelists said.
"We are very close to full production right now," Ryan Waldron, general manager of Goodyear global OTR, said during the panel. "We anticipate within the next few weeks that we will be back up to or above pre-strike levels based on some additional investments we are making this year."
Goodyear´s goal in 2007 is to get back to its 2006 allocation model, he said.
The Tire Manufacturers Panel session at the conference featured four speakers. The other panelists were Shawn Rasey, executive director of North American sales and marketing for Bridgestone/Firestone Off Road Tire Co., and Todd Ramsey, North America sales director for quarries, construction, ports and terminals for Michelin North America Inc.´s earthmover tires unit.
Gray marketing, or unauthorized importation of OTR tires, was a problem all the tire makers on the panel said their companies are fighting.
Michelin has dealt with the issue for the past three years on a weekly if not daily basis, Ramsey said. Whenever the company can find the serial numbers on the tires, "we track them to the original customer, and we´re doing it on a case-by-case basis."
Having the serial number, which allows the tire to be traced, is the key to stopping the practice, the panelists said.
"Any time we can get a serial number to help us out on that, we can track them down and take corrective action," Goodyear´s Waldron said.
Often these tires may originate with a mine that´s been shut down-possibly coming from equipment left at a mine site that´s being auctioned or sold off, according to BFS´s Rasey. Someone might be buying the equipment in some cases just to get their hands on the tires and put them on the black market.
Dealers buying these nonauthorized tires are contributing to the problem, Yokohama´s Richards said.
"I would stress that the only reason this market exists is because you continue to buy those tires. So, if you see a serial number is cut out, don´t buy it. It´s that simple," he told dealers.
Buying a tire without the serial number means there´s a chance it has been adjusted, he said. "Unless you inspect it carefully, you may be putting a bomb on somebody´s vehicle."
The panelists also acknowledged the growing presence of Chinese-made OTR tires and their position in the marketplace.
"Years ago, when I was at a dealership, the prices were very inexpensive and the quality wasn´t there," Richards said. "And what we´re seeing now is that the quality is getting better and the technology is starting to catch up a little bit."
Michelin´s Ramsey thanked the Chinese manufacturers for being available the past few years as OTR tire demand outstripped supply. It may be "bizarre to hear someone from Michelin or any of the others of us to say, but thank goodness there has been someone to handle the overflow," he said.
National account sales of OTR tires are another issue impacting the industry. This is a trend that probably will continue as a result of mining industry consolidation, the panelists said, with larger concerns leveraging their size to achieve better pricing.
"I think that without a doubt, as the quarry and construction companies start to follow the path of the large mining companies-becoming international and not just regional companies-their demand for a direct relationship with the manufacturers will continue to increase," Ramsey said.
Why can´t tire makers that profess the importance of their relationships with independent tire dealers just say "no" to companies that want to buy direct, tire dealer DiMartini asked. He cited the practice of Caterpillar Inc., which goes to market only through its dealer network.
BFS´s Rasey responded that there are fundamental differences between the Caterpillar model and how the OTR tire industry does business with its customers, noting that independent tire dealers value their independence like to have choices.
Caterpillar dealers are Caterpillar dealers only, he continued. "They´re selling one brand. They´re not selling Komatsu along with Hitachi. And that is the fundamental difference, I think, as it relates to this."
Aging work force
Responding to a comment about the lack of young people entering the OTR tire industry work force, Richards of Yokohama said he doesn´t see many dealerships training people for careers in the business.
The industry has changed tremendously, he said, and is now modernized and computerized.
"I really don´t understand why that doesn´t attract the kids of today," he said. "With Caterpillar you drive the machines with joy sticks and all that kind of stuff. I would think the technology that´s developing within the OTR industry should attract some people."
Michelin´s Ramsey offered another take on the issue. When traveling in North America, he often asks dealers, "Who´s your No. 2? Where´s the succession? What are you planning?
"I normally get one answer: ´I´m here until you guys buy us.´ I hear that repeatedly and it concerns me for the independent tire industry."