How has inflation affected business?
Inflation affects all segments of the business and the economy in general. We are hearing that our Prinx and Fortune products are positioned to meet the demands of customers that need tires that can no longer afford branded products as they might have selected in the past. This is the value tier, and it is our sweet spot.
Are you seeing any volatility in the supply chain?
Ocean freight continues to be a challenge in 2024. Year-to-date, it is up 50 percent versus all of 2023. Continued issues in the Red Sea, container shortages and reduced shipping to the West Coast and through the Panama Canal attributes to the freight increase.
This is a huge concern of mine and the customers. No one likes or wants to hear the word "surcharge" because of what occurred in 2021 and 2022 and be stuck with overpriced inventory. However, there becomes a point where we can no longer be profitable without either a change in our everyday price, a surcharge or both.
Has the Fortune brand gained traction from the pickleball sponsorship?
Being associated with USA Pickleball (USAP) as the official tire has definitely helped with our brand awareness. There are close to 40 million people playing pickleball, and our studies have shown that they are brand loyal customers to the USAP sponsors.
Also, anyone can play pickleball regardless of skill level, and my team and I believe that Fortune Tires are for everyone. Since we make tires that fit 97 percent of the P/LT vehicles in the market today, we have a great chance to be the tire of choice when tires are needed.
On the other hand, for Prinx, we are the official tire of the United Soccer League (USL). Again, we believe that soccer is on the rise in the U.S. and Canada, and with the buildup to the World Cup being played in both countries (and Mexico) starting in June 2026, we believe that Prinx will continue to grow its brand awareness throughout the USL.
How important is North America to Prinx?
North America is very important to the overall growth of Prinx Chengshan Tire. Today, I have responsibility for the U.S. and Canada and growing market share in both countries is essential.
The key to increasing market share is continuing to find open "white space" in the U.S. and Canada for each brand, leveraging our sponsorships today with USAP and USL for Fortune and Prinx respectively, and continue to introduce new products such as our all-weather Fortune ClimaFlex4S and HiSeason4S and our new Fortune Tormenta AT2 and our new Prinx HiCountry AT2, as well as add sizes to our current product lines. We are building attractive and comprehensive product lines than can be a dealer's go-to value-tier solution.
Why did you decide to testify at the recent antidumping hearing?
Prinx decided to testify in person only on behalf of Prinx Chengshan Tire North America and our Prinx and Fortune customers. We, Ken Coltrane and I, did not speak on behalf of any other competitors. I think that it was very important that we defend our position and our customers' position.
Feedback from our customers after our testimony was very positive. Many thanked us for being willing to stand up and fight on their behalf.
We do not believe it was a factor in the DOC preliminary ruling. We were hoping that our testimony would lead to the ITC making a determination that there was no reason for the DOC to proceed forward with an investigation. To that end, we were unsuccessful.
Fortune and Prinx tires are consumed by independent truckers (not national accounts or government fleets) that rely on high-quality products at fair prices. With the rise in fuel and insurance, independent truckers need our Fortune and Prinx products in order to maintain a living wage. Our products get great mileage, retread and are cost-effective in a cost/mile basis.
Do you expect the ruling to be revised or remain as is?
While the ruling is preliminary, it is our hope that it will remain as such, but we are still about four months from a final ruling.
Have you experienced a consumer shift toward value-tier tires recently?
All reports indicate that tier 3/tier 4 segments are growing, and I think that some customers have limited funds to spend on tires versus other everyday expenses. I believe that they are finding that Fortune and Prinx products are high quality and at a fair price that they can afford.
The question will be: "What happens if and when discretionary income increases? Will customer return to branded products?" I believe they will remain with the Prinx and Fortune brands for the long-term.
What is your current electric vehicle (EV) tire strategy?
While there is growth in the EV segment, it is still a relatively small part of the overall business. We have already introduced EV tires in Europe and we are in a wait-and-see mode here in the U.S. and Canada. We have focused on adding other products such as the new 4S tires that we believe can have a bigger impact for our customers than an EV tire.
What are some of the pleasant surprises in the industry?
As spoken about earlier, consumers are trading down in terms of brand tiers. This is a phenomenon happening across all consumer products and tires in particular. Many tier 1 brands also offer a tier 2 option but strategically do not carry as many sizes in their tier 2 option.
We've got the tires and sizes to meet the needs of most of those customers. This gives us an opportunity to maintain that customer the next time they need replacement tires. Dealers are seeing that the breadth of our line makes it the go-to value-tier solution as mentioned earlier.
Do you expect to roll out any new products in 2024?
Our new all-weather tires are beginning to ship now, and we will be rolling out a new second-generation AT tire for both Prinx and Fortune.
Do you expect any other major investments in the next six months?
As we continue to grow our business we will need to continue to add to our infrastructure in our office and the field. Also, it is my hope that we will have a U.S. warehouse to meet the needs of our customers within the next 12 months, if not sooner.
We are completing expansion to our P/LT plant in Thailand, which will increase capacity by 25 percent in August. In terms of another manufacturing plant, I am sure that our head office will consider the worldwide needs for the company.
What are some of the challenges of the industry?
For us, it is volatility with ocean-freight pricing, potential consolidation of current customers and governmental regulation changes. These three areas of which I have no direct control over are the biggest challenges that I see for the industry.
What do you want tire dealers to know about the company?
We are the manufacturer, not a broker. We own the factory and the molds. We are committed to the U.S. and Canadian markets. We are a full-line supplier of P/LT, STR and TBR products with over 390 SKUs each for Prinx and Fortune and growing.
We make the decisions here in the U.S. Most importantly, I have a great team of people here at PCTNA in all departments: sales, marketing, customer service, logistics and finance that are dedicated each day to being the best partner we can be with our customers and doing what we say we will do so that our customers can and will trust us.
