Aftermarket sales of construction tires may improve as construction fleets try to reduce capital expenditures on equipment.
"From a construction standpoint, there is always the road building, which is going to lead to federal (funding), but much more construction goes to commercial real estate and even housing starts where the interest rates are," Chris Rhoades, BKT USA Inc.'s vice president for the medium and large OTR sector, said.
"I talked to one of our dealers last night. On a given year, they normally sell about 200 of the super large scraper tires. Last year they sold 20, and it was just because all of the new startups were on hold. ... So all the builders and everybody are just there waiting to see what is going to come down. And then there's the selling out of all the existing stock of homes and businesses.
"Yeah, you see road construction projects going on, but big sector construction is idle. And then moving into this year, it's election year, and that's a toss up. ... Most election years, we all use that as an excuse or reason for what's going on. This year, it's pretty serious."
Federal infrastructure funding is flowing, added Minoo Mehta, managing director at BKT USA, as evidenced by the amount of infrastructure construction activity.
"Of course a lot of it will be filtered away, but at least the activity has started," he said.
Yet the BKT executives believe it will be a positive year for the construction tire market in 2024, after a year of oversupply of tires on dealers' shelves.
"It seems as if all the dealers' inventories are right-sized. There's not a lot of movement where people are trying to watch for cash flow to acquire new dealerships. ... This is a mild winter. So a very positive outlook for growth between all sectors," Rhoades said.
"2024 has started off so much better than previous years, comparatively," Mehta added.
"I think the pipeline is kind of dried up with the Red Sea issue," he said, referring to the shipping disruptions at the Suez Canal that has forced carriers to reroute around the southern tip of Africa, adding time and cost to tire deliveries.
"So, there's a lot of orders happening, but the challenge is how to meet them, how to send them, how to find the space in the ship, how to get the containers."
Yokohama Off-Highway Tires America (YOHTA) executives said inconsistent weather around the U.S. last year meant that construction machinery wasn't always operating, so tires didn't need to be replaced as often.
"Last year it wasn't that good of a year for construction considering multiple reasons," said Dhananjay Bisht, product manager for construction off highway for YOHTA, noting high inventories, supply chain issues and variable weather conditions.
"I think road construction has been an integral part of the construction activity across the states. It has not slowed down. We've seen an upsurge. Housing has been consistent. I would say it has been up in comparison to other years," Bisht said.
"Now where before it was a lot of greenfield (construction), I consider it a lot more brownfield now, where you're replacing roads, you're replacing interstates, you're replacing bridges, things like that," added Bruce Besancon, YOHTA's vice president of marketing.
"Now it does require, obviously, gravel, things of that nature that do have to come out, but a lot of it is demolition and then restarting. That uses some different machinery than we had, it could mean smaller machines. In many cases, it could mean also heavier duty tires that have to go in for the demolition," he said.
"So this year is looking good," Bisht said. "I think that's in both OE and aftermarket units."