OTR manufacturers expect better days in 2014

Staff Report
Published March 5, 2014

MARCO ISLAND, Fla. — The off-the-road tire business expects to bounce back this year, according to Tim Easter, director of OTR sales at Yokohama Tire Corp.

Easter offered the industry-wide forecast at last week’s annual OTR conference at Marco Island hosted by the Tire Industry Association.

What happens in the OTR market is of interest across the Southeast, and South Carolina in particular, which is home to Michelin’s off-road tire manufacturing facilities in Anderson and Lexington counties. Another tire maker, Bridgestone, is building an OTR plant in Graniteville, S.C., that’s expected to be completed by 2015.

Tim Easter, director of OTR sales at Yokohama Tire Corp.
Tim Easter, director of OTR sales at Yokohama Tire Corp.

South Carolina’s third tire maker, Continental Tire, manufactures automobile and light truck tires at its recently opened Sumter plant.

Sales of the giant tires, which are mostly used in mining and construction and can weigh more than 11,000 pounds, have fluctuated wildly in recent years.

In 2012, tire companies struggled to keep up with demand. But last year the industry suffered a 21% drop in shipments.

“The U.S. and global OTR tire market were very strong in 2012, but took a downturn in 2013, partially due to challenges in the coal mining segment,” Easter said.

“Many factors came into play, including new government regulations, which increased the costs of mining,” Easter said. “Power plants had to comply with the new regulations by putting in new scrubbers, which added to their cost to use coal.”

Also contributing to the downturn in 2013 was a drop in the construction industry, Easter said.

“The good news is we’ve seen a slight upturn in construction, and we think it will continue to improve in 2014,” said Easter, whose company’s North America headquarters is based in Fullerton, Calif. “Also, from the infrastructure standpoint, there’s more work to repair and build roads, which will help the industry.”

Trends that will affect the industry in 2014 and beyond include the size of mining equipment in Eastern U.S. mines, Easter said. “The equipment seems to be getting smaller instead of bigger, because of the way coal is being mined today. There’s a lot less mountaintop removal and more contour-type mining.”

Similar industry trends have been noted by other manufacturers.

Bill Van Someren, director of the mining business segment at Michelin North America Earthmover Tires, said the company expects demand to be flat in 2014.

“Issues regarding fill rates really only impacted a few tires, primarily on the larger sizes. And even these were far and few between,” Van Someren told Tire Business, a trade publication.

Michelin, which in December opened an 800,000-square-foot Earthmover tire plant in Anderson, S.C., said in its annual report for 2013 that there was a 2% decline in original equipment orders in North America while replacement tire sales rose 4%.

Demand for large mining tires rose slightly over the year, but fell sharply in the fourth quarter following inventory drawdowns by mining companies, Michelin reported. The OEM market “dropped precipitously” in North America, “dragged down by weak demand and deep manufacturer destocking, which is now coming to an end,” the company said.

Demand for tires used in infrastructure and quarry mining “contracted noticeably in mature markets, particularly North America, due to lower equipment sales and sustained high dealer inventories,” Michelin said.

Michelle Lane, manager of OTR marketing for Bridgestone Americas, told Tire Business that the company expects the construction industry to have a solid year in 2014.

“Things are trending up,” Lane told the publication. “Obviously, we’ve seen construction confidence being optimistic and housing trends are starting up.”

The lack of federal government funding has delayed many infrastructure construction projects, Lane said.

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