The off-the-road tire market is finally seeing an uptick but it will have to adapt to meet the future demands of industry.
That’s according to two of the tire industry’s most experienced voices. Bridgestone OTR tire divisions president Taylor Cole and Alliance Tire Group vice president of marketing Bruce Besancon outlined their analysis and expectations at the Tire Industry Association’s OTR Conference last week.
Cole told those in attendance the industry was seeing upticks in the construction, mining and aggregates sectors — which he attributed to the Fixing America’s Surface Transportation (FAST) Act of 2015 — which put $305 billion into the federal transportation budget for 2016 through 2020.
“Thus far, 2017 is looking better than 2016, which is far better than 2015,” he said.
Three major trends Bridgestone is seeing in OTR
Cole said he was seeing three main trends in the OTR industry this year. First, customers want predictive analytics to help them maximize productivity.
“Customers want immediate access to information that they can leverage into insights that will help improve their bottom line,” he said. “Predictive analytics enables customers not only to track tire and rim performance, but also to manage the lifecycle cost of tires and forecast the demands of a tire program.
“This leads to lower production unit costs and ultimately improves their net profitability. We will see this continue to grow as the workforce changes and increases its sophistication through the adoption of new technology.”
The second major trend in 2017 is that major fleets are becoming more focused on total cost of tire ownership. Cole said fleet owners are moving away from a purely product-centric or transactional view, where they only evaluate a tire’s purchase price, “but rather they are assessing the total cost of tire ownership.”
“They are using technology and data to analyze product value and are making decisions based on this data to maximize uptime and increase profitability,” he said.
Lastly, Cole said workforce needs are changing because of several factors, including the introduction of new technology, baby boomers reaching retirement age, and shifting demographics. He said it is important that education, mentorship programs and apprenticeships are being used to fill those gaps and retain talent.
ATG urges OTR dealers to diversify
ATG’s Besancon warned OTR tire dealers to diversify and take advantage of the growing opportunities in the small OTR tire segments, rather than focus on areas like large mining tires.
“The big boom of mining just hasn’t been there in the past few years,” he said. “But there are other opportunities out there — growing opportunities — in small OTR, for rim sizes 25 inches and under. Dealers need to stay aware of those opportunities and set themselves up to cater to those customers.”
Besancon said the increased focus on infrastructure improvements would drive demand for tires for skid steers, telehandlers, backhoes and small loaders. Skid steers, he said, were “an especially bright spot” because they have been adopted for so many uses.
“There are over 800,000 skid steers in the market today,” Besancon said. “Compare that with mining haul trucks, where there are approximately 14,000 out there globally. If we look at 28,500 tire dealerships across the U.S. and divide 800,000 skid steers equally among them, that’s almost 25 skid steers near every single dealership. And chances are those skid steer owners may not only need tires, but wheels to go with it.
“Yes, the ultra-large trucks are a high dollar sales item, but you can make money on these smaller tires,” he adds. “You may be driving past five skid steers to go look at something bigger and not even notice them.”
Besancon said small tractors — the 40-hp and below category that fits hobby farmers, vineyards and small commercial farms — had been a bright spot in the agricultural equipment market for years. Sales grew more than 11 percent in 2016, well over the tractor industry’s five-year average.
He said rental equipment was another ripe market for tires.
“When you rent out a machine, what’s the first thing to get torn up? The tires,” he said.