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“This is a crisis
that affects everyone,” Kevin Rohwling, senior vice president
of education and technical services for the Tire Industry Association,
says of the global tire shortage. “Demand far outweighs capacity,
and no one has excess supply.”
This phenomenon, which
began in 2003, has “shocked the market,” according to
Continental General Tire Off-the-Road (OTR) Field Manager Cara Junkins,
who predicts the production shortfall to last an additional 18 to
24 months. “It caught everyone off guard,” Gary Nash,
director of OTR sales for Yokohama Tires, reflects. “We’re
behind in production about 10 months, with heavy back-orders. In
40 years in the tire business, I’ve never seen anything like
this.” Prashant Prabhu, president of Michelin Earthmover Worldwide,
adds, “This demand is unprecedented in the history of the industry
and was unanticipated by the industry.”
Andrea Berryman, Goodyear’s
global marketing manager for OTR tires, says her company’s
plants are “full-out globally,” with no open capacity.
“Every single tire is allocated.” She doesn’t see
any relief from this crisis until late 2007, possibly 2008. “There’s
simply an unprecedented level of demand, with the mining and construction
industries, the military, and OE all cycling high at the same time.”
She warns that 2006 will be a tougher year for tires than this year
has been, because the reserves that manufacturers relied on to get
through 2004 are nearly gone.
“Skyrocketing demand
for OTR tires has resulted in a strain on tire supplies globally,”
says Rob Mills, manager of marketing services with Bridgestone/Firestone
Off Road Tire Co. “This heightened demand is expected to continue
for several years, and our customers are projecting this growth
trend to continue beyond the historical cycle of a four- to six-year
period.”
While the off-road business
has historically documented peaks and valleys, a convergence of
events combined to create a global shortage that’s putting
the squeeze on the construction and mining industries, according
to Nash. “In 2003 inventories were at an all-time low,”
he explains. “Business had been slow for five years, so instead
of a normal five- to six-month supply, we were down to a three-
or four-month supply.”
The Iraqi war siphoned
off a significant percentage of tires because, as Nash explains,
thanks to the Patriot Act, every company with a government contract
has to supply the military before providing replacement tires for
other customers.
Economic factors also
fueled the demand, including low interest rates that sparked an
increase in home building and road construction; an upswing in the
metal business due to price increases—specifically gold, copper,
steel, and lead; and greater demand from developing countries such
as Iraq, Russia, China, and Southeast Asian countries. Berryman
notes that China is consuming all its own production, and that because
it uses predominantly bias tires, no new low-cost radial production
is coming into play to answer global needs.
Scott Sloan, vice president
of engineering and technical services for Titan Tire, comments,
“This current boom in the mining industry has pushed mining
companies to put mines and trucks back into service. It’s also
led to a tremendous increase in the demand for new trucks and equipment.
The numbers show this segment has increased approximately 30% in
the replacement and OEM markets. The industry was only predicting
a 3% to 5% increase.”
Al Chicago, president
of Purcell’s Western States Tire Co. in Phoenix, AZ, believes
the mining industry is hit harder because it uses bigger radial
tires, two categories where the shortage is greater. In mining,
the 777 truck, with its 57-inch tires, is experiencing a particular
shortage, but outside the mining industry, wheel loaders, scrapers,
and trucks are adversely affected, with 25-, 33-, and 49-inch tires
especially scarce. “Manufacturers are holding up deliveries
of the larger trucks and the big mining equipment because they don’t
have tires,” Chicago concludes.
Compounding the problem
is the fact that raw materials are in short supply. Accordingly,
production costs have escalated as much as 25%.
Tire Manufacturers
Launch Offensive
“Production is at 100%, with a lot of plants operating
24/7,” prefaces Rohwling. “Because production schedules
are set six months in advance, it takes time to adjust. It’s
a huge problem for really large tires because only a handful of
people build them. Unlike car tires, these tires take a long time
to build. It can take one day to build one tire!
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PHOTO: MICHELIN |
“Most tire manufacturers
have plans to expand overseas, but they won’t be online until
2006,” Rohwling continues. “You can’t just pick up
a mold for a 63-inch earthmover tire! It takes time to order equipment
and molds because there are only a few companies that build presses
and molds. It’s a tough spot from a business perspective: Will
you be stuck with the expense of a new facility? Will the numbers
level off? You can’t look at it from a simple perspective.
It’s so deep, there’s no easy solution.”
Bridgestone Firestone
addressed the crisis last year by adding several new building and
curing machines at existing factories and investing $120 million
in its Hofu, Japan, OTR factory, to significantly increase tire
output by 2006.
Similarly, Michelin,
which leads the industry in radial earthmover tire production, maximized
production at its facilities and added capacity at plants in Lexington,
SC, and Vitoria, Spain. In addition, Michelin is constructing a
new earthmover tire plant in Brazil that is expected to start production
of 25- to 49-inch tires in the second half of 2007.
Yokohama has adopted
a multipronged attack: Production now runs 24/7 plus holidays; the
flow of production has been improved, resulting in an 8% increase;
and the company has sent small tire molds to plants in other countries
to free up production capabilities for larger tires here. Yokohama
is also in the planning stages for a new facility, although Nash
says the economy and the market will be factored into the decision.
Working to “get out from under this” in one year, he admits,
“It’s a serious problem. A lot of equipment will be parked
if production doesn’t pick up.” However, he cautions against
over-reacting and over-building. “The market has grown 36%
since 1997–1998; I don’t think we’ll ever experience
this again.”
Nash says traditionally
Yokohama has not been a big supplier for OEMs, but the calls are
now pouring in. “Historically, OTR has not been a big market,
but now there’s increased business at the OEM level,”
he explains. “OEMs used to have alliances, but now that’s
gone; no single company can supply an OEM. The increase in total
demand has helped manufacturers survive because no one has an over-supply.”
The crisis has been a
boon to Titan, even though it doesn’t manufacture large OTR
tires, focusing instead on light industrial tires for skid-steers,
graders, and loaders. “This has been a shot in the arm,”
Sloan reports. “Our phone is ringing with new customers on
the other end every day. We are experiencing record sales on sizes
that have been quiet for some time.”
Titan isn’t the
only “second tier” tire dealer to experience a boost in
sales. Galaxy, whose niche is small OTR tires for backhoes, graders,
and loaders, has also witnessed a “tremendous amount of increase
in business,” according to Neil Ganz, executive vice president
of sales and marketing for Galaxy Tire & Wheel Inc. “It’s
helped brand awareness.” Because Galaxy’s business began
increasing significantly before the shortage, plans were already
in the works for new facilities, and production has been expanded
at existing facilities to meet rising demand.
The Trickle-Down Effect:
From Equipment Manufacturers to Contractors
“The shortage is hurting business; manufacturers can’t
deliver equipment because they can’t get tires,” claims
Rohwling. “There’s about $1 million of new equipment waiting
on tires right now.” Junkins says some manufacturers have been
forced to ship equipment barefoot or on old tires.
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PHOTO: MICHELIN |
“We never got to
the point of relying on old tires,” says Joe Gimbel, product
manager with Case Construction Equipment. Ironically, he says a
Case strike from November 2004 to March 2005 may have saved the
company from tire shortage pains. Despite a sizeable decrease in
production of tractors, loaders, and backhoes, Case purchasers continued
normal buying practices, thereby stockpiling tires.
However, “To fully
satisfy our customers, we have shipped machines with different brands
than the customer asked for,” Gimbel admits. “Vendors
put us on an allocation; we may not have the exact tire the customer
wants, but we do have the right tire.” He concedes that Case
has to justify the use of an unfamiliar brand in order to convince
the customer that performance will not be hampered. “We try
to stay away from using unfamiliar brands; it leaves questions in
our customers’ minds.” Instead, Gimbel says sometimes
Case ships a different tread pattern to the dealer, who can then
swap from inventoried equipment tires before delivering to the end
user.
John Deere & Co.
has also resorted to substituting brands when the customer doesn’t
specify. Sales went up 31% last year and continue to rise in 2005,
sparking a corresponding increase in demand for tires. “Demand
is higher for tires from some manufacturers because some brands
of tires are more popular,” reports Jim Mitchell, manager of
marketing communications, but he indicates that customers can reduce
lead time by being flexible.
Michael Stec, product
specialist of global product marketing with Volvo Construction Equipment,
says his company has increased delivered products to the US by nearly
50% and is receiving more tires than ever—“but to be honest,
it’s not enough. To be blunt, if we could receive more tires,
we would jump at the opportunity, just like our competitors. We
all have the same problem, whether we want to admit it or not.”
Some don’t—at
least publicly. Johnny Campos of Caterpillar Inc. responds, “They
won’t want to talk about this; it’s a subject they don’t
want to discuss.” Despite that, Caterpillar issued a statement,
saying in part, “We are utilizing a variety of alternatives,
including bias-for-radial substitutions, adding new suppliers and
considering retreads in some applications to deal with the industry-wide
tire shortage. In some cases, we are shipping equipment without
tires.”
For McAninch Corp., a
Des Moines, IA–based contractor, the tire shortage has caused
a “big-time pinch.” Fortunately, says Equipment Manager
Jason Paulson, McAninch anticipated the shortage and beefed up its
inventory, although to fill the gaps, it continues to buy used tires
and rely on its local tire dealer to “hunt them down.”
McAninch’s local
dealer, Cross-Dillon Tire, is struggling. “We’re trying
to get our hands on anything through our normal vendors,” says
Sales Manager Butch Nelsen. “I’ve been in the tire business
a long time, but now the fun is out of it.”
Although Nelsen says
his company’s been able to fill most orders with “no real
crunch yet,” it’s a balancing act of prioritizing tires
per customer needs and trying to create a demand for what’s
in stock. “All off-road tires are hard to get, but the bigger,
the harder.”
Yours, Mine, and Someone
Else’s: Who Gets Hurt, Who Benefits
When there’s not enough to go around, options and alternatives
change. “A lot of tires are spoken for by large national accounts,”
says Rohwling. “The small guy gets hurt.”
Nelsen admits that’s
true to an extent. “We have to manage our inventory. We get
calls from all over the country, but we take care of our regular
customers first. McAninch is priority number one because of the
volume of business they do with us and the amount of equipment they
have.”
One trend that can magnify
the impact of the shortage is the tendency of equipment owners to
stockpile their inventory for emergency backup—a tactic manufacturers
and dealers continue to recommend.
Paulson says McAninch
shares with other local contractors when it can, although it declined
one tire company’s inquiry on behalf of Caterpillar about buying
its inventory, preferring to keep its reserve.
Desperate times call
for desperate measures, and when begging and borrowing don’t
work, stealing escalates. The National Equipment Register (NER)
recently released its second annual report on equipment theft in
the US. Although the report doesn’t track tire theft specifically,
it notes that the most common thefts involve skid-steers, tractors,
and backhoes. Overall losses for stolen equipment total between
$300 million and $1 billion, with a recovery rate of 9.5%.
The NER’s Dionne
McLaughlin attributes theft to the high value of the equipment,
ease of theft (generally related to poor security), easy resale,
low risk of detection and arrest, and low penalties if prosecuted.
“Due to few checks made in the used-equipment market, thieves
are confident of not being caught, and feel safe selling equipment
in neighboring states or even neighboring counties.”
Junkins advises locking
equipment, saying she’s hearing “more and more stories,”
particularly involving smaller tires. But Rohwling dismisses the
notion of tire theft, pointing out that it can’t be done easily
or quickly, and that special tools, trucks, and training are required.
Rohwling praises tire
manufacturers for not taking advantage of the shortage by price
gouging. “Everyone who runs earthmover equipment also runs
a fleet of trucks,” he conjectures. “That’s a lot
of business for a tire company; they don’t want to risk losing
it.” Yokohama’s Nash agrees: “People remember. You
simply can’t be guilty of gouging. The price has to be based
on the raw materials, not the short supply.”
There’s no question
that the price of tires has gone up while the supply has gone down.
Plan B: retreads. “The real benefactors of this crisis are
the retreaders,” insists Rohwling. “They’re busier
than they’ve ever been, working three shifts six days a week.”
Nash reports that “people are retreading for the first time.
A good retreader can repair a tire back to original condition, so
you’re seeing more tires repaired.”
The Tire Retread Information
Bureau points out that retreads are environmentally friendly; because
most of a tire’s oil is found in the casing, which is reused
in the retreading process, a retread uses a significantly smaller
percentage of petro-chemical products. More importantly, retreads
save money. According to Bandag, retread tires typically incur one-third
to one-half the cost of new tires.
Rohwling advocates retreading.
“Every tire that can possibly be retreaded needs to be! Contractors
should look at retreads. They perform like new tires at a fraction
of the cost. You can retread a tire two or three times, if you don’t
run it too long—if you run it down to the cords, you can’t
retread.”
The trick is to convince
equipment owners to incorporate retreading into their maintenance
program. “It’s a tough decision,” says Tomas Bennett,
Michelin earthmover market segment manager for product development.
“You can run the tire until it’s destroyed, or pull it
with 20% tread left—but you risk losing the tire if it isn’t
retreadable.”
Rohwling’s solution
is to find a retreading partner to make recommendations on rotation
and when to pull for retreading. It’s a service Cross-Dillon
offers its customers who don’t want to play “Russian Roulette
analyzing their tires,” says Nelsen. Rohwling believes “sophisticated
companies are rotating inventory, monitoring tread levels, and sending
tires to be retreaded. But a lot of companies resist pulling tires
that have tread left. Guys are stubborn; they don’t want to
change the way they’ve done business for 20 to 30 years. They
think they can squeeze another month out of a tire.” It’s
a gamble, but if they’re wrong, there’s no guarantee replacement
tires will be available.
Berryman reports that
tires are being dug up from scrap yards and quarries; she relays
stories of frozen tires being uncovered in Russia. “In fact,”
she says, “it’s one of our recommendations for quarries
to check their scrap yards to see if they can put a tire with 10%
tread on the back, just to get a little more use out of it.”
Extending Tire Life:
Right Tire, Right Pressure
“Maintenance is always important, but now more than ever,”
Rohwling expounds. “You have to take extra care of your tires
because a replacement might not be available. Equipment operators
hold their fate in their own hands; if you abuse your tires, you’re
going to have downtime.”
“Since last fall,
we’ve been promoting improved maintenance practices,”
Berryman claims. “We’ve always had servicemen in the field
preaching site maintenance and inflation. Finally we’re seeing
some improvement in the habits of contractors.”
As Bennett explains,
tire care is a multistep process. Virtually everyone in the industry
agrees that the first step is selecting the right tire for the application.
According to Nash, the bigger the tire, the more attention needs
to be paid to application.
Mills advises end users
to partner with a tire manufacturer or service dealer to ensure
they’ve chosen the right tire for their operating environment.
Factors he considers include bias versus radial, material to be
handled, expected weight load, ground conditions, carry distance,
and cycle time. Speed and heat contribute to the decision.
“Whereas one tire
type might work fine in a soil-intensive environment, the same tire
might not fare nearly as well in a rock construction environment.”
In those applications, Bennett says cut resistance is more of a
concern than traction, and a heavy-duty tire with deep tread will
perform better.
Firestone Construction
Tires’ David Ashby indicates that the current trend, caused
by the shortage, is bias-to-radial. Research has proven that radial
tires can improve performance for earthmoving equipment because
the heavy-duty steel construction delivers lower total tire costs
by providing better traction and significantly reducing flats, punctures,
and cuts in very rough environments. Other radial advantages include
low fuel consumption, and improved operator comfort and machine
operation due to increased sidewall deflation. Radials also lower
a machine’s center of gravity, improving its stability.
According to Junkins,
the decision boils down to the application. “Bias tires have
a lot of sidewall damage issues. Radials provide a better traction
and longer wear, but they’re more expensive.”
Step two involves ensuring
tires are mounted and dismounted properly. Michelin recommends letting
a tire dealer provide this service. It also pays to pay attention
to rims. “You’re supposed to clean and repaint your rims
when you change tires,” advises Junkins. “Rotate rims
to keep them in good repair.”
Step three is a resounding
“routine air pressure checks,” closely associated with
steps four and five: operator training and tracking performance.
According to Stec, the most important part of tire care is maintaining
the proper inflation pressure. “You need to keep in mind that
it’s not the tire that carries the load; it’s the air,”
reminds Junkins. “Inflation is critical.”
The Tire Industry Safety
Council reports that nearly half of all tires are underinflated.
More than 80% of tire problems begin with low tire pressure. Tires
that are underinflated by 10% lose as much as 12% of their tread
life. Overinflated tires can also reduce tread life and lead to
failures such as sidewall and bead separations, according to Sloan.
Overinflation and overloading can lead to violent tire explosion,
causing severe equipment damage, serious injury, or death.
“Correct air pressure
is very important. If you don’t maintain the right air pressure,
you decrease the life of the tire, pure and simple,” says Ganz.
“Every OEM’s performance handbook lists air pressure recommendations
for their vehicles, so the information is readily available to any
user.” Gimbel explains that the numbers on the side of the
tires indicate maximum pressures; for the optimal numbers, consult
the operator manual.
While many manufacturers
and dealers recommend checking air pressures when tires are cold,
Gimbel suggests checking pressures when tires are hot. He also counsels
ensuring that pressures are balanced right to left. “That’s
particularly important for wheel loaders and haul trucks.”
He says a visual check is equally important, and suggests checking
the tires, moving the machinery, and checking again. That way, operators
can inspect every inch, without missing the contact patch where
the tire rests on the ground.
Sloan uses a basic tire
pressure gauge. “It’s a simple and inexpensive check that
will prolong the life of tires.” Gimbel advises using a calibrated
gauge for accuracy. “Checking and adjusting tires should be
done on a weekly basis for continuously used units,” Sloan
coaches. “Tires should be checked and adjusted before each
use on units that may sit for some time between jobs.”
“Utopia would be
a weekly tire inspection program,” Junkins laughs, “but
most don’t pay attention. A regular inspection program can
help you get better and longer use out of your tires. It’s
that simple.” She agrees with Gimbel that contractors aren’t
checking tires regularly, and when they do, all too often they do
little more than “eyeball it.” Junkins says that’s
about as effective as old-fashioned tire thumpers—wooden sticks
used to gauge inflation by listening to the sound they made when
struck against a tire.
Because most operators
don’t check air pressures regularly, fail-safes are available.
Paulson says McAninch relies on its local tire dealer to monitor
its tires quarterly for air pressure and wear; other than that,
operators conduct daily visual inspections.
Others rely on monitoring
systems. The Doran PressurePro Tire Pressure Monitoring System continuously
monitors pressure of all vehicle tires and displays them in a digital
readout in the cab. “You can scroll down to see the pressures
at any time,” confirms Scott Comisar, general manager. “It
lets you know if the tire is going out of range via an audible and
visible alarm, within 1% to 2% accuracy.” Designed under military
specifications and tested on six-wheel over-the-road trucks, this
system is easily installed without the need for special tools. Sensors
simply screw onto the valve stem. At a cost of approximately $50
per tire, it offers considerable payback, says Comisar.
The Human Factor
“Monitoring systems help, if you do something about it,”
Rohwling scolds. Gimbel agrees, adding, “The problem is, if
the system fails, people aren’t used to paying attention. It’s
easy to rely on automated systems, but they aren’t foolproof.
Don’t take exceptional, unnecessary steps. A lot of these things
are marketing gimmicks aimed to get around operators. It always
comes back to the human factor.”
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PHOTO: CONTINENTAL TIRE NORTH AMERICA INC. |
“The equipment can
only do so much; the rest depends on the operator,” agrees
Bennett. Operators need to be trained in efficient and safe methods:
accelerating and decelerating smoothly; making slow, smooth turns;
avoiding curbs, holes, etc.; and watching top speed. “Running
over things can bruise or break the cords and sidewalls, inflicting
severe damage,” explains Gimbel, who also suggests evaluating
the speed-weight ratio. “Long runs with a full bucket load
are better trucked.”
As Sloan says, “Machine
operator work habits play a critical part in the life of a tire.
Excessive spinning of tires will dramatically reduce tire life by
as much as 50%.” Mishandling tires causes premature tire wear,
costs fuel, and can damage drive trains and undercarriages. “Everything
is interconnected,” says Gimbel.
He believes that everything
is the operator’s job: tire inspection, collecting and recording
data, and maintenance of the job site. “When possible, the
job site should be cleared of trash, metal debris, fuels, oil, and
chemicals, which degrade tire rubber.”
Recording pressures and
measurements is also the operator’s responsibility. “Things
that are measured are easily managed,” Gimbel quotes an old
saying. “You need to be predictive by collecting information,
not reactive—that puts people in potential danger. If you have
a history that shows trends, you can predict the life of a tire.
When you can predict, you can control.” Bridgestone’s
TreadStat Tire and Rim Management System provides data to enable
equipment owners to manage their tires. Reports detail tire performance
trends, cost-per-hour/cost-per-mile statistics, and tire failure
causes. This information is critical in planning, forecasting, maintenance,
and tire selection, says Mills.
Repairing the Damage
Controversy and contradiction surround after-market products.
Sloan says flat-proofing products like Quic Gel don’t necessarily
extend the life of a tire, but do minimize downtime due to flats
caused by punctures. Continental General’s official line states
that such products can void the warranty, but Junkins says it’s
not strictly enforced. “We don’t recommend them, but we
have no problem with anything that helps keep the tire sealed and
isn’t petroleum-based.” However, she warns that some products
make repair difficult. “It can be hard to mount tires without
tearing up the bead face.”
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PHOTO: CASE |
Nash grudgingly acknowledges
the benefits of sealants. “You can seal tires to keep them
from going flat—and keep rims from rusting. If it’s a
good sealant, it doesn’t interfere with the warranty, but it’s
difficult to reuse the tire because polyurethane becomes solid.”
While he says solid tires are acceptable for underground mines and
steelyards, he recommends products such as Trojan Care, which can
be removed for retreading.
Miguel Diaz, owner of
Flat Free, claims his sealant extends tire life by as much as 20%,
and notes that the Missouri Department of Transportation recommends
his product, which is used by the US Postal Service. By adding weight,
Flat Free increases traction and translates into less pull on the
engine. It keeps tires 27% cooler and helps them wear better. It
lasts as long as the tire, works equally well on retreads, and is
environmentally safe. Although business is up, Diaz says, “Prevention
doesn’t sell well in America.” He envies Fix-a-Flat’s
$140 million in annual sales.
“Sealants have been
around forever,” Diaz says. “There was a patent on molasses
and feathers, but the molasses ate rubber.” Other homemade
remedies remain in full force. Stec’s customers fill their
tires with nitrogen or water for cooling, and favor ballasted tires
for the added weight. “Nitrogen minimizes tire explosions,
aging of the inner tire, and rim rust.”
Liquid ballast typically
consists of a water/calcium chloride solution that increases operating
efficiency by 20% to 30%, improves traction, and reduces slippage,
tread cuts, and fuel costs. It doesn’t erode rubber, doesn’t
freeze, and is inexpensive. Dry ballasted tires use clay, limestone,
and barium sulphate, which are heavier than the liquids. Stec says
dry ballasted tires are operated at lower speeds where there’s
little danger of internal heating.
Galaxy produces a polyurethane
fill it considers superior to foam fill. The Soft Flex-Super Fill
tires provide 100% protection against flats, but ride like air-filled
tires, claims Ganz. Once filled, they remain pressurized to the
correct setting for the life of the tire, and can be retreaded three
times without decline in performance. Ganz says they’ve been
approved by every major equipment manufacturer and don’t void
OEM warranties. Furthermore, Galaxy’s warranty covers the cost
of the tire and the fill. “Galaxy is the only manufacturer
to warranty its product when filled.”
Oasis Off Road Manufacturing
offers a safety seal kit that doesn’t require dismounting for
its 100% vulcanizing repairs. Another popular item is the 12v/24vdc
onboard air compressor system. The compact system can be mounted
anywhere, says Owner John Williams. “It meets the rugged requirements
for contractors. It can inflate huge equipment tires, blow out a
radiator, and run air tools.”
Whatever systems, tools,
or routines are used, for safety and economic reasons, it’s
important to give tires attention all the time, not just when they’re
flat. Now more than ever.
Residing in Indianapolis,
IN, Lori Lovely writes authoritatively on transportation and technical
subjects.
GEC
- September/October 2005
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