Farm tire market trends for 2015

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Dealers say recruitment and

The market is transitioning to Increased Flexion and Very High Flexion tractor tires, says Bridgestone’s Tony Solon. The move to radial implement tires (like the Firestone Destination pictured on the planter) is another trend.

New products, new tire technology may save the day

Corn production in the Midwest was greater in August than was forecast. At the same time, coton production in the South was down year-over-year.

Farm equipment sales in some segments have been steady, despite the change in the maximum allowable deduction on farm equipment purchases from $500,000 to $25,000.

Farmers in California are optimistic about navel orange production, but that could change because of the efects of a lingering drought.

With all the variables that can afect crop yields and pricing, it would seem almost impossible to accurately predict farm tire supply and demand.

Modern Tire Dealer decided to try anyway.

We asked experts from some of the largest farm tire manufacturers and marketers in the United States to share their insights into the farm tire market in 2015. Tey talked about a number of trends, including Increased Flexion (IF) and Very High Flexion (VF) radial technology.

Michelin North America Inc., Bridgestone Americas Inc., BKT Tires USA Inc., Alliance Tire Americas Inc., Mitas Tires North America Inc., Trelleborg Wheel Systems Americas Inc. and TBC Corp. agreed to participate.

MTD: As the year winds down, crop yields are high and commodity prices are low. In addition, new farm equipment sales appear to be down. Do these factors bode well for farm tire sales in 2015?

James Crouch, North America Farm Segment marketing manager, Michelin: It will be an interesting year for replacement ag tire sales. In the past, we have seen a direct correlation between the replacement market and original equipment sales. Tis was very consistent until a few years ago when the accelerated depreciation bill was passed as part of the Farm Bill.

Section 179 of this bill allowed for farmers to deduct up to $500,000 of their taxable income in the frst year on up to $2 million of equipment purchased. This, along with some of the highest ALSO IN CTD commodity crop prices 2014 U.S. replacement farm tire ever and record high farm market shares: net incomes, created the Radial, bias and small farm perfect storm for farmers replacement tire shares . . . 46 to finally upgrade all of BIG plant, tires and investment: the equipment on their Bridgestone opens frst radial OTR farms. During this time, tire plant outside Japan . . . 48 Commecially Viable . . . 50

the original equipment tire market was booming, while the replacement market was declining.

Now that this section of the Farm Bill has expired, original equipment sales are tapering of, as expected, and the dust is starting to setle on the implement dealer lots. Tis new environment creates opportunities for replacement tire dealers. Farmers are now on their second or third year on the tires that came new on the sprayer in the shed. Instead of the farmer simply trading it in before those ftments become a target, they may instead shop for tires and put a few more years on that sprayer. We have seen the replacement farm tire demand cycle move cyclically through the years in three- to fve-year curves. If legislation remains the same, it appears things will begin to trend in favor of the replacement farm tire dealer.

An interesting dynamic to consider is the willingness of the farmer to alter the tire confguration of the tractor. A farmer who will keep a machine one season is obviously not very interested in investing in a wider combine tire to manage wet conditions or triples over duals to manage the load imposed by a planter. If farmers keep equipment longer, the tire is no longer simply black and round. It turns into a piece of valueadding equipment that can increase the productivity of the machine as much as a larger planter or header. All of these diferent aspects coming together will give the replacement tire market momentum moving into 2015.

Tony Solon, marketing manager, Bridgestone-Firestone Ag Tire Division: Low- to mid-range horsepower tractors and some implements are still doing well. Te type of equipment used in livestock operations and this segment is doing well. Te higher horsepower tractors and combines have dropped of compared to the last three years due to the drop in commodity prices. OE equipment manufacturers are adjusting their production levels down to address some of the new equipment inventories on their dealer lots, so that business will be down. On the replacement side, these same issues may cause a slowdown in that business.

Bruce Besancon, vice president of marketing, Alliance: It is clear that the farming community is facing some lowered expectations in terms of commodity prices and equipment sales — and our dealers and distributors have seen some of this in their day-to-day operations as well. At the same time, however, we are also seeing calls for some of the largest food commodity harvests that we have seen in recent years. It is clear that the business of providing food is not going away, and we will need to have VF (pictured) and IF technology are equipment in the feld “building momentum,” says BKT to accomplish this task. President Carl Casalbore. And where equipment

Trelleborg’s ProgressiveTraction concept features a double lug design for improved farming effciency.

is being used, tires will be needed. Today’s farmer is making sure he does not spend his money unwisely. In some cases, he may delay purchases to see what he will bring in from his crops, but he is not doing any less work than he has done in previous years.

We anticipate that with lowered equipment sales, the farming community will have more vehicles that they will want to keep running longer. While OE fgures may drop in 2015, afermarket sales to farmers in the feld should remain fairly steady compared to what we have seen this year.

Te demand for increased productivity and technology in the agricultural feld is not slowing down and everyone is going to be pushed to “do more with less.” With new products ranging from the highest technology IF/VF row crop and combine tires to best-in-class fotation tires for spreaders and haulers, we anticipate that 2015 will be another excellent year.

Carl Casalbore, president, BKT: Tere is apprehension with the end user. Farmers are being cautious with large purchases. Tat being said, we believe that the replacement business in 2015 will be active.

We also believe that the end users are looking for value, meaning excellent products for less money.

Our market is mature and growth is slow but steady. Te momentum is based on the product/value that a brand has to ofer. Technology is also playing an important role, which plays into the value equation.

Neil Rayson, vice president, Mitas: For the replacement market segment, if there are favorable weather conditions in the spring, a normal sales patern may be enhanced by the

At the “cutting edge of fotation tire technology,” the Alliance 393 radial manure tire also can travel up to 40 mph on the highway, according to the company’s Vice President of Marketing Bruce Besancon.

efect of a decrease in new machine purchases, leading to more tire replacements on existing equipment.

Farmers and dealers should avoid complacency over supply in the spring as tire manufacturers will tend to “right size’’ production to anticipated 2015 demand, bringing the supply/ demand relationship into balance and creating the potential for tight supply in high demand sizes during the crucial early selling season.

Jef Jankowski, director of ag sales in North America, Trelleborg: We anticipate the radial ag tire market will be sof through at least the frst half of 2015. Tere are a number of independent tire dealers who are siting on inventory levels they are not comfortable with. Tey are very apprehensive right now because nobody is buying anything. Tey are trying to move the tires out.

Bill Dashiell, senior vice president, Commercial Division, TBC: Te outlook for 2015 is likely to be a litle cautious. High crop yields may partially ofset low commodity prices. Corn and soybeans recently showed modest improvements in October fnally coming of two-year price declines, while some livestock sectors are continuing to gain momentum. 2015 is likely to be a year of mixed opportunities; if farm income declines, we are likely to see stronger tire sales as farmers are likely to delay investment in the new equipment.

Te prospects and opportunities for 2015 vary greatly by region. Te ongoing drought in the West is puting signifcant pressure on farmers, with no major expectation of relief, while areas of the Midwest had strong harvests even with the early winter. (Next year) may be very similar to 2014 as weather continues to make the news and will continue to be a key factor.

MTD: Do you plan to introduce any new farm or ag tire products into the U.S. market in 2015?

Crouch, Michelin: Yes we do. We have several new tire launches planned for 2015. We will continue to expand our Spraybib tread design, which is a VF high clearance sprayer tire ofer. Tere is a very large demand for VF sprayer tires because of the extreme loads they carry. Te Spraybib allows for a much lower pressure to carry this load, which dramatically decreases the amount of compaction imposed by the machine.

We are also continuing to expand our Cerexbib tread design, which is an IF/VF combine tire. We plan to ofer the farmer several new low pressure combine dual options by year end.

Solon, Bridgestone: We have a number of new products in the pipeline for 2015 covering a range of tire applications.

Besancon, Alliance: Te coming year promises to be an exciting one for Alliance and our customers. We’re continuing to broaden our product line with more innovation, more purpose-built designs and more sizes.

At the cuting edge of fotation tire technology, our 393 and 882 Radial Flotation tires deliver outstanding load ratings along with excellent “roadability” at up to 40 mph on the highway. We have seen them tested on farms, pavement and oil felds this year, and everybody who’s seen them wants a set — or as many as they can get their hands on. Our 381 Radial Implement tires ofer a tread patern that’s great for over-the-road handling as well as excellent performance in a wide variety of feld conditions. We’re working with top-tier OEMs to introduce sizes that will roll out on new equipment.

Our classic diamond-tread 330 fotation tire will be expanded to include massive 28LR24.5, 28LR26 and 28LR32 sizes in radial construction, at the request of a couple of OEMs. Our engineers continue to work hard to keep up with equipment that gets bigger, stronger and faster every year.

We’re also introducing a full line of tires for the irrigation market, which is a new entry into a very large market and a great opportunity for dealers to fll up containers or expand their options for working with Alliance. We’re commited to being versatile, customer-centered and easy to do business with. Part of that is being able to ofer a wide range of tires to help customers meet almost any need on the farm.

Mitas will add two sizes to its VF HC 2000 tractor line in 2015: 600/70R30 and 710/70R42.