22 minute read
Tariffs and time are helping dealers
from Modern Tire Dealer - October 2016
by EndeavorBusinessMedia-VehicleRepairGroup
Tariffs and time are helping dealers compete against low-cost import tires
By Ann Neal
The crisis for retreaders created by high volumes of low-cost tires from China seems to be easing. Respondents to Modern Tire Dealer’s annual survey of the nation’s largest commercial tire dealers expect tariffs on medium truck tires, which have gained preliminary approvals from the federal government, to provide some relief.
Parkhouse Tire Inc. has had about a 5% growth in retreading business in the last year. “It could be better if the Chinese thing was resolved,” says CEO Jim Parkhouse. “Once the tariffs are established, the pricing will level off and it should help increase our retread business.” Based in Bell Gardens, Calif., Parkhouse Tire holds the No. 11 spot in MTD’s top 25 commercial tire dealer rankings.
Steve Theissen, an owner of T&W Tire Inc., which holds the No. 20 spot, also feels tariffs will improve the operating environment. “The tariffs help us increase our retreading business. It’s going to make retreads much more cost effective,” he says. T&W Tire is based in Oklahoma City, Okla.
Anti-dumping tariffs on truck and bus tires received preliminary approval in August, and countervailing tariffs were preliminarily approved in June. The U.S. Department of Commerce is expected to issue its final ruling on Chinese truck and bus tires on Jan. 17, 2017.
Earl Colvard, president of Earl W. Colvard Inc., which does business as Boulevard Tire Center, feels tariffs are a short-term fix. “Tariffs are a temporary solution. It really should be a value proposition: price versus performance.” Deland, Fla.-based Boulevard Tire Center holds the No. 9 spot.
Quality begins to trump price
Now that fleets have put some miles on their low-cost import tires, Sumerel Tire Service Inc. is seeing customers choose better quality tires, according to Bob Majewski, chief technical officer.
“Customers think it’s a new tire, so it’s good. Then we have to show them their mileage and tell them they’re actually buying two to one so how good is it at that cheap price? And the casing isn’t worth anything when they’re done with it. They’ve got to look at all that,” says Majewski.
Jason Lightbody says his core customers did not buy low-cost Chinese tires. Lightbody is manager of the tire Three generations of the Houska family are and oil division at Houska pictured (from left) LJ, vice president, and Dennis, Automotive Inc., a single store president, stand by a portrait of Chuck Houska, founder of Houska Automotive. The dealership’s offering retail and commercial commercial business grew 15% last year. services in Fort Collins, Colo.
But Lightbody says his customers who to Brad Raben, vice president of comchose low-cost imports did not realize mercial sales at Raben Tire Co. LLC, the savings they expected. which holds the No. 17 spot.
“We had some customers that put on “These products have a higher margin some lower cost Chinese import tires, and rate, but in the end cost us margin dolthey didn’t perform very well,” he says. lars. It has had some effect on retread “We’re talking flat repairs, irregularities margins but in most cases where they’ve in the tires, problems capping them. competed, the customers perceive the They found out pretty quickly that the new tire to be better. In many cases we initial $150 or $200 savings in the tire couldn’t get low enough with a retread is causing them some problems on the and casing to offer savings.” backside. Obviously, we’re not going to give them near the same kind of price for their casings. Over time, they weren’t ALSO IN CTD providing the cost per mile.” The top 25 U.S. commercial tire dealers in 2016 . . . 48 Low-cost imports hurt margins
The lowest tier Chinese truck tires have New vs. retreaded trailer tires . . . 52 taken some share from Tier 3 Chinese Fleets expect wheel refinishing and domestic manufacturers, according service . . . 58
Houska Automotive is building a commercial truck center and retread shop next to its existing store in Fort Collins, Colo.
Tom Bowman, vice president of Belle Tire Distributors Inc.’s commercial division, reports low-cost Chinese imports had no impact on Tier 1 margins while margins were reduced 7% to 10% on Tier 2 tires and 5% to 7% on Tier 3 products.
Top tier tire makers react
Top tier tire manufacturers responded to the low-cost Chinese imports with new offerings. “Goodyear with its Kelly line and Michelin with its Uniroyal line are getting really aggressive trying to go after that Chinese market. I think that’s fantastic. That’s giving us another tool in our box,” says Lightbody.
Majewski has operations in Lebanon, Tenn.; Newport, Ky.; and Bluffton, Ohio. “I have plants in three markets. The coal industry has been crushed this side of Ohio, West Virginia and up into the panhandle area of Pennsylvania,” he says. Business is down 20% at his Bluffton retread shop and commercial outlet, which serves southern Ohio and West Virginia’s coal industry.
The story is different at Majewski’s Lebanon store and retread shop. New construction and road building in the South, especially in the Nashville area, are helping push volumes up 25% at the Lebanon operation.
Volumes at the Newport facility are steady. “We’re established but we’re feeling the pinch from the cheap Chinese tires. Our new tire sales are up considerably from last year, and our retread sales are flat. You can buy a premium tire for $60, $80, $100 less than you could a year ago. A lot of people try them.”
Overall, his business is flat for the year. “Flat is good because a lot of people are down 20% and 30%,” says Majewski.
Majewski is finding new ways to stay relevant to his customers. He is adding a retread for 12-16.5 skid steer tires and retreads for wide base tires in sizes 455/55, 445/50, and 445/65 at the Newport plant by the end of 2016. Dealers of all sizes add stores
Belle Tire Distributors is restructuring its business to enable customers to single-source their commercial tire vendors over a larger geographical footprint. In August, the company announced plans to merge its commercial division with Tredroc Tire Services Inc. and Belleroc Tire Services, a joint venture formed in 2010 by Belle Tire and Tredroc.
The merged company will operate under the Tredroc Tire Services name and will be jointly owned by Belle Tire and Tredroc. The merger is expected to be complete by the end of 2016. The new Tredroc Tire Services will have 25 store locations and six retread shops in Illinois, Indiana, Kentucky, Michigan, Ohio and Wisconsin. Tredroc is tied for No. 13 in MTD’s top 25 commercial dealer rankings.
McCarthy Tire Service Co. has been expanding and relocating stores since acquiring 10 Ragan Tire Group LLC locations in June 2015. Five commercial stores have been moved to larger facilities and commercial tire and truck repair have been expanded at eight stores. A new Bandag retread plant with a capacity of 1,000 retreads per day opened in Wilkes-Barre, Pa., in September. The company also opened a retread plant with a capacity of 198 retreads a day in Wilson, N.C., last winter. McCarthy Tire holds the No. 6 spot with 25 commercial stores, 14 combination stores, and eight retread shops.
Over the last year, Raben Tire opened outlets in Otterbein, Ind.; Paducah, Ky.; and Clarksville, Tenn., as well as a satellite of its Central City, Ky., store in Greenville, Ky. The company also expanded commercial repair and alignment services and now offers them at 14 locations. The No. 1-ranked dealer, Southern Tire Mart LLC, has opened five to seven stores per year for the last few years and plans to continue that pace in the coming years, according to Cliff Brown, communications director. The company is opening its newest stores in Mossey Head, Fla., in the fourth
quarter of 2016 and in Forest Park, Ga., in the first quarter of 30 bays. About 750 tires are distributed annually through a 2017. The Mossey Head store is new construction located in wholesale service begun two years ago. In addition to selling and Florida’s Interstate 10 corridor. For its Forest Park location, servicing medium truck, off-the-road and farm tires, Houska Southern Tire Mart is retrofitting a former big box store into Automotive offers light truck and medium truck mechanical a commercial truck center. services from preventive maintenance to engine overhauls.
About the same time Southern Tire Mart opens its 75th The company has four service trucks and a mobile repair truck. commercial store in Forest Park, Houska Automotive is opening The commercial business has been growing 15% a year. The its first stand-alone commercial truck center and retread shop. company bought property next to its store for a seven-bay truck
Houska Automotive was founded in 1952 as a three-bay center housing a retread shop. Construction will be complete automotive service center. The company added retail and by the end of January 2017. At first Houska Automotive will commercial tire sales and service five years ago. Retreads retread 25 medium truck tires a day using Oliver Rubber Co. were offered through a third party. Today the company has LLC’s retread process. The goal is 50 a day, or a thousand 45 employees working in two side-by-side buildings totaling retreads a month. The company is starting with medium truck tire retreads and hopes to add OTR retreads, section repairs, foam filling and tire pressing. Local mom-and-pop shops in Fort Collins offer diesel repairs but not passenger and light truck repair or tires. The dealership’s other competitors are Tire Centers LLC (TCi) and Bridgestone’s GCR Tires & Service stores. “We’re the only family-owned commercial tire center. As far as independent tire retailers, we’re the largest in northern Colorado,” says Lightbody. No. 3-ranked Les Schwab Tire Centers Inc. stores are now entering the Fort Collins market. “We’re excited to have them here because they’re another tire business that’s at the top of their game,” says Lightbody. “We don’t give our business away. We think there’s a Southern Tire Mart opened a $15 million, eight-bay commercial store in Las Vegas in real value to it. Our success from January 2016. It is the company’s westernmost location and only store in Nevada. 1952 proves that.”
Rank, company, headquarters, chief officer, website 1. Southern Tire Mart LLC, Columbia, Miss., Thomas and James Duff, owners, www.stmtires.com 2. Best-One Tire Group, Monroe, Ind., Larry and Mark Zurcher, co-chairmen, www.bestonetire.com
3. Les Schwab Tire Centers Inc. 1 , Bend, Ore., Dick Borgman, CEO, www.lesschwab.com 4. Pomp’s Tire Service Inc., Green Bay, Wis., Jim Wochinske, president, www.pompstire.com
5. Snider Tire Inc., dba Snider Fleet Solutions, Greensboro, N.C., John Snider, president, www.sniderfleet.com 6. McCarthy Tire Service Inc., Wilkes-Barre, Pa., John McCarthy Jr., president, www.mccarthytire.com 7. Service Tire Truck Centers Inc., Bethlehem, Pa., Walter Dealtrey, chairman, www.sttc.com 8. Purcell Tire & Rubber Co., dba Purcell Tire and Service Centers, Potosi, Mo., Roger Lucas, CEO, www.purcelltire.com 9. Earl W. Colvard Inc., dba Boulevard Tire Center, Deland, Fla., Earl Colvard, president, www.boulevardtire.com 10. Bauer Built Inc., dba Bauer Built Tire, Durand, Wis., Jerry Bauer, chairman and CEO, www.bauerbuilt.com 11. Parkhouse Tire Inc., Bell Gardens, Calif., Jim Parkhouse, CEO, www.parkhousetire.com
12. Cross-Midwest Tire Co., Kansas City, Mo., Greg Trum, president, www.crossmidwest.com
13. Redburn Tire Co., Phoenix, Ariz., J.D. Chastain, president, www.redburntireco.com
13. Tredroc Tire Services Inc. 2 , Antioch, Ill., Stevan Weakley, CEO, www.tredroctire.com
15. Bob Sumerel Tire Co. Inc., Erlanger, Ky., Bob Sumerel, CEO, www.bobsumerel.com
16. Ziegler Tire & Supply Co., Massillon, Ohio, Bill Ziegler, president, www.zieglertire.com
17. Raben Tire Co. LLC, Evansville, Ind., Eric Glover, president, www.rabentire.com
18. Sullivan Tire Co. Inc., Norwell, Mass., Robert Sullivan, president, www.sullivantire.com 19. Commercial Tire Inc., Meridian, Idaho, Bob Schwenkfelder, CEO, www.commercialtire.com 20. T&W Tire Inc., Oklahoma City, Okla., Kane Russell, John Theissen and Steve Theissen, owners, www.tandwtire.com Commercial only outlets/combination outlets
Truck tire brands 73/0 Bridgestone, Firestone, Continental, General, Yokohama, Toyo, Double Coin 74/123 Bridgestone, Firestone, Mastercraft, Roadmaster Continental, General, Michelin, Goodyear, BFGoodrich, Uniroyal, Yokohama 0/407 Toyo, Ohtsu, Double Coin, Gladiator, Michelin, Bridgestone, Firestone 25/49 Bridgestone, Firestone, Dayton, Continental, General, Goodyear, Michelin, Yokohama, Kelly, Hankook 46/0 BFGoodrich, Continental, Michelin, Goodyear, Yokohama Retread shops Service trucks
2015 estimated commercial sales (in millions) 18 700 $810
17 450 $380
3 1,500 $349
13 330 $310
8 200 $300
25/14 Bridgestone, Firestone, General, Yokohama, Double Coin 8 460 $265
43/3 Michelin, Yokohama, BFGoodrich, Cooper, Goodyear, Dunlop 14/33 Dunlop, Goodyear, Michelin, Kelly, Yokohama, Hankook, Aurora, Aeolus 4 255 $220
4 216 $190
18/3 BFGoodrich, Bridgestone, Continental, Firestone, General, Michelin, Roadmaster, Yokohama, Gladiator, Dayton 19/14 BFGoodrich, Continental, General, Hercules, Kumho, Michelin 6 145 $173
7 96 $170
12/0 BFGoodrich, Bridgestone, Continental, Double Coin, Firestone, General, Michelin, Dayton, Yokohama 14/0 Bridgestone, Continental, Cooper, Firestone, General, Titan, Yokohama, Gladiator, Dayton 13/0 Continental, General, Michelin, Dayton, BFGoodrich, Bridgestone, Firestone, Yokohama, Roadmaster, Double Coin 12/0 Bridgestone, Firestone, Continental, Toyo, General, Michelin, Hankook, Yokohama, Roadmaster, American Omni 11/5 Bridgestone, Firestone, General, Continental, Goodyear, Roadmaster, Yokohama 0/17 Michelin, BFGoodrich, Bridgestone, General, Firestone, Dayton, Continental, Samsun, GT Radial, Uniroyal 8/11 Michelin, BFGoodrich, Goodyear, Dunlop, Kelly, Continental, General, Yokohama, Pirelli, GT Radial 15/1 Bridgestone, Firestone, Goodyear, Dunlop, Kelly, Double Coin, API 7/26 Bridgestone, Firestone, Dayton, General, Yokohama, Roadmaster, Continental 0/16 BFGoodrich, Michelin, Hankook, Yokohama, Uniroyal, Continental 3 140 $146
3 169 $110
5 105 $105
3 230 $105
6 91 $92
2 80 $89
3 116 $87
3 90 $77
3 141 $75 Points 164
249
166
137
100
84
94
73
45
65
27
31
31
27
33
33
34
34
48
Rank, company, headquarters, chief officer, website 21. Valley Tire Co. Inc., Charleroi, Pa., Jim Stankiewicz, president, www.valleytire.com
22. Pete’s Tire Barns Inc., Orange, Mass., Peter Gerry, CEO and president, www.petestire.com 23. Royal Tire Inc., St. Cloud, Minn., Pat Duininck, president, www.royaltire.com 24. Nebraskaland Tire Co. Inc., dba Nebraskaland Tire, Kansasland Tire and Coloradoland Tire, Lexington, Neb., Gary Wright, president, www.thetirestore.com 25. Black’s Tire Service Inc. Whiteville, N.C., Ricky Benton, president, www.blackstire.com Commercial only outlets/combination outlets
Truck tire brands 11/4 BFGoodrich, Continental, General, Michelin, Sumitomo, Yokohama, Linglong 0/19 Bridgestone, Firestone, Michelin, Continental, Double Coin, General 16/0 Bridgestone, Firestone, Michelin, Toyo, Dayton 2/23 Goodyear, Dunlop, Kelly, Roadmaster, Aeolus
0/37 Goodyear, Dunlop, Kelly, Continental, Roadmaster, Double Coin, Hankook, Falken Retread shops Service trucks
2015 estimated commercial sales (in millions) 1 55 $71 Points 29
2 121 $65
3 121 $60
3 63 $58 29
35
39
1 120 $56 38
1. Les Schwab outlet total does not include 63 affiliated member-dealers. 2. Tredroc Tire Services Inc. figures do not include Belleroc Tire Services, a joint venture between Tredroc Tire Services and Belle Tire Distributors Inc. The merger of Belle Tire’s commercial division, Tredroc Tire Services and Belleroc Tire Services is expected to be completed at the end of 2016. How the rankings are determined: To be ranked on the MTD Top 25 U.S. Commercial Tire Dealers list, a dealer has to: 1) sell truck tires, 2) have at least one retreading plant, and 3) offer 24/7 road service. Points are tabulated based on number of outlets. Each commercial-only outlet receives two points and each retread plant receives one point. The number of combination commercial/retail stores is multiplied by the estimated percentage of commercial sales and then multiplied by two. The highest 25 point totals make up the list, and then the dealers are ranked based on estimated commercial sales.
Urban and regional operations take the highest toll on tires. These fleets need high-scrup compounds help resist curb damage.
New vs. retreaded trailer tires
There are several good reasons why truck fleets prefer the former or the latter
What issues do fleets face when buying tires for their trailers? Jim Park knows. Park, who writes for fleets as equipment editor for Modern Tire Dealer’s sister publication Heavy Duty Trucking, covered the topic in HDT’s July issue.
We often publish his stories in our Commercial Tire Dealer section in order to share with you insightful practices from the fleet’s perspective. By knowing what is important to fleets, you get what amounts to insider information.
Do you need to put new tires on a trailer? As it turns out, a lot of fleets do buy new tires for trailers, and for very good reasons. But there are probably an equal number content to cycle their older drive and steer tire casings back to a trailer position to let the trailer finish them off.
Trailers don’t have to be a tire graveyard, but that’s often the case. They tend to be neglected and rarely see proactive maintenance. In the truckload sector, where trailers can disappear into drop yards scattered around the country, it’s not uncommon for a tire to go six months or longer without any attention. Tires are often stolen from trailers left in drop yards, too.
Fleet maintenance consultant Darry Stuart, operating as DWS Fleet Management Services, says crooks can steal a tire right off the rim of a parked trailer in less than 30 seconds.
That might seem a pretty compelling reason to limit your theft exposure by leaving some scabby old carcass on the trailer. Who’d want to steal something like that? On the other hand, if customer service and driver satisfaction are more important than losing a few tires to a five-finger discounter, then you can make a good business case for newer tires and even retreaded tires.
It’s common practice to retread a steer or drive tire once and
place it into a drive position, then retread it a second time and move it to the trailer. Trailers in the truckload sector, where trailer to tractor ratios are up to three to one, will run as few as 40,000 miles per year. In that scenario, you can easily get up to seven years out of a well-maintained, deep-rubber tire, providing it suffers no catastrophic failures and doesn’t get stolen. In such a scenario, a retread or a new tire makes a lot of sense.
The deep rubber, Stuart says, is a hedge against perforation.
Stuart says an average tire service call today runs close to $1,000 with a new tire, and rarely takes less than three hours from breakdown to back on the road.
“You’d have to make a lot of fuel savings to pay for that service call,” he points out. “And then you have the risk of making a driver angry and possibly the customer too with a late delivery. A lot of the big shippers today won’t even look at a bid from a carrier with a less than 98% on-time performance. That’s a lot to wager on a well-used, thin-tread tire.”
Stuart recommends pulling the tire at 6/32 or 7/32 rather than the federally required minimum. That thought is seconded by Gary Schroeder, director of commercial vehicle sales for Cooper Tire & Rubber Co., assigned to the Roadmaster brand.
Schroeder notes that Department of Transportation regulations say steer tires must be pulled at 4/32-inch remaining tread depth and drive and trailer tires must be pulled at 2/32-inch remaining tread depth.
“Some fleets will pull steer or drive position tires early to help maintain traction and rotate them back to the trailer to run out their remaining tread life,” he explains. “If the fleet’s application tends to experience penetrations from nails or other road debris, then it’s probably a better practice to pull the tires early and retread them to help preserve the casing integrity.”
Special applications
Tread depth is especially important for fleets using spreadaxle trailers, which are notoriously hard on tires.
“Fleets that pull these trailers need tires with deep, 18/32 tread depth for extended life (or normal-life for a high-scrub tire), high-scrub compounds to help resist curb damage, durable casings and robust rib designs to help minimize tread tear,” says Evan Perrow, marketing manager at Goodyear Tire & Rubber Co.
Goodyear designed its G619 RST specifically for spread-axle trailers. Other companies also make models that appear to thrive in that hostile environment, such as the Continental HSR2, Michelin XZE and Bridgestone Ulti-Rib designs, which incorporate stabilizer ribs to combat irregular wear and rounded shoulders for spread-axle applications.
Similarly, while long-haul fleets often seek wear-extending or low-rolling resistance attributes in their trailer tires, regional and urban operators seek a tire that easily shakes off the threats from curbing, scrubbing and scuffing common to that application.
“For regional applications, you want a tire with a thicker tread, say 19-23/32,” says Walt Weller, senior vice president of sales and operations at China Manufacturers Alliance LLC, a subsidiary of Double Coin Holdings Ltd.
“You’ll need a tire that’s cut- and scrub-resistant, and can take some abuse from drivers running up on curbs and over certain hazards.
Acquisition strategies
Retreading is a cost-effective way of maintaining a stock of service-ready trailer tires. Top fleets know that retreads play a major role as a tire program best practice. Retreads for trailer tires are available in SmartWay-verified models, with tread designs tailored to fuel efficiency, wear battling, or extra-long life.
“Given that retreads typically cost a fraction of a new tire and perform as well as or better, it makes sense for the bottom line to incorporate retreads into a tire program,” says Sherrell Watson, communications specialist for commercial tires at Bridgestone Americas Inc. “Truck tires are simply too big of an expense not to consider retreading.”
While long-haul fleets often seek wear-extending or low-rolling resistance attributes in their trailer tires, regional and urban operators seek tires that shake off the threats from curbing and scrubbing common to that application. Dragging a trailer around corners takes a toll on tires.
When considering this option, it’s important to take into account the quality of the casing.
As Stuart suggests, a tire in a trailer position can last up to seven years, so a quality casing is certainly called for.
Another procurement strategy is to spec new trailers with drive tires. When the trailers are delivered, those tires are stripped off the vehicle, put into stock and replaced with retreaded tires from inventory. Fleets are researching where they can get the best pricing on the tires — from the trailer builder, from the tire supplier, from a tire dealer, adding up the costs including labor and restocking charges.
“There’s usually a pretty steep upcharge from the zerodollar standard tire option when going up to a drive or steer tire,” cautions Stuart. “Often, the math just doesn’t work, but depending on how you account for the tire costs, it may work for some fleets.” If it does, spec’ing drive tires on the trailer can be a cost-effective but labor-intensive way of building your drive tire inventory.
On the other hand, spec’ing a trailer tire with a shallow tread depth, say 11/32-inch, will give a year or so of fairly fuel-efficient operation before you have to worry about the tread becoming too thin to resist punctures. “There is just no way to say this option or that one will work for all fleets,” Weller reminds us. “Any number of strategies will work for most fleets, including combinations of new, used and retreaded tires.” Remember the highest risk exists in the extremes. Thinner tread at end-of-life will yield the lowest rolling resistance, but it will also expose your customer to the greatest risk for a mission-crippling puncture. Cheaper tires from the outset may not provide the longest miles to take-off or multiple retread opportunities. Premium tires may get scuffed and curbed to a premature death by drivers who aren’t careful when driving in urban environments.
“Fleet managers should identify the average miles that can be expected on each wheel position and application within the fleet,” Perrow says. “This allows a fleet manager to identify areas of opportunity for improvement and create a set of best practices. It also helps with budgeting and fleet cost predictions.”
But keep this in mind: You can’t fix what you can’t measure. Determining which approach works best for trailer tires still requires tracking and monitoring to get a measurable result. From there, you can take steps to get the best performance from the tires themselves and the capital tied up in the program.
Remember that the highest risk exists in the extremes. Thinner tread at end-of-life will yield the lowest rolling resistance, but it will also expose your customers to the greatest risk for a mission-crippling puncture. Cheaper tires from the outset may not provide the longest miles to take-off or multiple retread opportunities. Premium tires may get scuffed and curbed to a premature death by drivers who aren’t careful when driving in urban environments.
