A G T i r e Ta l k well into the first quarter of 2023, which will allow more farmers to purchase equipment or tires into the first half of 2023; and the global population continues to grow, which will create a permanent strain on food supply for the years to come. In addition, the current global delays caused by container or port distribution and/or ground freight problems — with no end in sight — will artificially continue to drive tire demand, as well sustain current crop prices. Farmers and growers need to remain proactive and monitor all of their equipment needs to include tires. In this case, proactive means farmers and growers must be placing orders now for what they think they may need in the next six-months-to-a-year. Maxam’s objective in the years to come is to grow our tire production capacity so we can continue to deliver radial products in the right sizes with the right load capabilities, that when operated at the right air pressure, will deliver the value our customers expect.
‘This is not the time to skimp on tires’ — Blaine Cox, national product manager, agriculture, gulf and turf, Yokohama Off-Highway Tires America Inc. DAVID GRADEN, operational market manager, agriculture, Michelin North America Inc. As many of us know, replacement tire demand can be driven by many different factors. If I were to prioritize those factors, I would say seasonal weather, net farm income and global agricultural economics would be at the very top. Of course, we can’t always plan for the weather, but to some extent, we can keep our thumbs on projected net farm income and global agricultural economics. As ag tire manufacturers, we manage our forecasted demand based upon these two projections, plus historical hits/misses and what we see in farming practice evolution. To explain what is occurring today, we need to look back to the beginning of COVID-19. Farmers who were negatively affected tended to rely heavily upon manual/migrant workers and/or grow and supply foods to our schools, restaurants and businesses. All other farmers and producers were affected very little, but still received COVID-19 financial relief. This — in addition to low input costs — are a big piece of the net farm income equation that led to more spending. Unfortunately, from a manufacturing perspective, the entire world almost completely shut down for four to eight weeks, while we all continued to feed ourselves and others. In a normal year, ag tire plants have to build constantly in order to keep up with demand. By the third and fourth quarters of 2020, all ag tire manufacturers were playing catch-up, while demand continued to increase. In early-2021, we began to see major shortages of raw materials like nylon and rubber. To further compound these issues, we began to see more cargo ships catching up and carrying more cargo, fewer trucks and truck drivers, massive increases in goods due to the spike in demand caused by the influx of cash into our economy, etc. We have been and are currently living in a snowball that continues to evolve. Jump ahead to today and replacement ag tire demand has continued to be strong, while net farm income is beginning to flatten, input costs are rising and COVID-19 relief is still being paid out. Unfortunately, we are all still experiencing higher raw
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material costs, while shipping container costs went from $3,000 to $18,000. Trucks and truck drivers are still very limited and labor costs have skyrocketed. Manufacturers of all shapes and sizes have to raise prices to cover these additional costs and even are finding creative ways to solve the logistic issues. Some ag tire manufacturers are curbing their demand by increasing prices, while others are cancelling orders and charging more for logistics. Either way, the light at the end of this tunnel is still a bit dim. We will see some relief around the late second half of 2022. Pricing will still be high and campaigns will be few and far between, but supply is improving. Michelin is maneuvering through this very fluid situation on a daily basis, as I am sure our competitors are doing the very same. NORBERTO HERBENER, OE applications engineer, Trelleborg Wheel Systems: Ag tires have been difficult to find because of several factors. With the pandemic in full swing in early-2020, customers hesitated in any kind of tire purchase because of the uncertainty as to what was to happen. Tractor production stopped and some tire production stopped, creating future pent-up demand. The ag tire market does go in cycles and 2021 caught up the cycle. The tire industry also is suffering a similar problem to other industries — a labor shortage. Many people are not working and because tire building is a skilled service, laborers are difficult to find. With fewer people making tires, factory output is lower. On the other hand, crop yield has been good. More than 14 billion bushels of corn were produced in the U.S. in 2020. That’s a 9% increase (from 2019 levels). Commodity prices also are high. Producers realized a large windfall from 2020 and this triggered spending. Tractor manufacturers could not keep up with the sudden influx of tractor orders. Consequently, tire manufacturers could not keep up with the sudden influx of orders from tractor manufacturers. Producers should place orders right now with their tire dealers. And we suggest that tire dealers place orders with manufacturers to get in line when tires become available. BLAINE COX, national product manager, agriculture, golf and turf, Yokohama Off-Highway Tires America Inc.: Many farm tires have been hard to find over the past year or so due to supply chain constraints at every level, from sourcing raw materials to shipping finished tires to dealers. Supply chain challenges have also contributed to high raw material prices, which have been a major factor in driving up tire costs. The bad news is that economists say it will be months or longer before today’s constraints let up. One of the great benefits of working for a company that specializes in farm and other OTR tires is that the off-road lines don’t get pushed aside by the demands of larger markets, like passenger or light truck tires. Our factories are dedicated to OTR and our team members are experts in keeping those lines moving. When supplies are tight and costs are increasing, it also really pays off for customers to know their tire dealer and trust that he or she is going to be able to get them the tires they need for the job they’re doing. This is not the time to skimp on tires and figure there will be a replacement around if something goes wrong. Selling a quality tire that’s purpose-built and application-specific for your customers’ equipment and conditions is the best way to ensure long, reliable service. This is a time when trust, expertise and relationships really pay off more than ever. MTD February 2022
2/1/22 12:04 PM
