The crush of delayed new tire shipments that arrived on shore in late-2022 still has the potential to give U.S. retreaders headaches in 2023. Several retreaders are bracing for a topsy-turvy environment for the year to come.
Activity in the import market has long influenced retreading. When new truck tire prices are low, it can be difficult for retreaders to compete on price. When low-cost imports aren’t readily available or when prices are out of whack, retreaders often are able to capitalize on — and market — the endurance and price efficiency of a reusable casing.
So when the truck tire import market is unsteady, it can have a ripple effect on the U.S. retread market.
That’s not universal, of course, and other factors contribute, too. John Ziegler Jr., vice president of Ziegler Tire & Supply Co., which is based in Massillon, Ohio, says demand remains high for retreading, even though “many customers just prefer a new tire to a retread, even if performance of the retread can meet or exceed (the new tire.)”
Jesse Richards, vice president of sales for CMC Tire Inc., in Hurricane, Utah, says the bulk arrival of imported tires didn’t single-handedly hurt his company’s retread sales. It was the “arrival of import products en masse, coupled with a softening truck tire demand, (that) created significant downward pressure on pricing.
“When this happens, it can change the value proposition of retreading versus purchasing imported product for a fleet, particularly where cap and casing sales are concerned.
“The larger and more forward-thinking fleets have stuck with the formula of purchasing premium tires and expecting multiple retreads. Fleets whose tire decisions are more acquisition-cost driven — or fleets that don’t generate enough of their own casings to sustain a retreading program — are gravitating more toward the import product.”
Richards says CMC Tire was able to “outsell” these effects in 2022 and so far continues to see “marginal” growth in 2023. But he says, “it will no doubt affect us and the retreading industry as a whole while this environment persists.”
Dorsey Tire Co. Inc., which has outlets in Georgia and South Carolina, received “a tremendous amount of imported tires in the fourth quarter,” says Bruce Chamblee, the company’s chief operating officer.
Yet demand for retreads has remained strong. Chamblee says, “The pricing (of the imported tires) is still out of line, as the tires that came in had inflated costs due to agreements made when shipping rates were excessive.”
Michael Beasley, general manager of Beasley Tire Service Inc. in Houston, Texas, says imports definitely affect his retread business.
“With pricing drastically falling on import tires this year, retreads will have an increased pressure above and beyond what was experienced in 2022. With raw material price increases in 2021 through 2022, coupled with increased operational costs, the profitability of (the) retread business will remain tough.”
At Bradenton, Fla.-based Callaghan Tire Inc., CEO Don Mead is still waiting for all the pieces to settle.
“Dramatic increases in import prices created increased demand for retreads in 2021 and 2022. In the last quarter of 2022, we saw import supplies strengthen significantly to the point where they were plentiful.
“As a result, prices for those imports began to materially fall. At this time, we haven’t seen retread demand noticeably fall, but based upon past supply (and) price dynamics, that would certainly be the expectation.”
Mead says so far, demand for retreads has remained strong.
“The strong economy and the previous supply challenges with new truck tires created more opportunities with retreads. Although new truck tire prices have dramatically risen, so has the cost of retreads. Tread rubber prices have risen, driven largely by the same factors affecting new tires.”
He cited two key factors: higher labor costs driven by labor supply issues and higher fuel prices, which have increased transportation costs. Despite that, Mead says that “the price difference between higher tier new tires and retreads has continued to still make retreads a good value.”
Larry Faulkner, executive vice president of Atlanta Commercial Tire, located in Clayton County, Ga., says he’s seen another factor driving new interest in retreads. “More and more local governments and municipalities are demanding retreads because of ‘sustainability.’”
He says pricing actions by new tiremakers is also helping to steer more customers to retreads.
“The continued escalation in price for new tires from large manufacturers is definitely driving the push for more retreads purchased over the road and on local (pick-up and delivery) equipment for most national accounts.”
The acquisition puzzle
Despite worries about the economy in 2022, it turned out to be a year with plenty of acquisition action. And that included retreading operations.
Several deals had one brand in common. Bridgestone Americas Inc. sold 51 GCR stores and nine retread plants throughout California, Colorado, Oregon, Utah and Washington. The bulk of those properties were bought by two of the nation’s largest commercial dealers and retreaders: Columbia, Miss.-based Southern Tire Mart, which purchased 26 GCR stores and four retread plants, and Green Bay, Wis.-based Pomp’s Tire Service Inc., which bought 24 stores and four retread operations.
Commercial Tire Inc., which is based in Meridian, Idaho, bought one GCR store and one retread plant.
The deals closed the books on the longstanding GCR-brand in the U.S. Even though Bridgestone retained nine former GCR locations and two plants after selling off those other assets, those have been realigned and rebranded into a new business, GCR Mining.
The tiremaker says the two plants aren’t retread factories and that retreading isn’t part of the GCR Mining operation. “Bridgestone Americas no longer has any retreading plants of our own,” says a Bridgestone spokesperson.
That moves all of Bridgestone’s retreading business into the hands of its Bandag dealers — and removes Bridgestone from MTD’s Top Retreaders list. (Two other dealers fell off the list this year after they were acquired. Pomp’s Tire Service added to its network with the purchase of Tredroc Tire Services Inc., which was based in Elk Grove Village, Ill., and Southern Tire Mart grew again after purchasing Redburn Tire Co., which was based in Phoenix, Ariz.
Jason Roanhouse, vice president of North American Bandag Operations for Bridgestone Americas Inc., says those Bandag dealers are making investments in their facilities.
“Bandag equipment demand is at its highest level in well over a decade, indicating that dealers expect to see a return on their investment in retreading. I think this also indicates dealers expect to see significant growth in the entire suite of fleet solutions offered to provide fleets with products, services, technologies and data to help drive their efficiency.”
Bridgestone maintains three tread rubber manufacturing facilities — in Abilene, Texas, Oxford, N.C. and Griffin, Ga. Roanhouse notes the company has announced a $60 million investment in the Abilene facility.
Investing in retreading
Despite any uncertainty in the economy or retread market, companies are still investing in equipment and in their people.
Since purchasing Piedmont Truck Tires Inc. in early 2022, McCarthy Tire Service Co. Inc. has completed the changeover of a Piedmont retread plant in Graham, N.C. from the ContiLifeCycle process to Bandag. McCarthy Tire Service also completed construction of a brand new Bandag medium truck retread shop in Syracuse, N.Y. The first retread rolled off the assembly line on Dec. 14, 2022.
At CMC Tire, Richards says his dealership added a new retread chamber and builder in 2022 to “keep pace with the growth experienced during course of the year.
“We also re-organized our management team to be more focused on data and analytics to maximize production, while minimizing cost and optimizing on-hand inventory.”
Wonderland Tire Co., which is based in Byron, Mich., has added three new Cima presses at its Wayland, Mich., location for increased production of the dealership’s AcuTread product. Jon Langerak, chairman and CEO of Wonderland, says the company is also installing eight Cima presses and support equipment for production of AcuTread products in Lebanon, Tenn.
According to Langerak, these presses will increase capacity at both manufacturing facilities to around 130 to 160 tires per day.
Noah Hickman, president and CEO of H&H Industries Inc., which is based in (note: add city/state here), purchased an OTR buffer and finished installation at the beginning of 2023. H&H Industries also released a new mobile OTR tire program that allows service providers to access tire retread and repair data while in the field.
While some dealers are making big capital investments, others dedicated resources to other priorities and projects.
“As of right now, we are focused on staffing and maximizing output in our shop,” says Dorsey Tire’s Chamblee.
For Ziegler Tire, 2022 was a “status quo” year for spending. The company upgraded some pieces of equipment to reduce downtime, but overall is sticking with its existing system.
