WASHINGTON (June 8, 2009)—Industry in general is taking a beating during the ongoing economic downturn, and dealers, distributors and manufacturers of industrial and specialty tires are no exception.

“Certainly business has softened due to the current economic conditions, especially in construction and housing,” said Jeff Vasichek, vice president of sales and marketing for Titan Tire Corp.

Speaking from his office in Quincy, Ill., Mr. Vasichek told Tire Business Titan’s sales of replacement skid-steer tires are still fairly strong because the tires wear out and customers have to replace them. In other areas—such as construction and mining—sales are extremely depressed.

“I have a friend who works in the mining industry, and he told me something that shows how all the different industries are tied in together,” Mr. Vasichek said. “He told me that 600 pounds of copper go into every new house. When the housing market slumps, can you imagine what that does to mining?”

Barry Dicker, president and treasurer of Wedge Tire Co. in St. Louis, Mo., said his company also is still seeing a good level of distribution for skid-steer tires in the highway construction sector. Distribution for forklift tires, he added, is also pretty close to last year, although customer behavior is changing in reaction to the economy.

“Forklift tire users are getting all the life they can out of their tires,” Mr. Dicker said. “The life cycle has been extended.”

Wedge Tire for years has provided all the forklift tires for St. Louis-based brewing giant Anheuser-Busch Companies Inc., according to Mr. Dicker.

On the other hand, the downturn in the steel industry has hurt orders from that sector, he said.

The downturn also has caused some procedural changes to Wedge Tire’s business, Mr. Dicker said. Some customers have changed their payables schedule from 30 to 120 days, and the company also feels obliged to e-mail its price list to customers more frequently.

“Buyers are paying more attention to cost than in the past,” he said.

Nevertheless, 99 percent of Wedge Tire’s patrons are return customers, and business has stayed steady despite the recession, according to Mr. Dicker. “We’ve been in business 40 years, and our company stresses good service,” he said. “We are consistent, and our customers know it.”

Wedge Tire also is optimistic about government-funded projects for fixing highways, bridges and overpasses through the Obama administration’s stimulus package, Mr. Dicker said.

For Houston-based Bird Tire Sales & Service Inc., business was pretty good up to March, then it dropped off about 15 percent, according to David Birdsong, the company’s owner and president.

Much of Bird Tire’s business traditionally has come from oil industry customers, including oil wells and material handling as well as the major refiners such as Exxon Mobil Corp. in Irving, Texas, and Houston-based Shell Oil Co., Mr. Birdsong said. “Oil prices had been up for a long time, but now that gas is down to $2 a gallon, they’ve been suffering like everybody else.”

he effect of tariffs

In July 2008, the U.S. Department of Commerce levied both antidumping and countervailing duties on various off-the-road tires from China, with many of the tariffs set as high as 210.48 percent. Dealers and distributors contacted for this article agreed the impact on their businesses has been enormous.

Monrovia, Calif.-based China Manufacturers Alliance (CMA) L.L.C., the U.S. marketing and distribution arm for China’s Double Coin Holdings Ltd., is finding the current market a double-edged sword between the downturn and the tariffs, according to CMA Vice President Aaron Murphy.

“On one hand, the tariffs raised the prices of our OTR product to the point where even premium products were cheaper,” Mr. Murphy told Tire Business. “Also, the industry is very slow. We’ve designed some new products for the port industry that we’ve been pushing hard, but demand is slow in that market, too.”

The United Steelworkers (USW) union petition to the International Trade Commission (ITC) asking for restrictions on passenger tires from China won’t have a big effect on CMA, because Double Coin doesn’t make passenger tires for the U.S. market, according to Mr. Murphy. “But it’s a very serious question. It certainly won’t help.”

The tariffs against Chinese tires also have been a major problem for Sudden Service Inc./Taylor Industrial Tires, an industrial and specialty tire dealership in Louisville, Miss.

“In general, business has declined quite a bit this year,” said Scott Whitney, sales manager for Sudden Service. “We would be doing pretty well if it weren’t for the ITC tariffs because the majority of our tires have been affected.”

Fortunately, the company has been able to get some OTR and other tires from countries such as India, South Africa and Taiwan, Mr. Whitney said. Also, it has obtained some brand-name tires—including Yokohama, Goodyear and Michelin—from a distributor on the West Coast, he said.

Bird Tire also was hurt pretty badly by the Chinese tariffs, Mr. Birdsong said, but the company has since switched to tires from a manufacturer in Sri Lanka.

“If I can get away from Chinese tires, I don’t have to worry about the United Steelworkers,” he said.

The irony is that Titan Tire Corp., which joined the USW last year in filing the antidumping and countervailing duty complaints against China, hasn’t found the tariffs all that helpful in the current market, according to Mr. Vasichek.

“Certainly you still have competition from everywhere—not just China,” he said.

The tariffs did help Titan in making the playing field more even, Mr. Vasichek said. “If something costs a dollar and you sell it for 80 cents, either you drive the other guy out of business, or you go out of business yourself.”

By Miles Moore, Senior Washington reporter

Source: www.tirebusiness.com