Commercial tire dealers looking to explore other business opportunities shouldn’t overlook the small OTR market.

Small OTR tires – which typically cover wheel fitments up to 25-inch wheel diameters – are outfitted on a number of vehicles. Equipment fitted with small OTR tires include backhoes, utility loaders, graders, forklifts, small earthmovers and dumps, and more.

Customers for small OTR tires can range from large construction and utility companies to mines and quarries to airports and independently owned landscaping companies.

Offering small OTR tires and service can complement a tire dealer’s medium truck or large/giant OTR tire business. And it can add to a dealer’s bottom line.

“The small OTR business can be very profitable for a commercial dealer, that’s why progressive dealers try participate in it,” says Aaron Murphy, vice president of China Man­ufacturers Alliance (CMA). “However, it’s an important segment of the market that does take some specialization. If you make mistakes in placing the wrong tire in the wrong application, it’s not a $75 light truck tire, it’s a $2,000 to $5,000 tire.”

Adding small OTR tires and service to a product offering shouldn’t require new equipment for a medium truck tire dealer, Murphy notes.

“Small OTR can be serviced by the dealer’s current sales group and existing truck tire service equipment. Many times that makes it very accessible to get involved in the market,” he says.

During the past few years the OTR industry has been faced with a number of challenges including over-capacity, under-capacity, and the varying cost of raw materials, notes Bruce Besancon, vice president of marketing for Alliance Tire Americas. Despite the ups and downs of the entire OTR industry, the small OTR market is on an upswing.

“The small OTR industry as a whole has done well in 2014 – aided particularly by new housing construction. Obviously, some spots around the country are brighter than others, but as a whole it seems to be doing well. We see the outlook as cautiously optimistic,” Besancon says.

Both the housing market and the country’s infrastructure impact the small OTR market, agrees Johni Francis, OTR product manager for Titan Tire Corp., a subsidiary of Titan International. This can be challenging but rewarding as well, he says.

“There’s a big need for improved infrastructure in a lot of states. What that means is we’re going to see a lot more need for smaller utility loaders, and small construction equipment. It’s definitely something that will be on the uprise moving forward into the next and following year,” Francis says.

CMA’s Murphy shares that view, and says that looking at the housing market, interest rates, commodity prices and the overall economy can help dealers predict how the small OTR market will perform locally. He also emphasizes that construction is a key indicator for the market.

“We’re such a construction-laden economy, that construction is a very important indicator on whether or not the demand will be there,” he says.

Working the Trends

In the small OTR industry, radial tires account for 70% of the market and bias-ply tires hang in there at 30%. While the bias tire segment continues to shrink, it still has a place in the small OTR industry, the tiremakers agree.

“There are many applications where the performance offered by bias tires will be the most cost effective and productive solution for the customer,” says Alliance’s Besancon.

Examples of bias applications would be “slow-speed operations, or those applications that need a very stable platform like the one created by the stiffer sidewalls of bias-ply tires,” he notes.

CMA’s Murphy notes bias tires are also used for low-aspect ratio fitments that carry extreme weights and tires operating in severe environments.

In general, technology advances in small OTR tires revolve around compounding, tread patterns and design. Additionally, changing equipment and shifting job requirements often dictate changes and innovation by tire manufacturers, the tiremakers say.

Dealers know that by using different compounds, the same size tire can be used in different applications, Murphy says. CMA uses three different compounds in small OTR tires – standard, cut and chip resistant, and heat resistant.

“You may have certain machines that work at a cement mixing yard and all they do is run on a concrete pad moving sand into a hopper. Take that same type of machine at another site, it might be used to haul rock in very severe environments. Even though the same size tire is needed, depending on the application, different tread compounds could be used within the tire size.”

Murphy notes that CMA’s cut-and-chip compound is used for severe environments and applications, while a heat-resistant compound is used in applications where the vehicles run at higher speeds and make longer hauls, thus generating greater internal tire heat. The standard compound is used for regular applications, he says.

Alliance’s Besancon says there are certain segments in the small OTR market where development in tire design is resulting in unique product offerings. “For example, lower profile tires are becoming more popular on lifting equipment because of their increased stability and the need for less fill for users who reinforce their tires with polyurethane filler,” he shares.

Titan’s Francis notes the tiremaker is just introducing its low sidewall technology (LSW) to the small OTR market. LSW helps with machine stability and ride, he notes. Titan also uses its LSW technology on its Good­year branded ag and mining tires.

Dealer Level

When it comes to small OTR tire customers, the tire manufacturers agree that durability, performance, cost and accessibility of product are key.

Peter Kearney, mine analysis specialist for Titan, notes that sometimes when companies are dealing with small OTR tires they consider the tire to be a consumable product, or a throw away. He advises that small OTR tires need to be maintained just as you would with larger tires.

“When we talk about the maintenance side of tires, the dealer’s tire maintenance program has to be complete. A dealer just can’t focus on the larger pieces of equipment and the larger assets and disregard the support equipment,” he says. “It’s important that small OTR maintenance stays the same and the focus stays the same as large OTR.”

Customers are looking for the low­est cost per hour, so dealers should know the product and keep it on hand, Kearney notes.

Alliance’s Besancon reminds dealers that in order to be successful in small OTR tires they need to do four things.
• First, dealers should be safe, so training for employees is important.
• Second, Besancon advises showing up on time and making yourself visible to the customer. “Let them know you are working for them,” he said.
• He also notes that dealers and their staff should understand the customer’s job requirements to get the right tire for the application.
• And lastly, dealers should have enough product in stock.

Ready to Go
Besancon says that the largest portion of small OTR tire customers are probably in construction and utility service where downtime is unacceptable, so service and product availability are extremely important.

“An important commonality among customers in these spaces is that although the machines are not used 24/7, they must be ready to perform at 100% exactly when they’re needed. Slow-downs caused by machine downtime can be a huge profit-killer,” he says.

“Small OTR tire customers tend also to be very mobile, working at different locations and rarely staying on one location for a long time. The servicing dealer who will be successful with this type of client must help his customer be ready for his current job, and the next one, via fleet checks and proactive service work,” Besancon continues.

“He must be available at a moment’s notice to provide emergency service, and be able to follow and service the customer in a given geographic area.”