Back to Building - Tire Review Magazine

Back to Building

Linked to economic health, small OTR tire market growth has returned

Now that the economy is roll­ing again, so are forklifts, graders, backhoes and compactors. Small construction equipment and other tire-using contrap-­ tions are getting back to work, so the small OTR tire industry is, as well.End-users of small OTR tires seek a variety of features, including quality, price, availability, brand name, cost-per-hour and durability, among others.

“The U.S. economy is on the mend and housing and construction markets are showing signs of life,” says Minoo Mehta, director of commercial tire marketing for Hercules Tire & Rubber Co. “We expect steady growth for small OTR tires from 2012 to 2014. If the economy stays healthy, tire sales will do the same.”

“Most small OTR tires are used in construction, earthmoving and some aggregate mining,” adds Aaron Murphy, vice president of China Manufacturers Alliance/Double Coin. “If these specific industries are affected by economic factors, we can see an increase or decrease in usage. The construction market, when heating up, can create shortages in certain-size tires in the small OTR segment. We feel that the market will mimic economic growth and have small increases in the small OTR segment. If there are increases in construction, this would assist growth.”

So, which small OTR tires are currently most popular?

     “For Double Coin products,” Murphy says, “we see sizes used on loaders and small earthmoving machines as most popular. In addition, our radial grader tire is a very popular sales item.” The radial products are in the sizes of E3/L3; the loader and earthmoving tires are 20.5R25 and 23.5R25; and the radial grader is 14.00R25 G2.

Meanwhile, Mehta says tires for backhoes, implements, graders, skid-steers, forklifts, compactors and ports are Hercules’ most popular small OTR tires. (See sidebar on page 46 for sizes.)

“There was no shortage of small OTR tires in 2012,” he says. “There are now more players from China, India, Indonesia, Thailand, Sri Lanka and Taiwan in this field, in addition to the majors.”

Murphy details last year’s sales progression. “In 2012, the market was very strong early in the year, with certain sizes being in high demand,” he says. “Our sales of 29.5R25 E3/L3 tires were at an all-time high through the first six months.

“In the second half, demand wan­ed a bit and, while we finished up with record sales in units, the last quarter of 2012 was much less vib­rant than the first quarter. It felt like, after mid-year, demand decreased and production was steady, which created a very full supply chain.”
Market Factors, Trends
Several global factors have affected the small OTR market in both positive and negative ways, according to Mehta. Differing anti-dumping duties on China-produced OTR tires have hurt business, he says, while the U.S. economy’s sluggishness has resulted in slow-moving housing markets and construction activities, and therefore slow-moving sales of the tires they require.

Meanwhile, the poorly performing European market has had its own impact, along with a growing global increase in production capacities.

Nevertheless, Mehta says he expects the market to hold steady through 2016, “as additional capacity will balance the growth in demand.” Murphy agrees, saying that steady growth “will be realized, especially with global economies slowly streng­thening.”

As workers get back to starting up their forklifts and backhoes, what will those end-users be considering when they purchase tires for their equipment?

Mehta lists those factors, in order of importance, as availability, quality, credit, price, brand name, appearance and country of manufacture. Murphy adds an improved cost-per-hour ratio, as well as matters of endurance, to the list.

“The most important thing is to have stock, because these customers cannot wait when their vehicles are down,” Mehta says.

“Availability of product locally, and recommending the correct product for the application, are two very important things necessary for a dealership to remain ahead of its com­petition,” Murphy agrees. “Offering the ability to support the tire after the initial sale, for retreading or warranty work, also is valuable to the end-user.”

“Offering customers a choice of good, better and best – with reasonable, competitive pricing – creates a big advantage in retaining custo­mers,” Mehta adds. “Dealers who fulfill the demands of availability, quality, brand name, credit, price and appearance of the tires will rate better with customers.”

Changing trends within the industry, however, continue to change expectations, as well as other aspects of small OTR tire use and manufacture.

“A few clear trends are emerging,” Mehta says. “One is the conversion of the lower-cost bias market to higher-cost radials. Bias still ranges from 30% to 70% of market share, depending on the segment and category of tire.

“It also is evident that many tire companies are making the transition to lower-aspect ratio tires and bigger sizes as vehicles become more technologically savvy. And pneumatics are converting to solids for lesser down-time,” he says.

“The market’s radial conversion continues, for sure,” Murphy agrees. “And equipment is getting larger, placing additional stress on the tire and requiring enhanced performance.

“Every customer is a bit different,” Murphy says. But they do have one thing in common: They’re all roll­ing back to work on small OTR tires.

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