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OTR/Ag/Specialty Tires

Industrial Tires Bring Rewards for Dealers who Work Hard

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It’s no secret that tire dealers need to stay on their toes and adapttheir business in order to be successful in today’s ever-changingmarket. This includes exploring new options as far as the kinds oftires to stock and the types of customers to service.

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If you’rein an area with any amount of industry, it may be worthwhile toconsider providing tires for local businesses involved in materialhandling. Savvy dealers who carry tires in this niche segment canbenefit from high profit margins and customers who offer steadybusiness.

But considerable knowledge of local market needs andnew industry developments are vital to success when it comes toindustrial tires.

Often associated with tires for forklifts, theindustrial segment does serve owners and operators of this standardmanufacturing, warehouse and distribution center equipment, but it isalso much more broad, according to industry insiders.

“Generallyspeaking, the industrial tire segment relates to tire usage for thematerial handling industry as a whole,” says David Fleischhauer,director of marketing and customer service for Trelleborg, which offersa “total solutions package” for this segment, in addition to the OTRmarket.

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Included in the broad industrial tire segment, saysFleischhauer, are tires for backhoes, small loaders and excavators withtires less than 25 inches in diameter, ground support equipment,personnel lifts, hand trucks and rough-terrain equipment.

“Manufacturershave been veering away from using designations that correlate directlywith tire and rim or other structured formats, and steering towarddesignations that simply make sense to the end user and dealer, saysJames Tuschner, director of marketing for Alliance Tire Co. (USA). Thecompany includes the industrial market in its much broader “offhighway” tire segment, he notes.

Digging Deeper
Whilemanufacturers have softened their definition of the industrial tiremarket, the core portion – material handling equipment – presentstremendous opportunities. The key to this tire segment lies inspecialization – and the ability to give customers exactly what theyneed for a specific application.

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Industrial tires arecategorized into sub-groups: press-on (solid rubber or polyurethane) orpneumatic tires. Taking this a step further, there are also solidshaped pneumatic tires, otherwise known as “resilient tires.”

“Thetype of application will normally determine what type of industrialtire will work best on a particular machine,” Trelleborg’s Fleischhauersays.

Press-on tires – those with rubber bonded directly to asteel-base band – are generally used on trucks working in indoorwarehouse and manufacturing type applications, he notes.

Whilethey offer better rolling resistance, higher load capacities andincreased durability than pneumatic tires, press-on tires result in arougher ride. Their use is generally limited to equipment that isoperated on smooth floor conditions, like warehouse forklifts.
Solidshaped pneumatics and pneumatic tires are essentially interchangeablewhen it comes to fitting them on machinery, Fleischhauer says.

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“Typically, these types of machines are working both indoors and outdoors in heavy duty applications,” he notes.

Solidshaped pneumatic tires “are a logical choice where the chance for tirefailure due to punctures is prevalent,” Fleischhauer says. For example,equipment being used in outdoor environments like recycling facilitiesor lumber yards – where there’s a high risk of puncture for pneumatictires – would benefit from being fitted with solid shaped pneumatictires.

Pneumatic tires cover uneven terrain and offer a softer,smoother ride for operator comfort. And though solid and press-on tiresare designed – and used – for special applications and conditions,“pneumatics, in contrast, are the mainstay of the industry,” Alliance’sTuschner says.

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In each category, add yet another division – the OE and replacement sides.

“TheOE market for new forklift truck shipments grew steadily since 2002 andpeaked in 2006,” says Fleischhauer. “Beginning in 2007, this segmentbegan a slight downward turn, which grew more dramatically in thefourth quarter of 2008 when the economy started to feel the significanteffects of the recession. 2009 is expected to be down about 40%compared to 2008 for the OEMs of forklift trucks.”

Keep in mindthat aftermarket trends do not always reflect OE changes, and are basedon many factors, including vehicle life span cycle, harshness of theapplication and end-user purchasing habits, he notes.

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“Trelleborghas maintained a very strong OEM position while steadily increasing theaftermarket pull through, gaining marketshare year-on-year,”Fleischhauer claims.

One change seen on both sides is the shift toward radialization, according to Alliance’s Tuschner.

“Threeto five years ago, we saw virtually no radial tires in this segment.Although radial is still a relatively small piece of the overallindustrial market, we are beginning to see an ever-increasingpresence,” he says.

One example of how Alliance has adapted to meet the needs of as many end users as possible is with its range of backhoe tires.

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“Wehave one of the most extensive lines in the industry, Tuschner says.“Most manufacturers build either radial or bias for this segment – webuild both. In radial alone, we have six lines. We want our customer tohave the ability to choose a tire that is optimal for the specificservice he is using it for.”

Another trend in the industrialsegment, he notes, is that machinery continues to get larger andfaster. “At Alliance, we stay ahead of the curve, providing the bestload and speed indexes in the industry to ensure our dealer base alwayshas the ability to satisfy the customer with the perfect fitment.”

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At the Dealer Level
Whatall this specialization means to tire dealers is they must remainup-to-date on industry trends and work with individual customers toprovide inventory and a service plan unique to their needs.

“Tiresmust be ‘sold’ now,” Tuschner says. “Dealers can’t simply offer acompetitive price and expect to get the business. They need to have theentire package: performance, warranty, value and service.”

“Therecession has caused many companies to focus much more on workingcapital concerns, so dealers are keeping inventory levels low and endusers are trying to extend their tire life to the maximum potential,”Trelleborg’s Fleischhauer says.

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“Many customers are morefocused on the initial acquisition cost of tires as opposed to thetotal cost of ownership, which has caused the non-premium tire segmentto eat away at the premium segment.”

Both men note that becauseof their respective company’s product portfolios and value to endusers, their premium tire sales have remained stable.

“A largesegment of the market is concerned about making sure downtime isminimized – with less punctures and a high quality product that is notdefective – to achieve the best cost per hour,” Tuschner says.

“Whenyou weigh all the variables (price, downtime, quality and service),best overall value is the driver behind the bulk of industrial tiresales.”

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For knowledgeable dealers, strong profit opportunities exist in this niche segment.

“Althoughmargins have slimmed to a degree with the overall economic slowdown,the margin on these tires continues to be exceptionally good relativeto other categories,” Tuschner says. “The industrial tire segment hasbeen noted for years as an arena that has far better margins thanmedium commercial truck tires.

Equipment-wise, the investmentto sell and service traditional industrial units is not bad. Obviously,press-ons don’t require much, while pneumatics will require specialmount/demount tools and training. If your definition of industrialtires includes small off-road units, most mount/demount equipment formedium truck tires will work here.

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Dealers need to be aware thatalthough the industrial tire market is “small in scope compared topassenger and truck tires, the amount of sizes, special compounds,tread patterns, etc. is quite broad,” Trelleborg’s Fleischhauer says.

“Thismeans that an industrial tire dealer has to be very focused on theirparticular customer tire needs because ‘a one size fits all’ approachwill not work in this segment.”

“Competition is stiffer in themarketplace, but a dealer who understands the fundamentals of keepingand maintaining a good customer will have no issue making money onthese tires, even in these difficult economic circumstances,” Tuschnersays. “If you are not familiar with the market, contact someone who canhelp you avoid making inventory mistakes that can cost yousignificantly in the long run.”

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Looking ahead, dealers should beprepared for the continued radialization of this segment, along with anincreasingly more noticeable gravitation toward value. “When businessis fantastic for the industrial tire end user, less attention is givento tracking cost per hour and down time,” he says. “Now that profitsare leaner and business is slower, the end user wants to make sure heis getting the best bottom line cost per hour along with minimum downtime.”

“While the OE market in this segment is expected to seesome stabilization in 2010, an expected recovery to 2008 levels is notexpected until 2012,” says Fleischhauer. “The aftermarket should beable to recover more quickly due to pent-up demand for replacementtires and idled equipment beginning to work again as the economyrebounds.”

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