OTR Tire Shipments Growing Fast, Demand Outpaces Capacity

The highlight of every TIA OTR Tire Conference is a presentation concerning the state of the segment, including a rundown on unit shipments and market outlook.

For last week’s 57th annual conference, that presentation was given by Angie Jones, Bridgestone America’s general manager of mining and strategic services. Her detailed presentation included projections of how the tiremaker forecasts the market’s future, and estimates on the dollar value of 2011 tire shipments.

According to Jones, the U.S. industry has seen sharp unit sales growth over the last three years, selling 163,508 OTR tires in 2009, 232,760 units in 2010 and an estimated 294,641 tires last year. She defined OTR tires as construction, aggregate and mining equipment tires with 24-inch wheel diameters or larger.

Of those totals, OE sales represented 22% or 35,972 units in 2009, 33% or 76,811 tires in 2010, and 41% or 120,803 tires last year. OE OTR unit sales for 2011 were nearly four times that of 2009.

Conversely, according to Jones, replacement tire sales also saw growth, but at a far slower rate. Replacement OTR unit sales in 2009 sat at 127,536 tires, 2010 sales at 155,950 tires and 2011 is expected to come in at 173,838 tires.

Jones showed just how harshly the market suffered during the recession. Using the first quarter of 2007 as the 100 index point, the OE sales low point came in the first quarter of 2009 with a 21 index level, and the low point for the replacement side came in the fourth period of 2008 with a 61 index. The recovery was slow, and now (as of the third quarter of 2011) the OE market sits at 101 index and replacement at 97.

Obviously not every tire in the segment is the same, and it’s no different when it comes to sales value. Jones showed that for 2011, replacement market construction tires represented 75% of units sold, but only 30% of the sales dollars. Mining tires, on the other hand, were just 10% of the units sold, but 51% of the sales dollars. Aggregate tires were 11% of the units sold and 18% of the dollars, and “other OTR tires” were 4% of units but only 1% of the sales dollars.

Jones said indicators show that the economy is recovering, and that manufacturing growth, improved employment picture, stronger wholesale and retail sales, and continuing GDP growth are all positives. Still, she warned, the financial crisis in Europe ad the economic slowdown in China are putting pressure on the recovery rate.

Speaking of the GDP, Jones showed that for 2007 the gross domestic product came in +1.9%, but it dropped in 2008 (-0.3%) and 2009 (-3.5%) before bouncing back in 2010 (+3.0%) and 2011 (+1.8%). Looking forward, Bridgestone estimates the U.S. GDP to be up 2.0% in 2012, +2.4% in 2013, +3.4% in 2014, +3.5% in 2015 and +2.8% in 2016.

Tire demand remains strong, and global competition for tires is keeping supplies tight, Jones said. Available tire plant capacity is in full use, but demand is far exceeding production. New capacity will be coming on-stream over the next few years, and still more may be forthcoming from other countries.

GRI recently conducted programs in Sri Lanka to empower women and motivate children under its Green x Circle initiative. The company said these endeavors aimed to address the needs of the community, focusing on both women empowerment and youth motivation.

GRI recently organized a training program titled "Management of household finance under current economic conditions" at the Ingiriya Rubber Collecting Center in Sri Lanka, South Asia led by Shashika Nimali, an NLP practitioner and life coach. The company said this initiative provided women in the industry with essential skills and knowledge to effectively manage household finances. GRI's tailored training sessions equipped participants with tools for informed decision-making, ultimately fostering greater financial security and independence, the company said.