Titan’s Giant Tires Falling Flat in Canada - Tire Review Magazine

Titan’s Giant Tires Falling Flat in Canada

(Bloomberg) Titan International Inc.’s bid to break into the oversized-tire market hit a roadblock after tires installed on trucks hauling Canadian oil sands lasted just 1% as long as expected.

Titan has halted production of 13-foot (4-meter) tires used on dump trucks to install pressure-monitoring devices, CEO Maurice Taylor said in a telephone interview. Some tires failed after 100 hours of work on the 400-ton trucks used to haul oil-soaked sand for Royal Dutch Shell Plc and other energy companies in Alberta, rather than the minimum expected lifespan of 10,000 hours, he said.

The tires, which cost about $42,000 each, carry Caterpillar Inc.-built 797B trucks at oil-sands operations such as Shell’s Muskeg River Mine 270 miles (434 kilometers) north of Edmonton. Taylor, who in March said expanding into oversized tires would triple sales to $3 billion in five years, blamed the early failures on local dealers who set air pressure too low, raising internal temperatures and causing steel belts to separate.

“The tire dealers up there demanded a 7% to 10% kickback, but I refused to pay it,” Taylor said. “If you don’t give them some money, they let a little air out of your tires, and no one sees it.” He didn’t identify the dealers.

Titan idled the oversized-tire production line at its Bryan, Ohio, factory, in the second week of August and plans to resume output by the end of this month, Taylor said. He’s scheduled to visit Shell and other oil-sands producers in Canada to discuss the tire failures on Aug. 31.

Half of Sales
The oil sands, home to the world’s largest petroleum reserves outside Saudi Arabia, account for half of Quincy, Ill.-based Titan’s sales of giant tires, Taylor said. He declined to provide a dollar figure for those sales.

Taylor, a 64-year-old Michigan Technological University-trained engineer, this year expanded the company’s capacity to produce oversized tires 10-fold to challenge dominant rivals in the market, Michelin & Cie. and Bridgestone Corp.

Taylor seeks to boost sales to oil-sands, gold, aluminum and copper miners to compensate for declining demand from the farm-tractor industry. Titan’s net income tumbled 56% to $5.91 million during the April-to-June period, its largest second-quarter decline in six years, amid slumping sales in the farming and construction industries.

To prevent a repeat of the tire failures in Canada, Titan is installing sensors on each unit at a cost of $2,700 to alert the company if air pressure is too low, Taylor said.

400-Ton Loads
The Hague-based Shell and producers such as Irving, Texas- based Exxon Mobil Corp. use heavy-duty dump trucks to carry 400 tons of oil-soaked sand, rocks and mud from mines to processing plants.

Shell employees celebrated with a barbecue at the Muskeg River Mine this month after a tire was retired after 10,600 hours of service, John Goodman, a pit manager at the mine, said in an Aug. 19 interview.

The tires usually aren’t recycled because no equipment exists that’s large enough to shred them, said Fred Kuzmic, head of reclamation and research at the mine. On a few occasions, a tire has been sliced in half and turned upside down to serve as a water or feed trough for cattle, he said.

At Muskeg River, which is part of the Athabasca Oil Sands Project that Shell operates, a fleet of 39 dump trucks move 400,000 tons of earth a day, Kuzmic said.

Moving Mountains
Some loads are dirt, brush and other detritus that have to be removed so shovels can reach the oil-soaked sand underneath. “We literally move mountains every day,” Kuzmic said.

Titan’s expansion into oil sands and other mining sectors coincided with production increases by competitors, resulting in a glut of 13-foot tires. The surfeit probably will cut prices by 17% to $35,000 each by the end of this year, Taylor said in a July 31 statement.

Salaries of Titan managers were reduced by 5%, effective July 1, and Taylor’s own pay was cut 10%, according to the July 31 statement.

Titan has dropped 64% in the past year on the New York Stock Exchange, compared with a 1.7% gain by Bridgestone and a 21% advance for Michelin. (Tire Review/Akron)

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