Modern Tire Dealer

APR 2019

Magazine for the professional tire industry

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Page 39 of 85

M T D A p r i l 2 0 1 9 38 R etreaders are eager for the boost the new countervailing and antidump- ing tariffs on truck and bus tires from China are expected to generate for their industry. But the companies on the Modern Tire Dealer Top Retreaders list acknowledge the tariffs, which went into effect on Feb. 15, 2019, are no panacea. When it comes to tariffs on tires, they've seen it all before. e countervailing (CV) duties range from 20.98% to 63.34% and the antidumping (AD) duties range from 9% to 22.57%. e new CV and AD tariffs on Chinese truck and bus tires are in addition to a 10% tariff on all Chinese products levied by the Trump administration in September 2018. Last fall's 10% tariff prompted Tredroc Tire Services Inc. to build up its stock of medium truck tire retreads, according to CEO Larry Jeffries. "We believe the retread will become the new Tier 4 at least in the next 12- to 24-month period. Anyone who retreads is going to potentially get a li from this tariff issue because there is a market out there for Tier 4 products." Jeffries' time frame fits previous tariff situations involving passenger car tires from China. "It took them about 12 months to shi production to ailand, Vietnam and Indonesia. en they started ramping it back up again." Jeffries says Tredroc, which holds the No. 21 spot in the ranking, is cautiously optimistic about the retread market for 2019 due to the initial 10% tariff as well as the AD and CV ruling. "e 'cautious' element revolves around how the manufacturers will react with retread rubber pricing," he says. "If they hold prices then it would be a very good thing for the retread market, conversely if they raise prices and keep the price spread between a Tier 4 and a retread minimal, retreading would remain status quo." Jeffries expects manufacturers to be producing truck tires in non-tariff countries in a year or so. "We feel that the coming 12 months, at least, or 18, that there's going to be a nice spike in the retread business." But the game changes if tire manufacturers raise the rubber price and put retreaders in a position where pricing is not competitive. "When the initial 10% tariff went into effect in September most every manufacture raised prices immediately, and we have already begun to see similar actions with the CV and AD ruling," says Jeffries. Tredroc is investing $300,000 to remodel its retread plant in Wyoming, Mich. e company has also increased capacity by adding split shis and second shis at some plants to keep up with demand. A CAUSE FOR OPTIMISM Eleventh-ranked Les Schwab Tire Centers Inc. is neutral about its retreading business in 2019 as the industry itself is down, according to Todd Coulter, executive vice president. "But tariffs on Chinese TBR products may help offset some of the decline." He says the company believes it will take several months for the tariffs to increase volumes for the retreading industry. In Houston, Texas, Bob Beasley also expects the tariffs to improve his retreading business. "If the tariffs hold it will definitely be cause for optimism. Not regarding the tariff issue, we expect the market to be flat except for our goal to gain market share," says Beasley, who is president of Beasley Tire Service Inc., which operates one retread plant and is tied for No. 62 in the rankings. Chris Chase, president of Donald B. Rice Tire Co. Inc., which goes to market as Rice Tire, is very optimistic because of the tariffs and the addition of a second retread plant. e company purchased Central Tire Co.'s retread plant, along with a commercial store and retail store, in March 2019. Frederick, Md.-based Rice Tire holds the No. 42 spot. Noah Hickman also looks forward to more business. "2018 was a good year and 2019 forecasts to be our best since 2012. e shortage of many major manufactur- Ann Neal By COURTESY OF SYRACUSE RETREADERS 'THE RETREAD WILL BECOME THE NEW TIER 4' TARIFFS CREATE CAUTIOUS OPTIMISM AMONG RETREADERS C o m m e r c i a l T i r e D e a l e r ™ Also in CTD MTD Top 50 Retreaders in the U.S. . . 44 OTR Tire Conference: OTR market continues in growth mode .................................................... 48 Understanding megatrends and anticipating change .......................... 52 Ag Tire Talk: Stubble damage: It can't be eliminat- ed, but it can be managed ............... 55 Commercially Viable ........................ 59 Brothers Marty (left) and Dennis Beaudette (pictured) along with their father, Dennis, opened Syracuse Retreaders in 2015. Business is growing about 20% year over year.

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