Modern Tire Dealer

APR 2019

Magazine for the professional tire industry

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Page 51 of 85

M T D A p r i l 2 0 1 9 50 O T R T i r e C o n f e r e n c e America is 100% dependent of imports for the 17 different REEs. Rohlwing said the U.S. possesses 13% of known REE reserves, particularly in California, Alaska, Idaho, Montana and Missouri, but at the present time, no processing is being done here. e Mountain Pass area of California is extracting REEs, but had been shipping them to China for processing. However, after being processed and shipped back to the U.S., the finished product is subject to tariffs. Rohlwing said Mountain Pass owners are planning to start domestic production in 2020. Canada is also looking to bring production to its country, with six projects to start in the 2020-2021 time frame. A tire manufacturers' panel discussion, moderated by MTD Publisher Greg Smith, presented a targeted look at how each manu - facturer viewed the marketplace and what actions each company was taking to meet upcoming demand and issues facing them. Bruce Besancon, vice president of sales, OTR tires, Yokohama Tire Corp., said that his company was seeing an upward trend in demand for OTR tires in the U.S. and Canada, probably in the 3% to 5% overall range, with stronger demand in certain categories. Yokohama has expanded its field sales staff during the past year and has been increasing its product portfolio, having most recently launched a radial scraper tire line. Already a large player in the market, Besancon said the company is expanding its 33.00R51 as well as it 27.00R49 line of tires. Doug Kershaw, vice president of BKT USA Inc., reported his company will be opening a new warehouse in the Midwest to improve delivery times and availability. He said the location has yet to be determined. From a product standpoint, Kershaw said his company is field-testing a 51-inch tire to be available later this year as well as a 57-inch tire that is in the works. BKT is in the process of building a $23 million carbon black plant in Bhuj, India, as well as determining where to build a new $100 million manufacturing plant in the U.S. Kershaw pointed out that one of the challenges he sees for the industry right now is a severe labor shortage. is observation was shared by other panelists as well. Ray McElroy, pneumatic segment man- ager, Trelleborg Wheel Systems Americas Inc., said his company continues to integrate CJS Holdings, producing the Mitas brand, into its portfolio of the EMR line of earthmover radials for work in quarries, pits and open mines. McElroy said the company's bias line of tires will continue to be sold under the Mitas brand name. e company intends to expand its train- ing facility, which is based in its Akron, Ohio, warehouse. Jimmy McDonnell, the vice president of sales and marketing for Maxam North America Inc., said that although the company has only been in North America for five years, they continue to be in an expansion mode. Maxam introduced 168 new items in 2018 and plans to introduce over 300 in 2019. Ken Simonson, chief economist for the Associated General Contractors of America, told attendees that the U.S. economy is still growing well. To highlight its OTR technician training program, TIA shot a live training demon- stration that was being done on an articulating dump truck with a 29.5R25 tire being replaced on a five-piece rim. RMI is just a part of the price of a tire During the tire manufacturers' panel discussion, a question was asked regarding how natural rubber pricing would affect the OTR market. Bruce Besancon from Yokohama Tire Corp. addressed the issue and made an impassioned challenge to everyone in attendance not to commoditize OTR tires. "We talk a lot about raw materials. That's part of the cost. That's part of the price of tire. It's not all of it. We're between 30% to 50% RMI (raw material index) that goes into tires. We talked about the producer price index. Each of us have talked about transport. Each of us have talked about labor cost and finding the right labor. Those all go into the cost of the product, as well as the R&D. Every one of us here is investing heavily in R&D. Our tires, the tires you buy, they're not a commodity. They're an engineered structure, and that's what we should keep providing to the customer as a best solution. That has some cost to it, and it's not just about RMI." After the conference, MTD asked Besancon to elaborate more. He said most companies — tire manufacturers/OEM/mining companies/quarry companies and dealers — began using the RMI as a means of increasing or decreased tire pricing about 10 to 15 years ago when there were a lot of really strong swings in material pricing. It got added into a lot of contracts as a way of protection against large moves of pricing. The downside, says Besancon, is it makes everything a commodity which he doesn't believe the industry makes. Most RMI clauses in tires only look at about four categories — natural rubber, synthetic rubber, steel tire cord and organic chemicals, all of which are tracked. Besancon's belief is "we all make and sell solutions — engineered products that are more than a com- modity. And none of the RMI clauses I ever saw included wages/transportation/energy or other indices." Besancon says every company he has worked for invests continuously to upgrade products — thus the same name/dimension product that was bought 10 years ago can be a vastly different product from what is being sold today. He says commodities are the same year after year — no changes. Based on the reaction to Besancon's remarks by the attendees, there was no disagree- ment to what he said.

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