Yokohama Exec Discusses 2015 tire trends in US market

Time: Mar 18th  2015   Copy editor: Tyrefull

With the surging economy, the U.S. turck tire market is on a roll. It is a good time for tire dealers to look at current market developments and how they will affect the industry.

Rick Phillips, vice president of sales for Yokohama tire corp., offer his thoughts on the OE and replacement segments and an update on the tiremaker's new truck tire plant in Mississippi.

The commercial tire market was up last year. Why?

Phillips: In 2014, the market was up 8% to 10% over 2013. It all starts with the economy. The stock market is doing well, which has led to increased consumer confidence and spending. When consumers buy things, they get moved by truck, and that’s good for our industry. We’re definitely back to pre-recession levels.

What improved sectors of the economy have most impacted the trucking industry?

Phillips: Manufacturing in the U.S. is now more attractive, which is good because products get hauled more. Housing has also been on the upswing. Any time somebody buys a house, they purchase many things that go with it, and that spurs spending. General road construction, fracking and oil drilling have increased, too.

When the economy is rolling, do new truck sales go up?

Phillips: Truckmaker sales is one of the indicators for market strength. If you’re a trucking company, the only reason you would buy a truck is to move freight.

Right now, OEM sales, especially Class 8, are close to all-time highs. The North American fleet of Class 8 trucks is seven- to eight-years old on average. It should be below six-years old to lower maintenance costs.

Will the commercial tire market be able to sustain 8% to 10% annual growth?

Phillips: It’s difficult to keep growing at that pace, so it might slow some. But 2015 still looks good for the industry.

What are some of the issues that will affect the industry?

Phillips: Government regulations will play a big role this year, and fleets everywhere are dealing with a huge driver shortage problem. Some fleets are not buying the equipment they want because they don’t have enough drivers.

What is the biggest change you’ve seen in the market the last five years?

Phillips: It’s the continued chase of more fuel-efficient products and trying to reduce greenhouse gases. The challenge is trying to achieve a lower rolling resistance without sacrificing tire life. It’s tough because if you make the tread shallower it is more fuel-efficient, but the tire also wears out quicker.

What opportunities exist for tire technology development?

Phillips: There are several different ways to make tires more fuel-efficient. You can simply take rubber off the tread and/or change the rubber compound. There are certain things you can do with the casing construction that makes it roll easier. We have some innovative things we do with curing the tire with regards to length of time and the temperature at which we cure it. The biggest challenge is trying to stay ahead of the technology curve. You want a tire that’s fuel-efficient, lasts a long time and is going to be retreadable.

What other issues do fleets and independent truckers face?

Phillips: A new challenge is being compliant with all the recent government regulations. And as always, trucking is a very competitive business with razor-thin margins. It’s all about delivering freight at the lowest cost and as efficiently as possible.

How are low-cost offshore competitors affecting the U.S. market?

Phillips: There’s a lot of the lower-priced, third-tier product in the market that looks like first-tier product, but doesn’t perform like it. The challenge with fleets is convincing them. One of the problems with these tires is they’re not very consistent, especially when it comes to retreading. One batch is fine and retread well, but the next isn’t. To come up with a consistent product that’s going to perform the same every time is not easy for many of these companies.

What trend have you seen developing in the commercial tire industry?

Phillips: There’s a big shift in regional products due to the increase in intermodal business. There are short freight trips at the front and back ends of a rail haul. A product goes from a truck haul to a rail car to a truck, as opposed to one truck taking it across the country. There’s a big demand for shorter-distance and higher scrub tires right now, so we’re building better products to fit that niche.

What’s the latest update on the new Yokohama tire plant in Mississippi?

Phillips: The construction on the plant, installation of machineries and equipment and planned recruitment for the required jobs are all near completion. We’re on target to roll out the first pre-production tire in May and mass production will start in October. Volume will be low at first, accelerate, and then really ramp up in 2016.

Where do you see growth opportunity coming?

Phillips: We’re going to target national fleets and increase our penetration. We have a very good truckstop network that we’re going to keep growing. Our OEM presence is also going to grow a lot. And we have the best Servicing Dealer Network in the industry…bar none.

When the new plant is completely operational, how much of Yokohama’s product mix will come from Mississippi versus a plant outside the U.S.?

Phillips: We expect about 60% of the truck tires will come from the plant. We’re already talking about bringing on Phase Two, which will produce an extra million tires a year.

AD: You can get  better price from us for Doublestar tire. Doublestar brand tire is the TOP 10 Chinese brand tires since 2004. Give us a call and  you would get a surprice price!