Emerging from Pandemic Challenges, Retreading Grows – Tire Review4 min read
When times are tough, the retread industry shows its true colors. We’ve clearly seen that over the last two-plus years when manufacturers, owners, plant workers, front office staff, you name it… have all stepped up during challenging times to deliver for their customers when it mattered the most.
We can see the impact those efforts had on the retread industry in 2021 as retreaded commercial truck tire shipments grew to 16 million units, a 14% increase over 2020. This year, some of the challenges started to recede a bit, but retreaders didn’t take their own foot off the gas and continued to provide strong growth. Let’s take a look at some associated with the factors currently influencing the retread industry as well as look forward to future changes we can expect.
Supply Chain Issues
Ports were clogged, drivers at the ports had been scarce plus container costs were doubling every couple of months. This made bringing in raw materials and casings a challenge for retreaders, but it also impacted the supply of new tires. Retreaders quickly shifted in order to balance the needs of the particular customers plus worked to get them the products they needed. At the same time, retreaders partnered with customers in order to explore maintenance options to protect investments within casings and improve the number of retreads per casing.
Not only were freight costs going through the roof, but costs for everything else like raw materials, fuel plus wages, etc. were rising. New wheel manufacturers were forced to raise prices multiple times more than this period and even along with some increases in retread prices, the cost difference between a new tire and retreaded car tire continued to grow. Throughout its long history, the particular retread industry has always been counter-cyclical. In an inflationary environment with higher prices, fleets turn to cost-saving measures including adopting or increasing the usage of retreaded wheels. Smart fleets realize the particular cost benefits of retreading are significant plus stick with it when the economy gets back in order to normal.
When I ask our members what their particular three biggest challenges are usually, many associated with them say, “People, people and individuals. ” Finding, hiring, training and keeping good people has taken upward an increasing share of retreaders’ time. During the early stages of the pandemic, retreaders had to keep plants operating while taking care of employees and managing operations when several employees had been out sick. Cross-training, working overtime plus changing shifts were the few associated with the ways the employees and employers stepped up to keep the particular tires rolling and fleets moving. Many retreaders I’ve spoken along with have echoed the same sentiments: “The demand for retreads is so high that if I could get more material and more people, I could be selling a lot more product. ” As we’ve moved through 2022, inflationary pressures are also causing retreaders to look at their wages and benefits to remain competitive and attractive employers in their region.
We’ve observed an acceleration of mergers and acquisition activity in the retread business in the last eighteen months with some of the particular biggest players getting even bigger. Southern Tire Mart, Pomp’s , BestOne, McCarthy , Purcell, Wonderland — the list of retread companies buying or being bought continues to grow as we finish out 2022. This consolidation allows for increased efficiency in plants, wider service networks for customers, plus an increased range of items for retread customers as well. However, those consolidations furthermore come with their own sets of difficulties in terms of integrating systems, procedures, and also cultures. As borrowing costs continue to rise, it may have a cooling effect on the M& A activity within retreading, yet I know some of our members are still exploring the right opportunities in order to continue their own geographic and product-line expansions.
Retreading is among the particular greenest of green industries with massive amounts of environmental savings within raw materials, (oil, natural rubber, steel), reduced carbon emissions and landfill avoidance for millions of auto tires. Increasingly, companies of all types are setting environmental plus corporate social responsibility targets for themselves and are operating with tire partners to help them meet their focuses on. While a few fleets are focused on alternative fuels, improved aerodynamics, and low-rolling resistance tires, many of them are realizing they are sitting on a gold mine associated with improved environment savings just by adopting or increasing their usage of retreaded tires in their particular operation.
So, what do we see with regard to the retread industry moving forward? Many of these same challenges plus opportunities will present themselves in 2023. The challenging, possibly recessionary economy will maintain fleets focused on cost-savings; while growing freight need, especially along with last-mile delivery, will keep retread plants busy. Provide chain issues will hopefully start to ease, but this also increases the likelihood associated with competition from Tier 3 and Tier 4 new tires. New tire producers and retreaders will continue to be concentrated on emerging new products in the industry which includes non-pneumatic wheels (an exciting prospect regarding retreading since under-inflation will be a primary cause of casing damage), tires intended for electric vehicles that can handle their improved weight and torque demands and smaller-sized retreads to get the growing last-mile shipping segment. Retreaders will continue to focus upon ways that smart automation within the grow can improve efficiency plus quality while also easing human resource concerns. The increased collection, analysis and sharing associated with tire data with retreaders’ customers will still be important, because will ensuring that data is secure from outside parties. Lastly, continuous improvements in casings, tread designs and tread rubber compounds, increased use of recycled components, and enhancements in inspection technology will all maintain pushing the retread market forward.
Times may be tough, but retreaders are usually tougher and are well-positioned to take advantage of the particular unique economic and environmental situation we all face.