People often ask me what I do for a living. I tell them I help sell big tires. Then they ask “How big?” and I tell them . I’m not sure they grasp the scope of how big they really are. 3 1/2 years ago, I knew nothing about tires. Come to think of it, I don’t remember a time when I had even changed a tire. I just paid someone else to do that, and counted myself fortunate for not acquiring a flat.

That all changed, the day I came to Mobile Fleet Service. I struggled to keep up, as I stumbled over “twenty-five-sixty-five-R-twenty-what?”. Since then, I’ve changed more than my share of flats, and learned more about tires than most people would care to know. Those of you who are fortunate enough to have spent more than 10 years in the industry, probably don’t remember how challenging it can be to a newbie.

There were many obstacles that I encountered upon entry, including the process of building a website. That took some time. There have been at least 5 incarnations of BuyBigTires.com, all different designs. Honestly, the first was probably the prettiest, even if it wasn’t the most functional.

BuyBigTires.com started with a tire list, composed on a notepad. Nothing more. It couldn’t have had more than 50 items on it, the first time it was posted, and I was ever so proud when I got the thing to display. As things progressed, the list grew longer, and we moved to a database. Thank goodness, as I remember it taking an entire day to enter a single list, during the first year or so of operations.

To the original tire list, we added resources for the industry, including manufacturer links, and data books. Then came video. I’ll never forget the first episode of “OTR Weekly”, and how proud we were, the first time we watched all 5 minutes of it. I’ll never forget the stories, as our salesmen came back from the Mine Expo. Evidently, a bunch of guys in the booths had watched the videos, and all Tom heard was “Hey, you’re that guy from the videos.” That was exciting.

On-and-on it goes. Apparently, BuyBigTires.com is kind of a big deal, which surprises the pants off of me. Then, there’s the blog. This is my baby. It’s surpassed all my wildest expectations. Why you very kind people listen to my ramblings week-after-week, I’ll never know.

With that slight bit of lead in, I have some news to announce:

I am leaving BuyBigTires.com . That’s right, the man behind the curtain is taking his final bow. Allow me to introduce myself, if you don’t know me already. I am Kurt Hartman. I am listed as a contributor here, but few bother to read that page. Many of you don’t know me, and that is okay. I have enjoyed the luxuries afforded by mystery.

I suppose in most cases where a departure takes place, people would give some soaring rhetoric about paths, streams, and include other, nature-based metaphors. Folks, to be frank, it’s just time to go. BuyBigTires.com will move on without me, and I’ll move on to other ventures. To say I am grateful for an opportunity to meet so many incredible people would be an understatement.

You’ve all been exceptionally encouraging, generous, and informative. Thanks to Tom and Lavonne for giving me the opportunity to really study some of the issues affecting the tire industry. That’s no small investment, either in time, or in money. Thank them, when you have the chance.

Heavy Treaddin’ holds the place it does today, because of all the loyal readers who make up it’s audience. Otherwise, our words are just print in a digital wasteland. The Psalmist once said “What is man, that you are mindful of him? The son of man, that you remember him.” Not to take too much license with scripture, but sometimes I wonder the same things about what is written here. I don’t understand it, but words can’t express how happy your support has made us, as a company, and as individuals.

So thank you, for everything. I leave this blog, and the website, in the hands of Tom and Lavonne, the founders of this company. I have served my turn as the author, and now it’s time for someone else to write their stories, and make their mark.

In closing: May The Lord bless you and keep you. May the Lord make his face to shine upon you, and be gracious to you. May the Lord lift up his countenance upon you, and give you peace.

That’s all the news that probably won’t have any effect on the tire and mining industries.

For the last time, I’ll be…

Signing off…

It’s been quite awhile folks, and American Tire Corporation, Washington Tire Corporation/Colorado Tire Corporation are in the news yet again. Since my last post, people have inundated our office with calls and emails, asking numerous questions:

1. Are these guys for real?
2. What do you know about them?
3. Should my business/family/neighbors make future plans based on Washington Tire Corporation?

Most of those calls have been from residents, whose suspicions have been raised by the erratic behavior of Abraham Hengyucius and company. Many of these people are worried about expressing questions, due to the fact that their friends and neighbors would blame them for opposing job growth.

It’s been a rough year for the people of Grant County, as nearby plant closings have cost them 1500 jobs or more. If you look at Ephrata (where the proposed tire plant will be built, it is a small town. 2000 jobs would substantially improve the economy, bringing much needed growth and revenue.

I’ve learned the most about Ephrata (pronounced “ef-RATE-ah” not “ef-RAHT-uh”) while talking with its residents. The main attraction that it holds for industry, is the abundant supply of cheap power in the area. While I haven’t been able to confirm this one of the residents claimed that Ephrata has the cheapest cost per electrical Kilowatt hour in the world(Ed. This has now been confirmed, via another resident.). This is because Ephrata is close to the Grand Coulee Dam, an abundant source of hydroelectric power.

Moving here would be a grand way to save operational costs, if you were in any industry that needed large amounts of electrical power. Which brings me to Washington Tire, and their latest announcement. On   Jan. 13th of 2o10, Abraham Hengyucius decided to make a presentation before the residents of Ephrata. He pulled a large audience.

During the presentation, he made mention of the fact that they had decided to expand production to both passenger and truck tires, in addition to OTR. It seems that the current tire tariffs have given him the idea to expand tire offerings.  This portion of information is not available in any online resources, but is available in the hard copy edition of the “Grant County Journal”, in an article by Joe Dennis.

One of the residents was kind enough to send me a copy, and it contains a great deal more information than other online editions. Mr. Dennis evidently has an eye for detail. One of the more interesting revelations is that Abraham Hengyucius has no clue yet as to whether or not the labor force will be unionized. In almost the next breath, he states that he has investors lined up to provide $400 Million for the first stage of construction.

Which begs the question “Who are the investors?”. The line that many residents are hearing  is that the investors are Chinese. It is a convenient line, as it makes tracking the validity of the answer rather difficult. Do any of you have friends in China that you could call to check references. It’s doubtful. Given the fact that Hengyucius is likely to bring  people in from China to manage the plant, this makes a little more sense. (Ed. Thanks to a very kind, anonymous source for bringing that bit of info to my attention. You know who you are.)

Back to the question at hand. What kind of investor doesn’t find out whether or not Labor(the Union kind) will be involved, before they commit the resources to build a plant? As many tire manufacturers can tell you, unionized labor will increase your expenses, and will cause your margins to shrink. That should be in your calculations up front.

Secondly, what are the sales projections for the plant? Again, I refer to Mr. Dennis’ article. The $1 Billion investment will be spread out over 3 years. They aren’t putting all the money up front. If the first phase isn’t successful, nobody is going to drop another $600 Million in the hope that it will be.

Third, and most important, Colorado Tire still hasn’t put forth independent testing data to prove their tires get the life they say they do. There is no guarantee that the tires built in the USA will be any better than the ones built in China. The molds will be from China, and so will the rest of the equipment in the factory.

Manufacturing a tire in the USA, using the same processes available in China, does not mean the tire will be of any higher quality. How will they overcome any Non-Disclosure agreements currently in place with engineers they presume to hire? Last, but not least, when did you gain the experience necessary to manufacture car and truck tires? The sales force to sell such products?

These are questions that have to be answered eventually, to the satisfaction of the community, and any would-be  investors.

Hurdles

After the FAA and Department of Energy give Dr. Hengyucius the “all-clear”,  a major milestone awaits. The power is cheap in Ephrata, but nobody said it was free. In order to “buy-in” to the grid, Washington Tire will have to make an investment of $8 Million. This covers equipment and the labor that would allow Washington Tire Corporation to access the power supply. I’m not in the electricity business, but the resident who called me is in a related industry, and that’s how I understand things work.

This, of course, is in addition to full payment for the remainder of  the land. Let’s not forget that the total investment that Washington Tire currently has, is $40,000. I’ll repeat: $40,000. I know people who have over $40k invested in their luxury car, but that doesn’t mean they have the cash to buy Audi.

They are saying that construction could begin in April, as long as there aren’t in holdups in issuing the permits. That’s fine. The question is “Will Washington Tire be able to fulfill their obligations?” At this point, no proof of their ability to pay has been publicly offered. How will the contractors be paid? What are the assurances being made to potential vendors?

So far, the word is mum. A big question mark in all this, is Mark Wren,  Manager for the Port of Ephrata(Ed. Changed from City Manager for the Town of Ephrata.) His statements have been minimal at best. This is probably because he is between a rock, and a tire factory. If he were to publicly question a legitimate operation, and drive away a source of jobs and revenue, then he can kiss his job “goodbye!” come next election. If this is a pipe dream, and the tire factory ends up dashing the hopes of thousands in Grant County, he’ll be nailed to the wall for not protecting the interests of it’s citizens.

Conclusions

There aren’t many to be made, at present. The last thing I want to do is send a legitimate company down the road, and be unwelcome in Northern Washington. It’s a place I’d like to visit at some point in the future.

Will they eventually build a portion of the plant? Maybe. Will they complete construction of the plant? I wouldn’t put my money or livelihood at stake. Will they employ 2000 workers? I wouldn’t quit my day job, especially since Mr. Hengyucius puts the average wage of a worker at his plant near $10-$11 an hour(Washington State’s minimum wage is $8.55 an hour.). I guess you have your answer as to whether or not he plans on the workers being unionized.

Before we go any further, let’s remember that the plant was supposed to be in full production by now. In fact, if you read any of the past press releases, most of the residents in Ephrata should already be working at the plant. Delays are a natural part of business. However, I have never seen such a highly touted factory with so much potential cash to be invested, and as little transparency.

This is the issue. Will my feelings suffer a little if all this goes off without a hitch? Absolutely. Would I rather take a personal hit, or be right and have the people of Grant County suffer? I would rather they have the jobs. I just don’t know if Washington Tire Corporation is capable of building a plant that would provide them in a sustainable manner.

A Note:

If there are residents who wish to comment, ask questions, or correct my lack of information concerning Ephrata or the plant, please do so in the comments. I will not publish comments without a verified email address. Nobody will see that address but me, but if there is a statement that needs clarification, I have to be able to get in touch with you.

That’s all for now.

Stay tuned for the latest news affecting the tire and mining industry.

Until next time, we’ll be…

Signing off…

A few weeks ago, I was checking out a bit of tire news, when I noticed that Titan had issued some new debt. The purpose of the debt, it turned out, was for acquisitions. It didn’t say what Titan intended to acquire, just that the company  was raising money.

I wasn’t left in the dark for long. Just after I published last week’s article, it came to my attention that Titan has made a bid for Goodyear’s European Ag business, which includes a plant in France (the letter of intent was signed in September).  At first glance, this seems like a smart move. After all, TWI has already taken over Goodyear’s Ag business here in the States. How difficult would it be to repeat the transaction in France?

The problem lies here: For better, and for…otherwise, Morry Taylor is Titan Wheel. They are inseparable. When TWI took over Goodyear’s US business, they ran the following ad:

I tell you, tapping into America’s xenophobic tendencies is a classy way to sell tires. The  metaphor is overly strained( e.g. “Beret is a style of hat, not a brand of hat.” You have to compare the quality of a beret, to another beret. It just doesn’t work.), the sterotypes aren’t clever, and honestly, the ad isn’t funny (I don’t mean that in a serious, politically correct sort of way. I mean it falls short of the very low, modern standard for consideration in the category of  ’humor’.)

Now, pretend you are an employee at Goodyear/Dunlop, France. You see the ad. You begin researching the company that is about to take over the day-to-day operations of your plant. After all, they aren’t super-friendly to labor unions(for political, and fiscal reasons.). They have the American mindset about politics, work, pay, and benefits. Not exactly something that will bring any comfort to the average French worker.

It’s also worthwhile to note that this might not be a great deal for Titan, either. Whether you like it or not, France has a distinct way of doing things. The Corporate taxes are high, but the employer contributions to France’s version of Social Security are worse(up to 40% of an employee’s gross pay.) Add in the VAT that each company within the EU must pay, on each item that is received as a raw material, and sold as a finished product…it adds up.

Since we’re on the subject of VAT, let’s bring up the fact that TWI’s European division, will also fall under the guidance of the EU’s environmental, legal, and fiscal jurisdiction. Right now, you have Greece and Ireland on the verge of economic collapse. Add to that a few other nations that are in a precarious financial position, and you have the rumble of tax increases on the horizon. Let’s not forget the commitments to CO2 reductions, and more stringent environmental policies.

From a fiscal and a cultural standpoint, this seems like a bad fit for both TWI, and Goodyear/Dunlop France. There is one way that this can work: If Titan leaves the current management in place, and gives them the ability to oversee personnel as they see fit, while focusing on improving inefficiencies in the supply chain, and decreasing the costs of unfinished goods…then this has a chance of being profitable.

On the other hand, if Titan goes in, decides that there needs to be a management shake-up, and begins to show them how “we do things in America”, then you can go ahead and put this one in the “loss” column. The French won’t stand for it as a culture, and there are ample social safety nets in place, should they decide to go on strike. The incident with Michelin a little while back should serve as a cautionary tale for any company who thinks they get to tell French workers what to do.

I could be wrong on this one. After all, there are highly paid consultants and lawyers who advise on deals like this. And you can’t  count Morry Taylor out completely on this one. He  prides himself on marching to the beat of  a different drummer. Let’s just hope that the drummer isn’t playing the company a death march, on the way to the guillotine.

Liberté, égalité, fraternité.

Stay tuned for the latest news affecting the tire and mining industires.

Until next time, we’ll be…

Signing off…

It’s hard to believe that we are at the beginning of yet another New Year. I’m sure you’ve heard/read/experienced that the market for OTR Tires was a little rough last year. Prices were down, inventories were running high, and well, it was pretty much dismal. If you read SotMaTI: 2009, then you know it was expected. I just didn’t know how bad it would look when it showed up.

Construction

Sayonara, 2009. And thank God for it. Now, if you read the 2009 report, you know that I made some far-fetched predictions. One thing that I predicted (and honestly, anyone could have seen this one coming) was the horrible year for the domestic Construction market. I also said that I was skeptical about shovel-ready projects . Sure enough, they ran into some major hiccups. We still haven’t seen an economic lift from that sector.

In fact, people are so tired of hearing about these projects that they have been placed on this year’s list of banned words. This year, mark my words, you will hear Commercial Real Estate bailout, TARP II, and outrage, discussed on every nightly news show from here to Hong Kong. That’s because the CRE sector is headed for bust-town. There isn’t a bank around that’s freely lending for new projects…Why? Essentially, commercial loans are coming due, and banks are too afraid to refinance owners.

There is a huge glut of commercial real estate sitting empty. Guess what? Nobody is going to be able to get a loan for new office space, if the existing space remains unfilled. Oh, and if you do manage to get your project financed, you’re going to pay more to borrow the money. Interest rates will rise with the increased risk, regardless of where the Fed keeps the base rate.

What about hotels? Well, that’s a problem too. The hospitality industry has taken a beating over the past year. Decreased business spending, along with travel have made Vegas change its advertising to be more business oriented. Gone are the days of “What happens in Vegas, Stays in Vegas.” People eventually figured out that “What happens in Vegas, appears on your Visa bill, and costs you 30% APR, each month.”

What does this mean for the tire market? Here in the US, small construction companies are going to be looking at cheaper tires, or delaying purchase even longer. They’ll be eyeing retreads and used tires, before they go looking for a new tire. My guess is, heavy equipment rental places will see their business decline as well. Unless, and this is, unless…construction companies believe it will be cheaper to divest themselves of equipment en-masse, and rent equipment by the week to do a job.

Are there any bright spots in the market for construction this year? If there are any, they won’t be widespread or located in the US. Internationally, the Chinese have to keep construction going. They’ve built completely empty cities, just to keep their population employed. They have to get rid of those Greenbacks somewhere. Who knows what Dubai will do this year? Our favorite citizen in the UAE opened the unfinished Al Burj to save a little face after they defaulted on $60 Bln in debt(…and yes, that was a default on their obligations, regardless of what the financial community at large says.) At any rate, the construction boom in Dubai is long gone, and its not coming back anytime soon.

Mining

On to the mining markets. Well, things are just dandy if you are a gold mining company. I’ve heard expenses for mining my second favorite metal in the $400-900 range this year. Gold is still over $1100 an ounce, even as the USD gains strength(although, that strength is very relative. Something about the EU leaving Greece to fend for itself.) Metals are still through the roof. Copper, at this writing, is still trading above $3.30 an ounce, whilst stockpiles continue to rise. Aluminum and Nickel prices are doing the same, even though their stockpile levels are at 5 year highs. What gives?

I’m not a metal expert here, so I’m going to take a couple of wild guesses:

1. Our currency is growing weaker.
2. China is exchanging  their Treasury Notes for commodities.

That’s it. I know you must think I’m some nutjob, doomer fruit-loop. The only difference between me, and the financial celebrities on the business channels, is that they are paid to be wrong…*cough*Jim Cramer*cough*.

My predictions for the mining sector are positive this year…but cautiously so. I read an article the other day( and I can’t find the source now) that showed mining companies were able to raise $18 Billion last year. Barrick used $5 Bln of that money to close their hedge book, which shorted the very asset they produce. They just couldn’t afford to keep losing money on that bet. That leaves $13 Bln that will make its way into the mining ecosystem.

Demand for Gold and Silver will continue to increase this year. Some have said we will live through another Gold rush, like we did during the early 80’s. Others say we are headed for a depression worse than the 30’s. Regardless of who is right, we are going to see  precious metals prices rise by 20%( those are no-brainer, hyper-conservative numbers) over the next year. This means mining stocks will gain traction, and the AUS Dollar, and CAN Loonie are going to appreciate against the dollar.

A New Shortage?

Now, some are already talking about another OTR Shortage by early Q3 of this year. That may be a bit premature. If such a thing did occur, it would be short-lived. All the major manufacturers increased capacity during the first shortage, Double Coin expanded its product offerings, and hopefully, everyone learned a thing or two about how things shouldn’t be handled, the last time around. If manufacturers aren’t investing in a little bit of extra inventory, then they are being short-sighted, yet again. Come to think of it, a longer-term shortage could be in the offing.

Will supplies tighten? Yes. Will margins get a little better? Yes. However, there isn’t a hot construction market siphoning supply this time around. Mining will be a bright spot on the balance sheet this year, regardless of whether you are a manufacturer, or dealer. The question now is: “How bright?” and “Will it be enough?”

Agriculture

On to agriculture. Last year was pretty good for tractor and ag tires. Ag is not our specialty, so I’ll leave this article to explain how the experts expect the ag market to play out. While last year was good for the tire segment, it was a miserable year for crop yields. This next article is rather long, and requires the liberal addition of salt. While their conclusions may be a bit wild, the data looks reasonably solid. In fact, if the numbers are half as bad as what they are saying, it might be wise to consider buying a few extra dry goods. Farmers will be working overtime to make up for the shortfalls experienced last year. I’ve never tried eating rubber for dinner, but I much prefer a steak. If we don’t have a bumper crop this year, it may not matter how many tires get sold.

Passenger and Medium Truck

The passenger market is up in the air this year. At some point, people are going to have to replace the tires that are running bald. According to the RMA, 11% of all cars are running on at least one bald tire. Whether they replace them because of an accident, a flat, or common sense, those tires will have to be replaced, and reasonably soon.

With more manufacturers keeping inventories light, I expect trucking to continue down the dismal path it was on last year. This article sheds a little more light on the challenges that freight networks will continue to experience this year. Fuel costs will be one of the X-factors this year, and any major price spikes will throw the tire business under the bus, along with other industries.

Conclusions:

Mining will be at the forefront of profitability this year. Agriculture will do reasonably well, while construction will continue to suffer. Metals, precious and otherwise, will continue to rise, as systemic financial weakness comes out in its hideous glory. Passenger tires will benefit when consumers can’t afford to delay replacement any longer. Medium-truck tire volume will decrease.

Of course, all these predictions go out the window if someone decides to call Iran’s bluff, or if some guy gets by security with an exploding fanny pack. Hopefully, this year is a better one for all industries, and uneventful, with regard to disaster. I’d like nothing better to than to report I was wrong about every negative thing I said, when next year rolls around.

My words in parting this week: Keep hope alive, your head down, and a blanket nearby. This year is starting out cold.

Stay tuned for the latest news affecting the tire and mining industries.

Until next time, we’ll be…

Signing off…

It’s that time of year again. Not the time where you sit down to eat a delicious meal with your family, and enjoy the hospitality of friends.

Nope, it’s time for leftovers, of the refrigerated variety: The hastily wrapped turkey gives off a pinkish-grey glow,warning that it may or may not disrupt your digestive system. The gravy, left partially-sealed after a midnight fridge raid, will inevitably spill on some pants that you received as a gift from your wife. A stealthy casserole will make its way onto your shirt in such a manner that only others will see it.

Not all leftovers are bad, or leave stains after eating, however. Some let us fondly recall a meal we ate the day prior. Other leftovers allow those who couldn’t make it to the main meal,to experience some of its splendor(Yes, I said splendor. Work with me here.) Many dishes improve with time, as flavors are allowed to meld, and sauces do their work.

Why all this talk of leftovers? Well, this post is a “reheat” of sorts. Today, I’ll be reviewing some posts written this year that you may have otherwise missed, shunned, or ignored entirely(shame on ya’). These articles will include those that were most read, received a ton of feedback, or that I think deserve a little more attention than they received at the time(Those’ll be few and far between, believe me.)

Without further delay, I present for your inspection and enjoyment “The Top Tire Treatises of 2009“. Bon Appetit…

1.The Real Reasons Behind Chinese Tire Tariffs-Part 2: When President Obama decided to pursue tariffs of 35% on Chinese passenger and light truck tires, I decided to go back and check out the reasoning behind the decision. The USITC held a hearing during the summer months, and kindly made the transcript available.

So, with permission from my kind bosses, I took a couple of days out my usual schedule and read the document. After 3 days of note-taking, it was time to write the articles, which ended up being so large, that they had to be split into 2 posts. People seemed to like this article, and I more than happy to recommend reading it, if you didn’t get to the first time.

2.The State of the Mining and Tire Industry: 2009: They say even a stopped clock is right twice a day. This was my first shot at naked prognostication. A few things I was very wrong about: OPEC depegging from the dollar, and Britain switching to the Euro as primary currency. Who knew China would start buying copper, for no apparent reason, and send the price back up? Not me, evidently. So, take your grain of salt, and see if I got anything right. Your feedback is appreciated.

3. Twitter asks “How Long Does it Take To Change 4 Tires: I didn’t necessarily expect this post to be successful. I did expect it to help some tire dealers learn the importance of using Twitter, as a part of their customer service strategy. We made a few videos as a companion guide to the post, to teach folks in the tire industry how Twitter works

In a twist I didn’t see coming, this article ended up on the first page of Google for “how long to change a set of tires”, along with a few other variations of the term. Hundreds of consumers have read this article. Not many people in the tire industry have. Please, if you didn’t get a chance to read it earlier, please do so now.

If you know any dealerships that are struggling with how to use social media like the big boys, let ‘em know that this post exists.

4. GPX Faults OTR Tariffs For Failure: What Happened, and Why? : I covered OTR Tariffs, back when they first made some noise during the shortage. Writing this post was a walk down memory lane for me. It’s sad to see a perfectly good company go under, just because it gets lumped in with bad company.

This post has been extraordinarily popular, even though it was written less than a month ago.  That’s why it makes the list. In the aftermath, Titan made an unsuccessful bid that drove the acquisition price of GPX’s assets up. Alliance countered and won.

Good luck to Alliance in the future. They made a wise purchase.

5. Going Green Means More Cash For the Tire Industry: I tried to write this article near the beginning of last year. It sat in my draft folder for 9 months. The only thing that survived the editing process were the first 2 paragraphs. This was another article that I thought would mainly appeal to the tire industry.

While green is hot, rubber is not the most interesting subject to the common man. This was an unexpectedly big hit, both on Twitter, and in some green blogs as well.  The response from the tire industry was very positive. We even received emails from people in the research department at a Major tire company.

Hopefully, this article contributed (even microscopically) towards profitability, and sensible stewardship of resources.

This is the end, my friend.

Yes, this is the end. I cut the total featured posts off at 5 this year, as they turns out to be ~10% of our total articles published. If you want to dive any deeper after reading this article, the “Archives” button is at the top of the page.

I tried to publish once weekly this year, and some of you will note that articles about persons of interest(or infamy) within the tire industry were left out. This was a conscious decision on my part, not because the articles weren’t extremely popular, useful, or correct in their assertions. It’s just that taking the last post of the year to rub salt in some wounds isn’t particularly classy.

So I pray for peace on earth, extend goodwill towards most men, and hope your turkey, ham, or goose is properly wrapped, so that it doesn’t dry out.

Merry Christmas, and a Happy New Year from all the folks here at BuyBigTires.com !!!

Until then, we’ll be…

Signing off…

Around 2 1/2 months ago, I had an idea. It came on the heels of one of our more successful articles on Twitter, and how it helped me make a decision on where not to buy a new set of tires. There would be a survey that deliberately excluded people in the tire industry (to the best of our ability), and tested brand awareness, while targeting a few specific questions within the industry.

I’m not a statistician, by any stretch of the imagination, but I did have a general idea of what I would do to get some responses. So, we set up a contest over on the main site, and didn’t link to it from any other page on our site. We offered a single copy of Super Mario Bros for Wii as the carrot, and let it rip on Twitter, Facebook, and a few contest sites.

To insure that there were no double entries, we made sure that their IP address and email address were logged, and that they were disallowed access once their original answers had been tabulated. We ended up with 851 unique responses.

I can hear you saying “Enough with the methodology. That stuff is boring. Get to the questions and answers.”

Fine then. There were four major questions that were asked:

1. When I say “tires”, what brand do you think of?
2. How long do you think it should take someone to change a set of tires?
3. How frequently do you check the air in your tires?
4. Where did you buy your last set of tires?

I’ll give a little bit of analysis after each question is graphed out, and give my take on what the sum of the data implies near the end. Let’s get to the first question:

When I say “tires”, what brand do you think of?

Goodyear leads in brand awareness, followed by Michelin.

As much as I was expecting Goodyear to win out in brand awareness, I wasn’t expecting that they would take nearly half the pie. Bias is a funny thing, as I expected Michelin to be within 5% or so of Goodyear. As to Bridgestone, I can see why they have paid so much to sponsor the SuperBowl halftime show each year.

While this may not seem like a particularly important question now, it may have some interesting applications later.

On to question 2:

How long do you think it should take someone to change a set of tires?

Is 30 minutes a reasonable amount of time to change a set of tires?

This is an instance where the data gets very interesting. The vast majority of people think it should take 30 minutes to change out a set of tires. If you will note, this percentage (46.3%) is the same percentage of people who hold Goodyear in their “top of mind awareness”.

The question I have for all the shop owners out there is this: Is 30 minutes a reasonable amount of time to dismount, balance, and mount a set of tires? Is that enough time for your guys (or gals) to do their job thoroughly, safely, and in a correct manner?

The second place answer, (45 Minutes) seems a much more acceptable amount of time.

How frequently do you check the air in your tires?

3 Months is a long time to go without checking air pressure.

Honestly, this is the question that I was most excited to learn the answer to. Air pressure has plenty to do with tire life, fuel efficiency, and even stopping ability. It really shocked me to learn that nearly 1/3 of all respondents waited 3 months (or, let’s face it, longer) to get their tire pressure checked.

It seems that some consumers put tire inflation in the same category as flossing:  Why should they do it, when they can pay a professional to do it for them at their scheduled checkup? This is a safety issue that needs to be hammered home at the service desk, come checkout time.

Something as simple as showing a customer where to find the recommended psi levels for their particular vehicle would help tremendously. With numbers like this, I would be afraid to find out when they rotated their tires last.

Where did you buy your last set of tires?

The local tire dealer is still king, but how do you define "local" these days?

This is a comforting chart, if you don’t look at things too closely. It shows that nearly 7 out of 10 respondents bought tires through a local dealer. The question is, do people differentiate between chains (like Les Schwab), and the 2-bay shop down on the corner.

I will say I was extremely surprised that the online purchase of tires was only 2.5%. With the fear that I hear in many dealers voices, throughout online forums, I expected that number to clear 10% or better. It turns out that the number of respondents who didn’t own a car(54), was greater than the number of consumers who bought their last set of tires online(20).

As usual, the biggest problem for the local tire dealer is Wally World(and other big-boxes), with their loss-leading oil changes. It will be interesting to see if online tire sales take a bite out of their business. That would be poetic justice.

Interesting Discoveries

You may have noticed that I mentioned respondents who did not own a car, or take public transportation. Their responses are only included in the first 2 questions. If I had included their responses for questions 3&4 , they would have skewed the data somewhat.

In an odd turn, people who do not own cars estimated it would take 45 minutes to change out a set of tires. They also stretched Goodyear’s margin in the area of brand awareness to 2.5/1 over Michelin. I guess that will make the marketing people happy, even if they won’t be buying their tires.

When I began this survey, I assumed that people who were buying tires online were perhaps better educated with regard to tire care. After all, few people know what their tire size even is, much less the model they want to buy. They may be better educated, but it seems that they are just as slack as the general population with regard to tire care. Their inflation schedule is almost exactly the same as other people who responded.

Post-Mortem

I could spend days plowing over the various data with regard to statistical significance, who is more likely to buy their brand locally, vs. who will choose to go to Sam’s Club.

The truth about statistics is, regardless of field, they only give you a broad view. You can manipulate that sample to say whatever you want it to. This was my first shot at giving you guys some data that you can use. From my perspective (and regardless of this survey) education needs to be a factor in customer service.

Managing expectations is huge. Don’t just let your customer sit down and wait, when they think it will just be 30 minutes. If you have to make your own little book that tells them what you will be doing in the back, while the impact wrench is jarring faintly in the background, do it.

Take the time to open the driver’s side door,and help them locate the recommended psi for their tires. Hold a class on how to properly inflate a tire, if you need to, even if it is just as simple as showing them where the tire stem is, and how to use a pressure gauge.

Give to your customers, and be repaid in loyalty.

There is a saying that there are three kinds of untruth: Lies, damnable lies, and statistics. Hopefully, these stats have helped give you direction, instead of diverting your attention from the truth.

Let us know what you think in the comments. If you have any questions about methodology, or want to get your hands on the raw data-sans email addresses, of course-then shoot us an email at: blogfeedback@buybigtires.com .

Next week, we’re doing a “greatest hits of 09″ post. I’ll rehash our most popular posts this year, and maybe throw in a bit of commentary about why I think they did so well. Email us, and let us know if there is a post you’d like to insure is included.

We’ll be back then, bringing you the latest news affecting the tire and mining industries.

Until next time, we’ll be…

Signing off…

I was pleased, nay…overjoyed…to read one of the latest interviews that Modern Tire Dealer has published at their site. Evidently, the new head of the TIA is a former programmer, with a degree in Computer Science.

Wayne Croswell, (who has written, and supported software for various industries over the years) and serves as President of ASA Tire Systems, has been anointed to serve as the new head honcho.

I am literally giddy with excitement over this possibility. The choice of someone with a programming background, along with proven management skills is a combination that I believe spells success for the TIA.

Yes,I know the conventional view of a programmer is some guy with a pocket protector, locked in a back room, splitting his time between Star Trek reruns and a keyboard.

While that may hold true for a small portion of the CS population, the vast majority of programmers bring an eclectic skill set to the table. So, today, we’re going to veer off the beaten path for a bit, and take a look at the qualities of programmers. Afterwards, I’ll show you how this may apply to Mr. Croswell’s year of governing at the TIA.

So, without further adieu, let’s get into some of the thought processes and qualities that  a programmer like Mr. Croswell brings to the table:

• They aren’t afraid to throw something to the wall, and see what sticks. While I don’t want to get too technical here, there are multiple ways that a programming language will allow you to accomplish a task. A programmer may try 2-3 ways to find a line of code that works. If an instruction you originally thought would work does not, no biggie. Small failures will eventually lead you to a method that will be successful.

• Programmers understand that in order for  something to be considered a success, it must be measurable. ASA’s various software  offerings measure everything…labor, service, inventory. In addition to these factors, they have to measure the software’s speed, reliability, memory usage, compatibility, usability, and a thousand other factors that no one even considers when they turn on a computer.

• A programmer is used to criticism. Whether it be peer criticism, or unsolicited advice from a client, the ego of a good programmer will eventually be beaten into submission. If the criticism is warranted, they have the good sense to change course. If the problem is something that just cannot be compromised on, they will be able to explain to the client, or their boss, in clear terms why this is an impossibility.

• Good programmers are self-teaching and have a love of learning. (I take this point, but not the explanation from How To Recognize a Good Programmer.) Programmer’s tend to be a naturally curious bunch. In this way, programmers are much like many auto mechanics I know (in fact, I know at least one mechanic who traded in his high-level programming job for an impact wrench.): They want to know what makes things move, tick, rebound and crash.Many of them have parallel interests in the sciences, economics, or history, in addition to absorbing one of the many new programming languages that make their advent each year. To illustrate the scope of what I am talking about, I have included a list of known programming languages.

• Programmers tend to be  calm, approachable, and good with people. The average programmer has dealt with deadlines, programs that crash and burn unexpectedly(even after extensive testing), and are used to collaboration. The best programmers I have ever met have a great sense of humor,  grace under pressure, the ability to accept responsibility for mistakes, and give credit to others when it is due. In contrast to the stereotypical view of a programmer, they are socially adept, and manage others in an empathic manner.

While Mr. Croswell doesn’t program software anymore (he admits to as much in the interview), I believe I can show a few ways his background will affect how he leads the TIA forward.

On the first page of the interview, he mentions an actual plan for social media(LinkedIn, FaceBook, Twitter, and the like). This has been a subject of active discussion in the Tire Review reader’s group over on LinkedIn. Allowing his members to voice their praise, concerns and criticism in a semi-open forum will go a long way in terms of insuring the constituency of the TIA has a voice in policy.

This is the first step in a direction that will allow for a more transparent, open relationship between the TIA, and their membership at-large. While there are sure to be a few hiccups, and the criticisms may be sharp at first, I believe that Mr. Croswell will handle these situations with genuine concern, and find an optimal solution to the problem.

In terms of measuring success, one of his more obvious stated goals is to increase the benefits of membership. By doing so, he will also be able to grow and retain membership in the TIA. While growing the membership is not a stated goal, you can be sure that it will be high on his agenda. This is an area where results are measurable and important.

Where he can, I also believe he will provide innovation in the way the TIA does business. If something doesn’t work, I believe he will admit it, and move on. That is the programmer’s way to sucess: Test, measure, and test some more. I wouldn’t be surprised to see live, online training rolled out to members, along with Q&A sessions.

After all, this a low-cost, high impact way to effectively educate consumers.They already mentioned a success with sales training with an affiliate, via Webinar during the interview. If this is the shape of things to come, then I am thrilled.

Of course, there will be the usual political wrangling, lobbying, and other areas that have to be taken care of. This is an area I can’t comment on, as I have no desire to interact with elected officials, at any level. Hopefully, he will be able to forge a way forward with minimal compromise on the political front. Perhaps he will make use of his voice to spur manufacturers towards tires that are made more profitably, through the use of recycled tires. We know from the interview that he has a “green” agenda up his sleeve. What that amounts to at this time, has yet to be defined.

As with all new Presidents, regardless of the organization, I may be making much ado about nothing.  I hope not, as I believe Wayne Croswell will bring a fresh approach to governing the TIA,  increasing the strength of its voice, and the visibility of its membership in the process.

That’s all for now. Stay tuned for the latest news affecting the mining and tire industries.

Until next time, we’ll be…

Signing off…

Lately, we have been getting calls here at the office that are rather puzzling: People are having a hard time finding certain sizes in stock for agricultural and earthmover tires.

I find this rather odd. Manufacturers have been liquidating inventory at a rate that seems desperate, even in comparison with their brethren in the auto industry. They’ve given dealers discounts and rebates, sold below list, and generally begged for people to take OTR tires off their hands.

I understand this. They need operating capital, and people won’t take delivery of tires over a certain age. Their quarterly financial statements have to look good.

Liquidation worked, to an extent. Unfortunately, manufacturers may have overdone it a little bit, and at an unfortunate time. We are starting to see shortages re-appear in different sizes, especially overseas. Shortages  are usually gradual with regards to onset. First, it’s just one size, then market demand moves upward, and it’s an entire category. Finally, there is a huge demand surge, and the most common sizes are on 3 and even 6 month lead times.

While I don’t think we will see supply deficits like we experienced in 2005 in the near future, there are a few problems on the  horizon. The main issues live in the commodities markets, driven by unexpected shortages, and projected increases in consumption. Thailand and Malaysia are both showing large dips in rubber production, due to natural disasters, and a host of other issues.

Now, we are hearing word through various sources that steel prices are on the rise, and will continue to do so. Couple this with the deterioration of the US dollar, pound sterling, and various pockets of fiscal instability(Hello, Greece and Dubai)…you get prices increases that are certain (and large , I might add) .

Then, there’s oil: Over the weekend, Saudi Arabia’s Oil Minister went on record, stating that the current price of oil was “perfect” at ~$76 a barrel. That’s code for “We aren’t letting the price drop below this level, ever again, if we can help it.” They will most certainly allow prices to go higher than this level. While oil is not the first component people think of when purchasing a tire, it still makes a large contribution to the price burden.

Another major issue is tire consumption in BRIC nations. As Jim Smith of Tire Review recently pointed out, Manufacturers have announced plans to build more plants in Brazil, Russia, India, and China. Opportunity for expansion is plentiful in China, and India will continue to add automobiles as its population centers continue along the road towards Westernization. Their consumption will continue to rise exponentially in the future.

What is my point in all this? Manufacturers have decreased inventories to get some quick, operating capital. In doing so, they have created potential shortages in some earthmover tire sizes. They could have held their inventories, until such a time as demand recovered, and liquidated their stocks at a much better profit (and kept costs lower for the customer).

Now, they are going to have to reproduce that inventory, with higher raw material costs. Price increases will be just as severe as they were during the shortage of 2005-2007, without a grand economic boom to support them. A 5-8% increase will be far more noticeable now, than it was during the shortage, buried in a sea of construction and mining profit.

How much will the customer put up with, given that they are counting pennies? That remains to be seen. Multiple price increases are on their way this year, that is certain. The only way for manufacturers to escape, is to hope that pricing in other industries rises at the same rate. If they don’t, they will answer to more than one incensed equipment owner(not to mention dealers with tightening margins).

We’ll continue to follow this, and other stories affecting the mining and tire industries, as they develop.

Until next time, we’ll be…

Signing off…

During the OTR shortage (which now seems like millenia ago), there was a Chinese company that made a name for itself, GPX.  Marketed under the names Triangle and Primex here in the US, their tires (along with CMA’s DoubleCoin) were the rare Chinese models that you could sell to a customer, without fear of premature failure.

They would last awhile, and the pricing on them was reasonable. As more than one veteran salesman we know of remarked, GPX made “…a good little tire.”(“Little” is an extremely relative term in the OTR industry.)

Now, their US branch finds itself in bankruptcy court, the victims of the first tire tariffs imposed as a remedy during the OTR shortage. They couldn’t be competitive with the 44% import tariff that was levied on their tires.  GPX was lumped in with the rest of the dumpers from China at the time.

Okay, I have to say something at this point. There was a conversation that we had on a weekly basis after OTR tariffs were imposed,  and it was this: “Why are they fining these people? It doesn’t matter if they have 4000R57’s at $10K apiece, people know which Chinese brands they can trust, and they aren’t buying ‘Super-Axe Sunshine Brand OTR‘. Most of these dumpers aren’t on the trusted list. The only place people will even consider buying Chinese tires in high volume is Mexico, and I wouldn’t give  anything but a GPX/DoubleCoin to them, out of good conscience.”

Yet, the US took the word of the USW, Titan, and Bridgestone about these Chinese tires. For awhile there, I thought it might be the right idea. After looking at actual demand, my thoughts went the other direction. Were the Chinese subsidizing freight? Yes. Freight was outrageous at the time. Agents for the major shipping lines were extremely busy. Getting a freight rate on a container could take 2 weeks. Once the pricing came through, it was enough to make your eyes roll back in your head.

The Chinese Government made a smart business decision, not unlike what many other companies do when they introduce a new product: They took a loss to get consumers to try the product. It’s a very free market idea. The only way a customer would even try a Chinese OTR product, would be if the price was relatively cheap, compared to it’s US counterpart. They were. The quality just wasn’t up to snuff. In fact, to put it nicely, it was vastly inferior. So, to keep people trying the products, they kept making more, and reducing prices(or at least, keeping them vastly lower than open market rates for the tires.)

This is the way the new Chinese economy works. They are still a Communist country, they have just adopted most tenets of Capitalism. In effect, China behaves like the world’s largest mega-corporation. The brand, in this case, is China itself. They want to be the next Michelin, the next IBM, and the next Wal-Mart. Thus, they do everything in their power to promote the Chinese brand. They have the leverage, the labor, and the willpower to succeed. They just lack  quality controls on many of their products. Chinese OTR was one sector where the attention to detail was painfully evident.

The market was taking care of the glut of cheap, low-quality Chinese OTR, and allowing the few quality brands that China was producing to succeed. The lack of discrimination and judgment that the USITC showed in those cases ended up killing GPX USA. In addition, the tariffs didn’t take effect until mid-late 2008. At this point, things had fallen off with regard to pricing. The sizes that GPX manufactured were mostly 25″, and below. The boom for these sizes ended by late 2007.

US Manufacturers were beginning to roll out their inventory reduction strategies.  Mines and equipment manufacturers like CAT were reducing excess tire inventories as well. The market was literally awash in 25″ tires throughout 2008, and the deluge continues to this day.

While GPX might have survived tariffs levied in the boom years of 2005 to mid-2007, there was no way that they could compete with tariffs that put them near the same price point as a brand-name Firestone, or Bridgestone product in late 2008. Again, we are getting into tiers here. The buyer for a Primex or Triangle tire is not the same customer that is demanding a Michelin, or even a Goodyear. It just doesn’t make any sense.

The USW lawsuit was designed to permanently lock the Chinese out of the tire market. It didn’t matter that the buyers didn’t want most of the tires produced to begin with. The tariffs proposed were designed to kill off any remaining market share that China held. It has done just that.

Just yesterday, a customer called me up, and said the following: ” I need  your best price on 4 skidder tires. No Chinese crap.” The Chinese hurt themselves by jumping en masse into OTR, valuing opportunity over quality. The tariffs killed them on the price end, punishing those who manufactured a quality Chinese tire, and still managed to survive the bad press.

The sad portion of this case is that GPX is a victim of time. You see, when the duties were levied, they lodged a complaint with the WTO, stating that the duties were exceptionally high. They don’t have time to wait for the tariffs to be rolled back, and keep their US business, so they must sell, even though they may have been truly wronged.

In the end, GPX USA is just one of the assets that are being sold off to interested bidders. In addition, they have a solid tire division, and a Canadian marketing arm that are on the block as well. Right now, the leading party for acquisition of their US assets is Alliance Tire, whose parent company has manufacturing facililities in Israel. Currently, there are questions as to whether or not they stay the high bidder.

If GPX accepts, Alliance hopes  to complete the acquisition by year end.

Heavy Treaddin’ would like to acknowledge Modern Tire Dealer and Tire Review as sources for some of the information used in this article.

We’ll keep you posted on this, and other news affecting the tire and mining industry.

Until next time, we’ll be…

Signing off…

Right now, we are on the edge of a mining recovery. Some are forecasting a new boom within the next year-and-a-half, as the demand for for a safe haven from bad international financial policy grows, and the global economy recovers.

The question I have to ask myself, is “Who is going to benefit, and how?” Right now, it does not appear to be those with large deposits of base metals. Nickel, copper, and aluminum (or aluminium, for my non-Yankee brethren) producing mines are watching stockpiles of these particular metals grow, albeit it at a lesser rate than they were during the middle of the current wave of losses.

I’m not a geologist, or a highly technical mining analyst looking at the supply chain, but we are on the edge of a bigger issue for base metals. You see, many of these metals are used in the manufacture of buildings, or used as alloys  for manufacturing. While copper and aluminum have recovered, they aren’t headed back to boom levels (unless things get really inflationary, and stockpile values increase as a result). For instance, an article is out this morning stating “Copper steady, as the dollar dives“. If you hold an asset, and the price stays essentially the same, as the overall purchasing power of your cash declines, then you just lost money holding that asset. Value is being lost.

Speaking of value, while residential home ownership has been given an artificial push through an $8,000 per buyer “grant” of the US government, the commercial real estate market is a massive bubble ready to rain fire and brimstone on all of us(and punish any international investor who thought it was foolproof to invest in American real estate).

In a rather long article over at Casey Research, Doug Hornig lays out the case that  commercial real estate sales are not only dropping, but defaults are about to skyrocket. They are also going to have to take serious writedowns on the existing notes they hold, so they can refinance the borrowers at a lower rate. This is the best case scenario, where the banks lose some serious money.

The other alternative, is that the defaults become so great, that the US revisits the same place we did with Morgan Stanley, Goldman Sachs, and the rest of those brilliant bozos who threw us into this last downturn, with much higher stakes. Then, the government has two nasty alternatives(and I quote):

Let all the troubled banks fail, and the consequences will range from some excruciating but short-term pain, to a plunge into full-bore depression. Prop them up with yet more newly printed fiat money, and anything from high to hyperinflation will inevitably result, along with the possibility of extending the problem well into the next decade.

So, what does this have to do with the mining market. The US is a large percentage of the global economy, mainly in terms of consumption. We have plenty of land still available for expansion, for growth, etc. If our inventories of commercial real estate are too high, then we won’t be buying increasing stockpiles of base metals. If we do buy them, we’ll be buying them at a far higher premium as people won’t have any faith in our currency.

They will have faith in precious metals, however, as their limited supply will ensure trust. That is where we will see the majority of growth within the mining sector. There is a wrinkle in that sector, at least where gold is concerned. In the past, I made the common error of not viewing mining from a geologist’s perspective. In many cases of late, exploration has revealed gold veins that are weaker in deposits than originally projected. This has lead some mines to shut down production altogether.

For some mines, it is not a matter of running more shifts, hauling more earth, or blasting more rock. It is the case of cost of extraction outweighing production of the metal. At last check, it cost just over $900 USD to extract 1 Oz. of gold. That does not include the cost of refinement.

Silver, on the other hand, seems to be underperforming at present. I believe we will see that issue correct itself over the next 6 months or so. Gold mines will do very well, provided they have a reasonably rich vein in which to mine. Silver mines will be the area where we see profits and activity grow the most over the next 12 months.

As to tire demand, it’s going to be interesting. Many of the mines are shedding their existing stockpiles of tires. Michelin and Bridgestone, and Goodyear are offering incentives, just to get current inventory off their books. If there is a real, quantifiable mining boom, as they are predicting in Australia, then we may very well see a repeat of 2005-2007 with regards to availability.

While I am not opposed to an economic boom anywhere, I don’t see it being anything more than a last feast on the Titanic. Will precious metal prices continue to soar? I wager that they will. Would this growth be enough to offset predicted woes? I think not.

Over a year ago, I wrote the most idiotic post ever. It was called “Why Disasters Help The OTR Industry“. I have been tempted to delete it several times, so that future readers would never know how horribly stupid I was to title an article in that manner.

I thought that the mines would be spurred back to life on the increasing prices in gold, that construction would increase because of political change, and that domestic disasters would mean somebody had to clean it up. Disasters do nothing but devastate. Political unrest destabilizes nations, and families. Financial collapse is of benefit to no one.

The only thing that article proved was that I was right on the timing of the gold breakout. That’s it. I would rather have been wrong, and kept things the way they were before things crashed. That being said, I hope I am wrong about a future downturn. I hope that it is all sunshine and roses from here on out, and that I get laughed out of the country for my negative remarks. It would be far better if I was wrong about all this, for all concerned.

For all our sakes, I really pray that I am.