Download - Mining Forum 9-2007 Tires Gove
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Mining Tire Update
Dan Gove
2007 Mining Forum
September 26, 2007
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Agenda - Tire Update
Tire Industry Overview
Tire Shortage Facts
Outlook by Tire Segment
Summary
Q&A
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Global Tire Industry ($100 Bill ion)
Bridgestone
Michelin
GoodyearContinental
Pirelli
Sumitomo
Yokohama
Hankook
Cooper
Kumho
Toyo
Other18.2%
17.7%
17.3%
21.3%
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Global Tire Industry ($100 Bill ion)
Earthmover
OTR
Two Wheel
Aircraft
Agricultural
Passenger Car
& LT Truck
Heavy Truck
(Highway)
60%
26%
6%
5%
2.5%
0.5%
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Whats in an Earthmover tire?
Synthetic
Rubber
22%
Steel Cable
11.5%
Carbon
Black
14.5%
Organic
Chemicals
11%
Natural
Rubber
41%
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Material costs doubled inthe last 5 years.
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Off The Road (OTR) Tire Shortage
The OTR tire shortage is real
The tire companies did not see the upturn in business and were not prepared for the
surge in demand.
Tire companies were slow to invest in new capacity Due to the high investment required and traditional low returns in that segment of their
business vs. other segments.
New capacity takes 18 months to 2 years to bring on line.
Tire supply is limited by curing capacity
By design to keep curing presses fully burdened.
Raw Material
Is not limiting supply, but costs are up considerably
End users without tire contracts
Were hit hard
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Tire Types: Radial vs. Bias Ply Tires
Radial is new technology a modern tire
Better traction, ride & life . a better value
Higher load & speed applications need radials => trucks
Bias Ton-MPH = 100%, Radial Ton-MPH = 130%
Haulage units require radials to achieve best results
Nearly all tire capacity installed in last 20 years is radial capacity
Off road is trend from bias to radials => 3% per year
Truck & Passenger tires already all radial
Bias tires helped close the OTR gap during shortage
Old, underutilized capacity was fired up to help get more tires
Radial growth trend will continue after shortage
Bias tire is usually the low price tire
Bias tire does have a place => a stiffer tire
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18+ Tire Brands offered at Cat
Michelin
Bridgestone/Firestone
Goodyear Triangle
Euro Tire
Yokohama
Titan
Continental/General
Goodyear Ag
Cat Brand Skid Steer
Dunlop
Mitas
GPX (Galaxy/Primex) Nokian
Pirelli
Alliance
Toyo
Torch
Purcell -- Retreads
Constrained supply requires many suppliers
to cover total needs
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OTR Tire Segmentation
Segment Small & Ag Large
Many Brands
Small to Lg Cos
Several Brands
Med & Lg Cos
29 to 49 rim
size
80% Radial
Quarry, Mining
& Construction
988-992, 770-
777, WTS, UGM
Smaller than 24 &
Ag style tires
90% Bias
Building Const.,
Forestry & Paving
SSL, TH, BHL,
CWL, WEX, FP,
Paving Prods.
Manufact-
urers
Rim Size
Type
Industries
Quarry &
Construction Mining
Machines
Medium Giant
3 Key Brands
3 Companies
51 to 57 LWL
51 to 63 LMT
90% Radial
Most sold direct
785-797, 993,
994
Many Brands
Small to Lg Cos
24 & 25 rim size
60% Radial
SWL, MWL, AT,
MG,
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Small Tire Outlook
Less than 24 inch sizes and Ag type tires BHL, SSL, CWL, WEX, Paving & Forest Products
Adequate volumes of small tires are available Free supply for most brands
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Medium Tire Outlook
24 & 25 inch sizes
AT, SWL, MWL, MG & Small Scrapers
Adequate volumes of Medium tires are available
Not yet free supply for all brands.
Some brand switching required until 2010
Chinese suppliers have added considerable radial tire
capacity over the past two years
Bias tire capacity is readily available
Be flexible on your brand selection
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Large Tire Outlook
29 to 49 inch sizes
770 to 777 trucks, 988 to 992 wheel loaders, scrapers, 24H motor grader
Large Tire Shortage wil l last into 08 / 09 for some sizes
New Michelin Brazil (large & med) tire plant starts up in late 2007
Many companies are adding radial tire capacity to existing plants
Bridgestone, Yokohama, Triangle, Euro Tire, China
Retreads are an option, but used tire casings are hard to find.
Be flexible on your brand selection
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Giant Tire Outlook
51 , 57 & 63 inch sizes
785 to 797 Trucks, 993 & 994 Wheel Loaders
Most Giant Mining Truck tires are sold direct
Tire company to end user
Few sales through OEM
Large Loaders are generally sold with tires
Lower volumes, constrained but adequate supply
Bias ply tires are an option for truck loading application
Radial tires are needed for load and carry applications
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Giant Tire Outlook Existing Manufacturing Locations
Michelin
Lexington, South Carolina
Vitoria, Spain
Bridgestone/Firestone Shimonoseki, Japan (Bridgestone Brand Radial Tires)
Bloomington, Illinois for Large Loader Tires (Firestone Brand Bias Tires)
Goodyear
Topeka, Kansas Tatsuno, Japan (joint venture with Toyo)
Yokohama - Onomichi, Japan (bias tires, radial tires under development)
Euro Tire - Ukraine (bias tires, radial tires under development)
Titan/General - Bryan, Ohio (bias tires, radial tires under development)
Belshina - Belarus (bias tires, radial tires under development)
China - Various (bias tires, radial tires under development)
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Giant Tire Outlook Tire Industry Capacity
Giant Tire supply stil l gapped
Estimated gap is 10%+
Do not see supply catching up with demand until 2011 Capacity increases are coming on l ine from existing suppliers
Michelin in South Carolina
Bridgestone & Yokohama in Japan
Retreading: Purcell has radial mold-cure press in Missouri
New radial capacity planned
China, Ukraine & Ohio
Management of existing tire supply is critical
Improved tire care & maintenance has increased tire life 20% to 30%
Must continue to improve tire life
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Many Tire Companies are Expanding Capacity
Will improve Large & Giant tire availability
Giant Tire supply gapped until 2011
Depends on how fast viable tire capacity goes on line
Management of existing tire supply is critical
Continue to extend tire life
Be flexible on the tire brands you use
Summary Mining Tires
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Thank You, Questions ?
Dan Gove
2007 Mining Forum
September 26, 2007