mining forum 9-2007 tires gove

8/13/2019 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
http://images.catmms.com/catimage/vision/jsp/preview


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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
http://images.catmms.com/catimage/vision/jsp/preview


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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

mining forum 9-2007 tires gove

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