off highway tires north american tire & retread expo new orleans, louisiana april 16, 2015
TRANSCRIPT
Off Highway Tires
North American Tire & Retread ExpoNew Orleans, Louisiana
April 16, 2015
Agenda
OHT Market Size and Breakdown
Some observations on main relevant sectors
Thoughts on what’s coming down the pike….
A Little Bit About Me…
Some OFF HIGHWAY TIRE observations…
• Great People• Cool Products, cool machines• End users appreciate value!• It’s a relationship business.
OHT Business Good Size
• Big enough to grow in and to make money.
• Small enough to be involved and make an impact.
OTR vs. OHT??
Forestry Mining / Earthmover
Construction
8
Segments of OHT Market
Agriculture
126
14
Above OHT market size excludes solid tire, racing tires and aircraft tire.
Source: Annual reports; Global Tire Report from Rubbernews.com
Global OHT Tire Market ~$14B!
OHT Market
Other Markets
14
Above OHT market size excludes solid tire, racing tires and aircraft tire.
Source: Annual reports; Global Tire Report from Rubbernews.com
Global OHT Market
OHT Market
OEM
Aftermarket / Replacement
29%
71%
Chart Title
Series1
14
Above OHT market size excludes solid tire, racing tires and aircraft tire.
Source: Annual reports; Global Tire Report from Rubbernews.com
Global OHT Market
OHT Market
34%
28%
38%
Chart Title
EuropeROW
North America
Global Market Breakdown
Agricul-ture
- 47%
Con-struction
26%
Forestry - 3%
Mining/EM 23%
North American OHT Market
Con-struction 26.0
%
Agricul-ture
- 39.3
%
Mining /EM 29.4
%
Forestry 5.3%
Mining
Mining….
“It was the best of times….it was the worst of times” Charles Dickens, A Tale of Two Cities
Mining….
• Highly specialized• Very regionalized• Cost of failure very high• High cost to serve
Mining Pockets of Opportunity
• Underground mining
• Sand and Gravel
Agriculture
THEIKPSOIUPRTE
AG vs. Mining
Agriculture
• Also specialized and regional
• But not as much as mining
• Farms in every state….opportunities unless you are an urban dealer
Farmers Very Tech Savvy
• Farmers research EVERYTHING online before buying
• Make sure your website is easy to find and easy to use.
GPS Guided Farming!
Heavy Users of Social Media
Productivity Driven….
Not Just Tractors….
Segment break-up of OHT market
Key OHT Segments
Agriculture
Forestry Mining Construction
Construction
Construction is Booming
• 2014 machinery sales up 8.7%
• 2015 forecasted to be even higher 8.9%
• 2016-2019 looking strong with CAGR of 4.5% or higher
Growth is Across the Board
• 2015 Single Family Housing Forecasted to be up 15% over 2014
• Commercial Building also forecasted in the 15% range
• Construction is EVERYWHERE….not just in Southeast or West.
• Not just suburbs as in past. INFILL in cities, led by millennials, driving urban construction
Construction Equipment
70% Of All OTR Tires 24”-25”
13.00-2414.00-2415.5-2517.5-2520.5-2523.5-2525.5-2529.5-25
OTR Segment Offers Greatest Short Term Opportunity
• You don’t have to be an OTR dealer to participate.
• Any commercial dealer, with a lift gate truck, can handle majority of tire sizes used on construction and industrial machines
Go Where the Numbers Are….• 800,000+ Skid Steers in
the USA alone• 600,000 on tires• 2.4 MILLION SS Tires in
the field right now• Severe use. High scrub
rate. Wear out fast• Limited sizes to
inventory10-16.512-16.5
Rental Companies Are Hot…
Rentals Are Hot!
• Over 50% of 2014 new equipment purchased by rental companies
• Trend forecasted to be even higher 2015-2019
• Driven by continuing uncertainty
• Users increasingly deploying specialized equipment for specialized jobs. More economical to rent than own
• Uncertainty over long term Federal Highway Bill
So What?
• Do not ignore the rental fleets• They are growing fast• Get to know local people at rental company
branch locations• United Rentals• Sunbelt• Cat Equipment• Etc.• They are everywhere. In all markets.
Where to Look….
Forestry
OHT…It’s a Dealer’s World.
• OTR Users Need Dealer Service and Value their servicing dealer
• You offer what manufacturers do not:
• 24 Hour emergency service• Inventory close at hand. • Trained technicians/OSHA certified• Data driven recommendations to
help lower production costs/reduce downtime
It’s All About Productivity & Cost
• No one cares about tires except for those of us in this room!
• Customers only care about lowering their production costs and improving productivity
• If this could occur through some new, disruptive technology, we’d be out of business
Good News…You are the Critical Link!
• Right service partner is still the critical link in making everything work
• Right tire recommendation• Right service offerings• You are in the driver’s seat. Customer
appreciates what you can do for him more than the brand of the tire.
• You can recommend the right bundle of products and services that you feel will help your customer best.
Majors De-Focused
• Pirelli spins off AG tire business to Trelleborg
• Goodyear spins off AG business to Titan
• Continental spins off OTR business in U.S. to Titan
• Conti spins off AG business in Europe to Mitas
It will be a buyer’s market
You Will Have Even More Choices in the Future….
Emerging Players starting to challenge the global giants
Emerging players more sophisticated
Choose Wisely….