With product shortages and cost increases in raw materials, it's been a tumultuous year in the commercial tire industry.
In a Q&A with Rick Phillips, Yokohama director of commercial sales, he offers his views on 2011 and previews 2012.
Yokohama Tire Corporation is the North American manufacturing and marketing arm of Tokyo, Japan-based The Yokohama Rubber Co., Ltd., a global manufacturing and sales company of premium tires since 1917.
Servicing a network of more than 4,500 points of sale in the U.S., Yokohama Tire Corporation is a leader in technology and innovation.
The company’s complete product line includes the dB Super E-spec - the world’s first tire to use orange oil to reduce petroleum - as well as tires for high-performance, light truck, passenger car, commercial truck and bus, and off-the-road mining and construction applications.
Question: With the earthquake/tsunami, product shortages and cost increases in raw materials, how did Yokohama’s Commercial Division fare in the industry?
Rick Phillips: Demand has continued to outweigh supply so we have literally sold everything that we are able to build. At the same time though, it has been very frustrating to not be able to meet the expectations of our customer base.
The tsunami just presented another set of issues that we had to manage through. We actually recovered quite well and the impact was less than what it could have been given the severity of the situation.
Question: How did Yokohama address some of these industry problems?
Phillips: The costs have been a huge factor. Although raw materials have fluctuated of late, they have increased dramatically over the last two years.
These include transportation, insurance, labor and related expenses. We have had to bear these costs but also pass some of them along, unfortunately.
However, if you consider the past couple of years in aggregate, we still have not recouped the full impact of all the rising costs.
Question: Do you see some of these issues carrying over to 2012 for the industry? Which ones and how much of an effect will they have?
Phillips: As an industry, we will go into 2012 with very little beginning inventory much like we did in 2011. This alone will be a challenge but add to it a demand that’s forecasted to remain at high levels - especially within the OEM segment - and further pressure can only be expected on the replacement market.
Although costs are probably not going to rise at the rates seen by tire manufacturers this year, they are likely to continue to escalate.
Question: Any new opportunities for commercial tires in 2012?
Phillips: Yes, we see the demand continuing to be greater than supply, at least through next summer. Despite reports on the economy being on the brink of another recession, the trucking industry remains strong.
Commercial equipment sales and future orders remain high as does the demand for freight.
It’s also interesting to note that amid all the bad economic news, we actually have had eight consecutive quarters of GDP growth. Not every quarter witnessed robust growth, but growth was achieved nonetheless.
Question: What is Yokohama's outlook for 2012? Are there any new products in the pipeline?
Phillips: We are expecting a solid year, with new products lined up for launch.
There will be a new steer tire, the RY647, which will be built on a highly retreadable casing, be extremely fuel-efficient and exceptionally resistant to irregular wear. It’s scheduled to be released in 2012.