MONTREAL, Que. – Demand for new truck and trailer tires has been “stronger than anticipated” this year, thanks to strong freight volumes and signs of life in the energy sector, according to Ralph Dimenna, chief operating officer of Michelin Americas Truck Tires.
Dimenna sat down with Newcom Truck Group editorial staff for a wide-ranging discussion at the company’s Movin’ On sustainable mobility conference in Montreal, Que., this week.
“Overall, we’re optimistic,” Dimenna said of current industry conditions. “We hope to get a little bit of a boost from additional infrastructure spending, that can only help. We’re not counting on it, but nobody will be complaining if it comes.”
Michelin began noticing the decline in truck and trailer tire demand – power units, especially – towards the end of 2015. The drop in demand was more severe than expected last year, but the recovery was also faster, Dimenna explained. This year’s demand is expected to be flat, however, Dimenna said there’s been robust demand for tires on new trailers.
Dimenna said offshore tires continue to be a factor in the North American market, but that their market penetration seems to have leveled off since about 2015.
“Now they represent more or less, one third of the market, and they’ve been sitting in that position over the last couple years,” Dimenna said of offshore tires. “I know from our business, we see people really flock to value as the economic conditions have gotten tough. We haven’t seen any decline in our Michelin brand sales. Where we have seen growth is with the introduction of the Uniroyal brand. In a down market, we took a significant amount of share out of the market with the launch of an intermediate brand, backed by the Michelin Group.”
Uniroyal has been successful, Dimenna said, in part because it promises excellent retreadability for an intermediate brand. And against the backdrop of its Movin’ On conference all about sustainability, Dimenna emphasized the importance of retreading.
“We are absolutely believers in the total life-cycle cost of tires,” he said. “When it comes to tires, we absolutely believe in retreadability…We put so much technology into that asset, that to not retread it is simply a misuse of a huge amount of materials.”
He also noted imported tires are generally heavier than those Michelin produces, and when you combine that with potentially poor retreadability, Dimenna said they’re much worse for the environment.
“There’s a 10-12 kg difference between a Uniroyal and competing imports and that’s a massive amount of material you’re throwing away if you’re not retreading that tire,” he pointed out. “We very much believe in re-using the carcass and getting the ultimate value and longevity out of it.”
Fleets that employ retreading are better able to control their operating costs, and in turn, provide better value to their customers, Dimenna said.
“Uniroyal is not about a low price, it’s about a better value proposition” he said. “We’re not competing on price with any of those other brands. Where we try to compete, is to provide a better overall value proposition. You are not selling tires to a fleet, you’re selling them a solution.”
Dimenna said the initial success of the Uniroyal brand in both the U.S. and Canada has exceeded expectations, “in terms of our ability to capture market share in a down market in a segment that wasn’t growing, from competition we haven’t traditionally competed against.”
Asked what Michelin gets out of investing so heavily into a conference on sustainable mobility, which covered a broad range of topics reaching far beyond the realm of tires, Dimenna said it’s not necessarily about selling tires, but about inspiring progress.
“We get so much out of the conference by having so many different thought leaders come together,” he said. “Just by having the different conversations we’ve been able to have with groups of people that would be hard to get together in any other space. To have conversations about, what does the future of last mile delivery look like in a city like Montreal? You leave with so many ideas about where we can take this, what’s our vision for the future, and what do we do from a product and service side?”
At the closing of the conference, it was announced Movin’ On will return to Montreal in 2018. And who knows what technologies will be on display then? Dimenna said Michelin and the rest of the tire industry is just beginning to tap the potential of technology when it comes to truck tires.
“We are nowhere close to seeing the end of technology on tires,” he said. “If you look at the different types over the 20 years of my career and how materials have changed over 20 years – you look at not just the types of rubbers but the types of components that go into the rubber mixes…the tires we make today, in 1993 no one dreamed we’d be able to make the types of tires we make today in 2017.”
He said work will continue to occur on an airless concept tire Michelin unveiled at Movin’ On. And he also promised Michelin will continue to develop not only more advanced products, but also services, which are necessary to appeal to an increasingly sophisticated fleet buyer.
“It’s all about data,” he said of today’s fleet customer. “Previously, it was all about experience – ‘I’ve experienced this product, I know this drive tire works in this application.’ Now, the new generation says ‘Okay, we’ve experienced your product for 25 years, show me. Tell me. You cost 25% more than that guy, what are you delivering?’ Now, it’s all about data. They are very technologically savvy and they want to be able to buy online and they want service at their fingertips. ‘You told me you guaranteed a road call in 120 minutes and it took 123 minutes, I don’t accept that.’ That, to me, is what is changing. It’s more sophisticated, it’s more demanding. They’re measuring everything. Every truck is connected somehow, every trailer is connected and the savvy operators are bringing in people to analyze that and get information from that and now every conversation is not, ‘Give me a tire I can run from Montreal to Miami and get 300,000 miles on,’ now the conversation is ‘Why am I having more tire failures in Iowa than I do in Nebraska,’ or ‘Why is your dealer in Iowa taking four minutes longer on road calls than your dealer in Nebraska, when they’re the same distance away?’ The level of sophistication is changing.”
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