Despite the groundbreaking advances in technology, a large number of fleets still refuse to consider retreads as a viable alternative to new tires. Whether the decision is based on personal opinions or actual facts is immaterial. If the decision-maker is convinced that retreads cannot do the job, then there has typically been little chance of any immediate change in policy.
But change is exactly what has happened in the retread industry. The latest inspection technology can now spot the tiniest flaws in a casing, and modern equipment will match the splice on pre-cure retreads while creating a bond-line at the tread edge that is almost impossible to notice. Advances in compounding have allowed the retread industry to deliver special blends that can accommodate the unique operating characteristics of specific applications. And the computerization of the production process has helped retreaders provide better service with more detailed reports.
From the physical standpoint, modern retreads look almost like new tires, with virtually no drop in performance and in some instances, improved mileage or traction. So the average truck driver will have a more difficult time identifying the difference between a new tire and a retread. Add the fact that they probably won't notice any changes behind the wheel, and it's not inconceivable that some minds can be changed.
Some of the major tire manufacturers are implementing increases in truck tire prices in the neighborhood of 6%. The usual culprits — raw material costs, energy and transportation — are at the heart of these increases. And with oil hovering around $100 a barrel as I write this, there's a good chance others will follow suit in 2008. Tire prices are escalating rapidly as the companies try to keep up with rising production costs.
For simplicity's sake, let's say a new tire is $300 and that it costs $100 to retread your own casing. If both the new tire and the retread manufacturer raise prices by 6%, then it's an extra $18 for the new tire and $6 for a retread. When — not if — the next increase rolls in, a new tire will cost $337 and a retread $112. So while the price differential this year is $212, by next year it will be $225.
Even if you take the $50 casing credit, which is not always guaranteed, when the new tire is worn out the price difference is still significant at $162 this year and $175 with the next increase. Rising energy costs are hitting trucking harder than almost any industry, so the opportunity to save that much money on each tire should be impossible to resist. Yet some fleet managers are still unwilling to consider a retreading program.
A couple of years ago I asked everyone to give retreads a chance. A lot has changed since then, especially when it comes to tire prices. Consequently, I believe that in order for most fleets to stay in business a few years from now, they must have an effective retread program in place. Fleets will still need to purchase new tires to replenish the supply of casings, but each casing must go through at least one or preferably two more tread lifecycles.
I know there are some fleets that can still make the cost-per-mile work by using only new tires. But if the latest round of price increases didn't close the gap, it's only a matter of time before it does.