Tire that costs as much as a Lexus
04-21-06, 12:04 PM
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Tire that costs as much as a Lexus
Check it out - these tires cost $40k!
http://www.nytimes.com/2006/04/20/bu...=1&oref=slogin
Big Tires in Short Supply
Matthew Staver for The New York Times
A mining truck that can carry as much as 400 tons of coal in Campbell County, Wyo.
By SIMON ROMERO
Published: April 20, 2006
HOUSTON, April 19 — The worldwide thirst for stuff from the ground — materials as diverse as copper and coal, gold and oil — has set off a stunning boom in just about every commodity market. But there is one item that lately has dealers in the global mining industry really scrambling: the supersize tire.
Multimedia
Graphic: Rolling Along
Matthew Staver for The New York Times
Prices of some of the biggest industrial tires, which can be 12 feet tall and 4 feet wide, have quadrupled over the last year to around $40,000.
Mining companies are complaining about a shortfall in the supply of the giant tires that go on large dump trucks and other heavy equipment. These outsize tires stand as tall as 12 feet tall and can spread 4 feet wide.
They are used prominently everywhere from the Canadian tar sands to open-air coal mines in the United States and China, but lately they have become almost as precious as gold and silver: prices have quadrupled for some of them in the last year to more than $40,000 a tire.
"This has never happened in the 35 years I've been in this business," said Michael Hickman, 63, who, together with his son, owns H & H Industries in Oak Hill, Ohio, one of the nation's largest retreaders of used mining tires.
"Right now the entire mining industry is going berserk, and we're feeding into it," said Mr. Hickman, whose company has tripled its work force to 160 in the last two years.
There are several reasons for the tire shortage. Demand is soaring, with greater needs by the military for the wars in Iraq and Afghanistan and by construction firms rebuilding the hurricane-ravaged Gulf Coast.
But mining companies and tire manufacturers say the biggest reason is the rapid industrialization of China, India and other developing countries, which is expanding the appetite for basic commodities.
The outsize tires have historically been a specialty business, so there was rarely an abundance of production capacity. Making a large tire requires a curing process in which the tire is cooled in a mold, and that can take as long as 24 hours. Factories normally produce just two to three large tires a day.
And with existing factories already running flat out, there is little hope for much increase in the supply of new tires anytime soon. At Michelin, the French tire company, its large-tire manufacturing plants have been "saturated," according to Prashant Prabhu, its president for earthmover tires. He said all of the plants were operating at full capacity 24 hours a day, or near that level in countries where labor laws restricted flat-out production.
"Our customers are very upset," Mr. Prabhu said. "We cannot accommodate them at the rate they want."
Michelin, together with Goodyear of Akron, Ohio, and Bridgestone and Yokohama, both of Japan, rank among the largest manufacturers of heavy tires.
In many ways, the tire shortage both reflects the soaring commodities prices and contributes to it. The price of copper, which is used in electrical wiring and pipes, has climbed 45 percent this year, closing at $2.9595 a pound on Wednesday. Nickel, used to make stainless steel, is up 37 percent during the same period, while gold is up 23 percent and zinc is up 65 percent.
In an attempt to cash in on the commodities rally, mining companies have been reactivating old mines and expanding existing operations. But time and again, these firms have been stymied by a lack of available tires.
Some companies have been forced to idle their heavy equipment or alert investors of the impact of the tire shortage. For instance, Fording, one of Canada's largest coal producers, has repeatedly warned in recent months that the tire shortage could reduce its coal output. Production capacity at its mines in British Columbia and Alberta is 28 million tons a year, but output this year could fall to less than 25 million tons, company said.
Some newsletters in the mining and construction industries have speculated about the possibility of a black market or even outright thievery of heavy tires, but such talk appears premature. In the meantime, salvage firms are doing a thriving business in discarded tires and companies that retread tires are struggling to keep pace with demand, with used tires in some cases fetching higher prices than new tires.
Michelin is investing $85 million to expand its tire factory in Lexington, S.C., a move that will eventually expand production there by 50 percent. It is also building a new $550 million plant in Campo Grande, Brazil.
These moves and plant expansions by other tire manufacturers, however, will do little to ease the tire shortage until late 2008 or thereafter. The heavy equipment used to make the tires is relatively difficult to procure, which means that the earliest any new plants could be operating is more than two years from now
Tire manufacturers were largely caught off guard by the surge in demand for heavy tires, which began to heat up in 2004 after several flat years in the industry. The largest companies say they have been hesitant to increase prices by larger amounts — despite pleas from some mining companies for tires at almost any price — out of concern for angering long-time customers.
Tire companies complain they are also squeezed by rising prices for raw materials, with natural rubber prices rising nearly sixfold, to about $2 a pound since 2002, the last weak period for heavy tire sales. High crude oil and natural gas prices are also adding a burden to tire companies, which use petroleum in large amounts to produce the carbon black needed for tire carcasses and threads.
"The larger the tire, the more difficult it is to source," said Shawn Rasey, executive sales director for off-the-road tires at Bridgestone North America. "I don't see the shockwave of demand peaking until 2009 or 2010."
Faced with such tight tire supplies, mining companies are doing everything they can to extend the life of their tires, which typically are made to last from 4,000 to 7,000 hours.
Phelps Dodge, the Phoenix-based company that produces commodities like copper and molybdenum, carefully monitors its trucks and heavy equipment to achieve the optimum life for its tires. This is especially important in the Arizona heat, according to Kenneth Vaughn, a spokesman, who explained how Phelps is even using truck simulators at its mines to train drivers in "hazard avoidance" techniques, like gently avoiding rocks on the road.
Some companies go even further, laying down a plastic covering, called geo-textile, on moist roads to provide a smoother ride. Newmont Mining of Denver has done that at its gold mines in Nevada, Indonesia and Peru, said Lee Krugerud, vice president of North American business affairs at Newmont.
Mr. Krugerud said Newmont has also been scouring other countries in an attempt to find alternate supplies of tires. Executives visited Belarus, where they found a manufacturer that still produces large, old-style "bias-ply" tires, which are less durable than the more popular radial tires. "We need to have a safety option, even though those tires won't last as long," said Mr. Krugerud. "The other option, parking our trucks, is not something we want to do."
Given the stress the commodities boom has unexpectedly created in an arcane area of the mining supply chain, some experts suggest that the tire shortage may keep prices higher longer than expected by limiting the ability of mining companies to meet the explosive demand for their products. But in the end, they say, there is little to worry about.
"This tire issue is, I believe, more a symptom of the mining industry's strength than its weakness," said Tibor Rozgonyi, head of the mining engineering department at the Colorado School of Mines. "It may be an acute concern at this moment, but the market has a way of taking care of these imbalances."
http://www.nytimes.com/2006/04/20/bu...=1&oref=slogin
Big Tires in Short Supply
Matthew Staver for The New York Times
A mining truck that can carry as much as 400 tons of coal in Campbell County, Wyo.
By SIMON ROMERO
Published: April 20, 2006
HOUSTON, April 19 — The worldwide thirst for stuff from the ground — materials as diverse as copper and coal, gold and oil — has set off a stunning boom in just about every commodity market. But there is one item that lately has dealers in the global mining industry really scrambling: the supersize tire.
Multimedia
Graphic: Rolling Along Matthew Staver for The New York TimesPrices of some of the biggest industrial tires, which can be 12 feet tall and 4 feet wide, have quadrupled over the last year to around $40,000.
Mining companies are complaining about a shortfall in the supply of the giant tires that go on large dump trucks and other heavy equipment. These outsize tires stand as tall as 12 feet tall and can spread 4 feet wide.
They are used prominently everywhere from the Canadian tar sands to open-air coal mines in the United States and China, but lately they have become almost as precious as gold and silver: prices have quadrupled for some of them in the last year to more than $40,000 a tire.
"This has never happened in the 35 years I've been in this business," said Michael Hickman, 63, who, together with his son, owns H & H Industries in Oak Hill, Ohio, one of the nation's largest retreaders of used mining tires.
"Right now the entire mining industry is going berserk, and we're feeding into it," said Mr. Hickman, whose company has tripled its work force to 160 in the last two years.
There are several reasons for the tire shortage. Demand is soaring, with greater needs by the military for the wars in Iraq and Afghanistan and by construction firms rebuilding the hurricane-ravaged Gulf Coast.
But mining companies and tire manufacturers say the biggest reason is the rapid industrialization of China, India and other developing countries, which is expanding the appetite for basic commodities.
The outsize tires have historically been a specialty business, so there was rarely an abundance of production capacity. Making a large tire requires a curing process in which the tire is cooled in a mold, and that can take as long as 24 hours. Factories normally produce just two to three large tires a day.
And with existing factories already running flat out, there is little hope for much increase in the supply of new tires anytime soon. At Michelin, the French tire company, its large-tire manufacturing plants have been "saturated," according to Prashant Prabhu, its president for earthmover tires. He said all of the plants were operating at full capacity 24 hours a day, or near that level in countries where labor laws restricted flat-out production.
"Our customers are very upset," Mr. Prabhu said. "We cannot accommodate them at the rate they want."
Michelin, together with Goodyear of Akron, Ohio, and Bridgestone and Yokohama, both of Japan, rank among the largest manufacturers of heavy tires.
In many ways, the tire shortage both reflects the soaring commodities prices and contributes to it. The price of copper, which is used in electrical wiring and pipes, has climbed 45 percent this year, closing at $2.9595 a pound on Wednesday. Nickel, used to make stainless steel, is up 37 percent during the same period, while gold is up 23 percent and zinc is up 65 percent.
In an attempt to cash in on the commodities rally, mining companies have been reactivating old mines and expanding existing operations. But time and again, these firms have been stymied by a lack of available tires.
Some companies have been forced to idle their heavy equipment or alert investors of the impact of the tire shortage. For instance, Fording, one of Canada's largest coal producers, has repeatedly warned in recent months that the tire shortage could reduce its coal output. Production capacity at its mines in British Columbia and Alberta is 28 million tons a year, but output this year could fall to less than 25 million tons, company said.
Some newsletters in the mining and construction industries have speculated about the possibility of a black market or even outright thievery of heavy tires, but such talk appears premature. In the meantime, salvage firms are doing a thriving business in discarded tires and companies that retread tires are struggling to keep pace with demand, with used tires in some cases fetching higher prices than new tires.
Michelin is investing $85 million to expand its tire factory in Lexington, S.C., a move that will eventually expand production there by 50 percent. It is also building a new $550 million plant in Campo Grande, Brazil.
These moves and plant expansions by other tire manufacturers, however, will do little to ease the tire shortage until late 2008 or thereafter. The heavy equipment used to make the tires is relatively difficult to procure, which means that the earliest any new plants could be operating is more than two years from now
Tire manufacturers were largely caught off guard by the surge in demand for heavy tires, which began to heat up in 2004 after several flat years in the industry. The largest companies say they have been hesitant to increase prices by larger amounts — despite pleas from some mining companies for tires at almost any price — out of concern for angering long-time customers.
Tire companies complain they are also squeezed by rising prices for raw materials, with natural rubber prices rising nearly sixfold, to about $2 a pound since 2002, the last weak period for heavy tire sales. High crude oil and natural gas prices are also adding a burden to tire companies, which use petroleum in large amounts to produce the carbon black needed for tire carcasses and threads.
"The larger the tire, the more difficult it is to source," said Shawn Rasey, executive sales director for off-the-road tires at Bridgestone North America. "I don't see the shockwave of demand peaking until 2009 or 2010."
Faced with such tight tire supplies, mining companies are doing everything they can to extend the life of their tires, which typically are made to last from 4,000 to 7,000 hours.
Phelps Dodge, the Phoenix-based company that produces commodities like copper and molybdenum, carefully monitors its trucks and heavy equipment to achieve the optimum life for its tires. This is especially important in the Arizona heat, according to Kenneth Vaughn, a spokesman, who explained how Phelps is even using truck simulators at its mines to train drivers in "hazard avoidance" techniques, like gently avoiding rocks on the road.
Some companies go even further, laying down a plastic covering, called geo-textile, on moist roads to provide a smoother ride. Newmont Mining of Denver has done that at its gold mines in Nevada, Indonesia and Peru, said Lee Krugerud, vice president of North American business affairs at Newmont.
Mr. Krugerud said Newmont has also been scouring other countries in an attempt to find alternate supplies of tires. Executives visited Belarus, where they found a manufacturer that still produces large, old-style "bias-ply" tires, which are less durable than the more popular radial tires. "We need to have a safety option, even though those tires won't last as long," said Mr. Krugerud. "The other option, parking our trucks, is not something we want to do."
Given the stress the commodities boom has unexpectedly created in an arcane area of the mining supply chain, some experts suggest that the tire shortage may keep prices higher longer than expected by limiting the ability of mining companies to meet the explosive demand for their products. But in the end, they say, there is little to worry about.
"This tire issue is, I believe, more a symptom of the mining industry's strength than its weakness," said Tibor Rozgonyi, head of the mining engineering department at the Colorado School of Mines. "It may be an acute concern at this moment, but the market has a way of taking care of these imbalances."
04-21-06, 03:40 PM
#4
Lexus Fanatic
Wait till DUB make an Escalade roll on these things. That oughtta satisfy even the most big-balling big ballers.
Last edited by XeroK00L; 04-21-06 at 08:11 PM.
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