Mining sector demand driving Bridgestone’s off-road business

Within the United Kingdom the off-road tyre market is dominated by the mining sector and it is no secret that Bridgestone has safely the largest presence here. When Tyres & Accessories spoke with Bridgestone UK’s OTR sector product manager Barry Coleman recently, he confirmed that current industry data places Bridgestone as clear UK market leader in the OTR/EM tyre segment and added that the company’s particular strength within the segment is in the rigid dump truck business. Bridgestone’s tyre portfolio for these 100 tonne plus vehicles includes sizes up to 3700R51 in the UK.

“The rigid dump truck business is the market into which we sell our giant tyres, which often sell for in excess of £20,000 each,” Coleman comments. “Our market share is very strong there, between 70 and 80 per cent.” Coleman also points out that although all Bridgestone OTR/EM tyres sold in the UK are imported, many products are manufactured with our local requirements in mind: “Tyres sold in this segment are mainly purchased by coal mining segment customers, and the products we sell are specific to our market. Due to our cooler climate we provide our UK customers with tyres made using super cut resistant compounds; the super heat resistant compounds utilised in tyres destined for service in African mines, for example, would not provide a good TKPH (tonne kilometer per hour) rating in UK conditions, and vice-versa. Therefore, we have developed tread compounds just for the UK market. We have to be very specific about the products we sell here.”

Within this dominant part of Bridgestone UK’s OTR/EM tyre business, Scottish Coal is the largest single customer. Recently the opencast mining company, which last year supplied more than four million tonnes of coal to UK power generators, renewed its tyre supply contract with Bridgestone. The UK’s largest surface coal mining producer and owner of Europe’s biggest earth-moving fleet has operated a 100 per cent Bridgestone tyre policy since 2003, with its rolling annual contract renewable every June. Bridgestone has previously attributed the long duration of its supply to Scottish Coal to the tyre management system it supplies – a vital cost-saving feature for a company said to spend around £3 million on tyres each year.

In addition to rigid dump truck supply, Coleman shares that the mobile crane and articulated dump truck sectors are two further important markets for Bridgestone: “Our other major sector is the mobile crane sector. Here we have a similar market share as we do in the mining sector, and our largest selling single size is the 445/95R25 VHS pattern highway service crane radial. We also have a high share in the articulated dump truck sector, with the most popular fitments being the VLT in sizes 20.5R25, 23.5R25, 26.5R25 and 29.5R25. The VLT is a standard depth pattern specially developed for earthmovers and front-end loaders operating on muddy surfaces; it is also available in the deep-tread VLTS variant, which was specially developed for articulated dump trucks operating on rocky or gravel in mining yards, quarries and large-scale civil-engineering/construction sites.”

Demand within the mining sector is currently very strong, the product manager notes. “Here Bridgestone is producing at full capacity in terms of tyre supply on a global level and our supply across the whole EM product line is only limited by the number of tyres we can produce – as is the case for all major competitors.”  In contrast, construction-related sectors are still quite flat, he adds. “We expect them to turn around as the economy recovers – we’ve bottomed out now but realistically have only seen the first green shoots of recovery.”

Raw material prices a huge challenge

It will come as no surprise to most readers that raw material prices are proving a huge challenge to both Bridgestone and its competitors. Barry Coleman confirms they are having a sizable impact on the sector at present: “OTR/EM products have a high percentage of natural rubber in them, and the price of this commodity is currently about 70 per cent higher than it was a year ago,” he comments. “For this reason the proportion of raw material costs to overall price has grown from just below 50 per cent a year ago to 55 per cent today. Due to these growing raw material costs, along with rising energy and transport costs, it has been inevitable that prices for our products have risen significantly this year.”

As previously mentioned, product supply in the EM tyre sector is presently restricted by global production capacities. While this applies to many manufacturers, Bridgestone’s global customers are also facing supply issues in the wake of the March 11 earthquake and tsunami in Japan. All Bridgestone OTR/EM tyres sold in the UK are manufactured in Japan. The tyre maker produces these in three factories – Shimonoseki, Hofu and Kitakyushu. The last of these was opened only two years ago and has been earmarked for capacity expansion to meet global demand for large and ultra-large off-road mining and construction radials. While none of the three plants are located in hard-hit regions of Japan and no damage was reported, rolling power cuts are still an issue affecting production. Mr. Coleman adds that further pressure on availability is coming from the huge demand for off-road tyres within Japan due to the rebuilding projects currently underway in earthquake and tsunami-affected regions.