Inflating Tire Costs

Michael Fickes

TRUCK TIRE MAKERS HAVE RAISED prices across the board this year, but many waste fleets are weathering the storm.

Bridgestone/Firestone North American Tire, Nashville, Tenn., boosted prices 5 percent on June 1. Between July and August, Michelin North America, Greenville, S.C., will raise tire prices from 3 to 8 percent. Cooper Tire and Rubber, Findlay, Ohio, has increased prices twice so far in 2004.

“Every major North American tire maker and marketer has announced hefty price increases within the past year,” according to the business publication Tire Business. Industry observers blame rising material and labor costs. Between 2001 and 2003, the price of natural rubber climbed from 28 cents per pound to 51 cents per pound, according to Purchasing Magazine. The run-up in the price of oil also has raised tire-manufacturing costs.

Large waste companies with carefully managed tire programs express little to no alarm about the price hikes. “We work closely with our vendors to address situations when raw materials prices rise dramatically and affect the prices of end-products,” says Will Flower, spokesman for Ft. Lauderdale, Fla.-based Republic Services Inc. “We don't want to see one of our partners get hurt, and [we] recognize that there are times when prices do increase.”

Waste Management Inc., Houston, takes a similar view. “We have contractual agreements with suppliers, so pricing doesn't have much of an effect on business,” says company spokeswoman Heather Brown.

Other waste operations, however, have been battling tire costs for years. When Kathy Sanders joined the collection division of the Solid Waste Services Department in Charlotte, N.C., in late 2001, tire costs were at an all-time high of $1 million per year. As fleet manager, Sanders set out to drive costs down.

She took the first step in 2002 by raising recap use. About 11 percent of the fleet's tires were recapped. Sanders has boosted recap use to 70 percent, a level she considers optimal.

Last year, Sanders switched tread patterns. The city was using heavy mud and snow treads considered ideal for landfill. “Our trucks spend 5 percent of their time in the landfill,” she says. “The regular road eats up that tread pattern. We were changing tires every 2,000 miles.”

Sanders found a new tread pattern from the city's long-time supplier that lasts longer. Sanders also standardized the tires used by the city's three fleets: automated trucks, rear loaders and recyclers.

To gain volume-purchasing discounts made possible by standardizing the fleet's tires, Sanders has centralized purchasing with a single vendor.

The result? Monthly tire costs fell from $115,000 to $47,000 between 2002 and 2004, a 59 percent decline. “We've been celebrating our lower tire prices,” Sanders says. “Today's price hikes will eat into our savings a little. But I think we can find a way to offset that.”