In North America, the ag tire market this year “has been fantastic so far,” Pompei said.
“As you know, the demand in the region is extremely strong, driven by two elements. First of all is the income of the farmer that is actually going up. Commodity prices of wheat, grain, soy, they are almost double compared to 2020,” he said.
“So obviously the income of the farmers is going up. This is obviously driving new investments. In North America, especially for the larger equipment, we were coming from seven years of a fluid investments level while now the investment level is moving up due to the confidence of the farmers, which is now higher and they’re able to keep investing.”
There is, of course, concern about rising inflation.
“But at the moment I don’t see this inflation affecting the agricultural tire market at all, actually,” he said, noting that commodity prices are driving inflation.
In North America, Trelleborg Wheel reported revenue of $199 million last year, or 17% of the unit’s global revenue.
Pompei said the main challenge for the company, and the industry in general, is trying to support the supply chain as there is growing demand in both the original equipment market and the aftermarket.
Pompei said there is strong demand for tires from ag equipment makers, “which is really something we weren’t expecting, but I think it’s a long cycle and, despite inflation, I think the farmers today are well compensated by the increase of the prices.”
He said he believes the North American ag market will benefit from the agricultural supply disruptions in Europe due to the war in Ukraine and countries seeking to establish new supply sources.
“The North American market is going to have a very good year in the agricultural business so far, and I don’t see a decline at least for the next six to nine months.”
The industrial tire market is also quite strong, both in OE and replacement, he said.
However, the industrial tire business has been impacted by the shipping disruptions.
“Many components on the OE level are coming from outside the United States and this is obviously, as you know very well, the global logistics at the moment is facing a shortage of containers. It’s very difficult to get the containers to get shipments.
“So obviously the agenda of the OEMs in the industrial tire business, it’s really not easy to get parts from different sources. But the market is strong. The main challenge is how to face this demand,” Pompei said.
“I believe, in the industrial tire segment, inflation will have an effect sooner or later, because obviously there is more difficulty in passing the pricing onto the end-users in this scenario. But again, at the moment, demand remains strong both in industrial tires, as well as in the construction segments.”
Pompei said he expects construction tire demand will remain strong for a longer period of time due to the U.S. government’s planned investments in infrastructure over the next few years.
