| The
Ethanol Boom
Three years ago the buzz in the tire market was the
OTR tire shortage. It was fast and furious. Customers
and Tire dealers were scurrying to find large OTR tires
that were being hoarded by the Chinese market and they
were no where to be found. The tires that were available
went to the highest bidder.
Today, 2007 presents a different kind of buzz –
Corn – lot’s of Corn, and what does this
have to do with the entire Tire industry? Let us at
Trans American Rubber tell
You what we have learned! An influx of calls coming
into Trans American Rubber for certain size inner tubes
such as combine sizes and backhoe sparked our interest
as to what exactly was going on in the US market. Repeatedly,
customers were telling us about the Ethanol plants being
built in their communities. Many of our customers were
projecting a 10-15 % growth in ag tire sales and inner
tube service.
They said the farmers are buying new equipment, new
tires and are being paid a premium price for government
contracts to supply the Ethanol plants with corn. A
large percentage of our customers are in these particular
regions where the demand for corn production is at an
all time high. Farmers who have signed contracts for
the Ethanol plants are being paid 10-12 cents more per
bushel of corn, with soybeans also in this mix. How
does this affect us as a contract manufacturer of inner
tubes? We diligently called upon our well seasoned tire
dealers and service providers who are smack dab in the
middle of this market frenzy, asked them their for their
opinions, facts, and here is what they had to say.
The U.S. government estimates 90.5 million acres of
corn this year, Ethanol fuels largest corn crop since
1944 - MSNBC.com
Iowa remains on top with the most corn acres to be
planted at 13.9 million – a 10.3 percent increase
from last year.
Marvin Alderk – Alderks Tire, Rochelle,
IL made this statement:
“I think the farmers will get better prices per
bushel. If the corn and soy bean prices stay up, this
will mean the farmers will buy more equipment and tires.
Marvin is projecting a 10% increase for inner tube service
and new tire sales. There were 2 new ethanol plants
built near Rochelle, IL.
Scott Givens – Friermood Tire and
Service, Wabash, IN
Scott is County Commissioner for Wabash, and is smack
dab in the middle of the ethanol boom. Scotts’
dad, Guy Givens, started Friermood Tire over 40 years
ago, and they are seeing the effects of the Ethanol
business, from farming to the commercial end for Tires
sales and service. Scott stated that the farmers are
spending more money and commercial tire sales will go
up because of the dump trucks used to haul the corn
to the plants.
It’s great for the economy. Jobs are created at
the plants and allows the farmer to be financially successful.
Scott was kind enough to send us an article that was
written in the Wabash Plain Dealer local paper.
There are many view points in this article, a few of
which we will quote.
“The plant in LaFontaine, IN, will need 30-33
million bushels of corn per year to produce 88 million
gallons of ethanol promised for the same time period.
In 2005, Indiana’s best year so far for corn yields,
Wabash produced only 11,947,900 bushels. The demand
for 2007 will be much larger. The ethanol industry is
growing like wild fire, already saturating states like
South Dakota, Iowa, Nebraska and Minnesota. Illinois
currently has nine plants in production.”
We had an opportunity to talk with Ray Baker
of Adkins Energy Ethanol Plant in Lena, IL we
asked him specific questions only pertaining to the
tire industry and what his opinion was on the overview,
here is what he had to say.
Q. What kind of equipment is used
at the ethanol plants?
A. Adkins uses both commercial and
industrial grade equipment in all areas of production.
Q. How many bushels of corn are hauled
to the plant on a daily basis?
A. On average, about 56,000 bushels
per day.
Q. How do you think the ethanol boom
will affect the tire industry?
A. The use of trucks and railcars are
the frame work for the corn and ethanol transportation
system. So tire usage for trucks will play a large roll
in the growth of the ethanol industry.
Q. Can the United States keep up with
the production of corn needed , and does this primarily
depend on weather conditions?
A. We are confident that the agricultural
community and the steady development
Of new corn seed technologies will find ways to make
sure that the production of corn is enough to service
the rapidly growing ethanol industry.
We just want to thank everyone who took the time to
talk to us about this great opportunity!
Article by Kelly Lein
|
