Company CEO Morry Taylor expects sales to increase by 20 to 30 percent in 2009

February 8, 2009

By Doug Wilson

Morry Taylor is tired of all the gloom and doom he's hearing from talking heads who are spreading fear about the national economy.

Taylor, chairman and CEO of Titan International Inc., expects the company to have sales revenue of somewhere between $1.175 billion and $1.35 billion in 2009. That would be up from about $1 billion in 2008.

"If you were to base this on unit sales, I believe 2009 would show a 20 percent to 30 percent growth over 2008," Taylor said.

That prediction -- more of a company goal -- is based on Taylor's reading of important markets for tires, rims or assemblies.

Farmers are being buoyed by lower fuel and fertilizer prices, so demand for large tires and rims for four-wheel drive tractors and combines should remain strong, Taylor said. Mining seems to be settling down somewhat from wild fluctuations in the past year or two, Taylor said, so large equipment tires should also be strong.

There are other markets that Taylor describes as depressed. The heavy construction equipment industry and small tractors are "still in free fall," Taylor said.

That mix of strong and weak sectors simply means that Titan factories will focus more attention on what is selling well, Taylor said.

"Quincy production, like everything else, is going to make a lot more big wheels than small wheels," Taylor said.

That means fewer rims for Skidsteers and backhoes will be coming out of the Quincy plant, where about 1,300 people are employed. The big rims will be the top focus.

Titan also owns tire manufacturing plants, which Taylor said are benefiting from lower rubber and oil prices. Natural rubber was selling for $1.48 per pound last June. By December the price had dropped to 56 cents per pound. Oil prices dropped by similar percentages.

Lower commodity prices mean lower input costs for Titan and bargains for tire buyers.

"Our 63-inch Big Daddy (tire for mining equipment) was priced at $50,000. I expect that to come back to $40,000" due to lower rubber and oil costs, Taylor said.

Titan has tire production facilities in Freeport, Des Moines, Iowa, and Bryan, Ohio. Taylor's biggest problem at those plants now involves labor costs in Freeport.

Freeport workers are represented by the United Steelworkers Union. Taylor said he was prepared to handle the costs of paying union members when Titan bought the Freeport factory. A contract lays out salaries and benefits. The union also provided a list of former

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workers at Freeport which Titan gave a first chance at jobs.

"When we started hiring the people ... on their preference list, the union filed a grievance. They didn't want them to get a starting salary," Taylor said.

An arbitrator agreed that the former employees should start at higher salary levels. Taylor said that has made Freeport an unprofitable plant with annual costs of about $100,000 per employee. The tire plants in Ohio and Iowa have annual costs of about $70,000 to $75,000 per employee. The Steelworkers Union also represents 520 employees at Titan's Des Moines factory, which has been hiring.

Taylor said he is reducing employment at Freeport to about 480, down from 600. The plant also had a two-week shutdown during January. It is now operating again, but Taylor said rolling shutdowns will occur after six weeks of operation. That cycle of two weeks off and six weeks on is allowed under the contract.

Taylor said once the union contract expires on Nov. 15, 2010, he will close the factory. Most of the equipment would then be moved to Iowa or Ohio. The Freeport site might be used as a smaller operation to handle use of large equipment that cannot be economically relocated.

"There's not any such thing as a monster company. It's people," Taylor said. "Should I jeopardize the jobs in Quincy and Des Moines? I do my job."

Taylor, who made an unsuccessful run for the Republican nomination in the U.S. presidential election in 1996, does not expect the economic stimulus package now under consideration in Congress to solve the economic downturn.

"Politicians don't create jobs," Taylor said.

The conservative Taylor also predicts that in two years voters will put more Republicans in Congress due to what he expects will be disappointment with the lack of achievements by Democrats.

In the meantime, he hopes Congress doesn't do too much to hurt U.S. business interests. That's where jobs will come from, Taylor said.