Amerityre Corp. has submitted prototypes of its polyurethane car tires to an independent laboratory for testing, trying to succeed where all past attempts have failed.
The move excited shareholders. The price for the publicly traded company's stock more than doubled at one point during January amid heavy trading, hitting $12.95 and giving Amerityre a market capitalization in excess of $225 million. That for a development company that had sales of $1 million in its last fiscal year and has accumulated losses of more than $20 million since its 1995 inception as American Tire Corp.
In contrast to Amerityre investors, many in the tire industry say they doubt the firm will succeed in getting its PU tire approved for automotive use. They insist this is just the continuation of a myth that Richard Steinke, Amerityre president and chief executive officer, has been promoting - and raising millions of dollars for - during the past two decades.
Amerityre said the tires - known as Arcus - are based on its ``air, no-air'' tire system, and can operate with or without air. If the project comes to fruition, Amerityre claims it will result in a tire that can be produced more quickly and cheaply than traditional tires, while meeting or exceeding the performance of rubber tires.
The Boulder City company has applied for a U.S. patent for the tire, and has other patents used as part of the development, including one that was approved in January for a run-flat tire with an elastomeric inner support.
That patent was for an insert that was ``somewhat of a foundation for the air, no-air tire,'' according to Elliott Taylor, Amerityre executive vice president and general counsel.
At its November shareholders meeting, Amerityre executives said they expected the testing to be completed by the end of January, but the timeline had to be delayed. ``We did not have the tires ready to be tested based on our manufacturing process,'' Taylor said. ``We now have some we're testing internally and some were sent to the independent lab. We probably will send some more to that lab based on testing with different reinforcement materials.''
Many shareholders believe in Steinke and his dream - and hope to reap a big payday if Amerityre succeeds.
Amerityre's credibility on the PU auto tire project received a big boost in 2001 when it signed a joint development agreement for the project with Goodyear Tire & Rubber Co. That arrangement lapsed without fanfare in March 2003.
Goodyear said it was refocusing its research and development budget on shorter-term projects. ``The Amerityre project was more long-range, more high-risk. It didn't fit into our plans to renew the partnership at this time,'' a company spokeswoman said.
Amerityre said it sought release from the agreement with Goodyear because the tire giant had to focus on other issues related to its financial difficulties and no longer had a high level of involvement in the PU tire project, according to Taylor.
He said the breakup was amicable, noting Goodyear since has helped Amerityre locate materials needed for the tire. Goodyear also allowed Rick Vannan, who retired from Goodyear in October 2002, to work as a consultant for Amerityre without violating any noncompete clauses in his retirement, Taylor said.
Vannan was Goodyear's director of advanced product and process technology, and his team worked closely with Amerityre in leading development of the urethane auto tire. During the two years of the joint effort, Goodyear tested Amerityre's closed-cell urethane foam products, including tires for bicycles, wheelbarrows, golf carts, and lawn and garden equipment.
``We came very close to distributing them in our retail outlets,'' Vannan said.
Goodyear also conducted extensive lab and track testing on Amerityre's newest urethane elastomers for application in auto tires.
``Our conclusion was that the Amerityre materials could replace rubber in tires and probably surpass traditional rubber tire performance,'' Vannan said.
He acknowledged that some at Goodyear, especially those who had worked on urethane tires in the past, were quite skeptical of the project. ``The two concerns I heard most were flat-spotting during a panic stop and wet traction,'' Vannan said. ``However, many of the skeptics changed their minds when our lab and road testing showed that these problems had been overcome. Of course, there will always be skeptics.''
The main question, however, is whether Amerityre can succeed in developing a PU auto tire, a goal many have called the Holy Grail of the tire industry.
Vannan steadfastly maintains confidence in the project. ``There is no question in my mind that Amerityre will be successful in developing a commercial auto tire,'' he said. ``All that remains to be completed is some fine-tuning.''
Others, though, are just as steadfast in their belief that it will fail. They have seen Steinke trumpeting the oncoming of a urethane auto tire as far back as the 1980s, both at Amerityre and at other companies he has led, most notably Urethane Technologies Inc.
``He will not get approval that it will be used on the highway,'' said William Knooihuizen, president of KIK Technology International Inc. ``There is no doubt. Talk to the Ph.D.s, and they'll tell you it can't be done.''
Oceanside, Calif.-based KIK competes with Amerityre in many nonautomotive PU tire markets, and Knooihuizen still has UTI brochures from 1988 touting PU auto tires. ``The only thing that's changed is the date,'' he said. ``I have not seen anything in their formula, application for patent or anything in their process or product that tells me it's unique.''
Knooihuizen said he doubts a PU tire will become a reality in his lifetime - and he plans to work another 20 years in the business. ``I do not believe a PU car tire is possible at this time - not with the knowledge I have available,'' he said.
Another doubter is Jose Padilla, business manager for Alshin Tire Corp. His company's founder, the late Dick Alshin, also was one of the founders along with Steinke of Captive Air Inc., the forerunner of UTI.
``Productwise, I don't see how he could do it. I could be wrong,'' Padilla said. ``He's been talking about the same thing for a number of years.''
Amerityre's Taylor said that when he looks at Steinke's past, it's important to note that the desire to create a PU car tire has driven the CEO more than anything else.
``He's had his detractors along the way, and he's had business relationships with people and groups that haven't worked out,'' Taylor said.
``You can either view them as obstacles or legitimate criticism, but it hasn't deterred him from trying to obtain that ultimate goal: to make a passenger car tire out of urethane.''
Taylor said he knows there is still a long way to go in the process and Amerityre does not have the infrastructure to take the tire to market.
If approval is gained, the firm will look at the best way to commercialize the technology, most likely through a partnership, development or licensing agreement. ``Our charge has been to validate the technology,'' he said.