Page 19 - CTB N15 - 2016-03

RETREADING
Chinese by doing anything about their “dumping” of cheap steel.
The inference of the scenario in the steel industry is gloomy indeed. If the stakes are so high
many other national associations who have made comments or representations on behalf of the retreading industr y, are successful in persuading the European government to do
products is at the forefront of their strategy to prove that their own premium products provide better value for money than cheaper mid-range and budget products.
Similarly, operating a large, independent mould cure retread plant is no guarantee of success, as can be seen by the difficulties experienced by Reifen Ihle once they lost their contract with Continental, and the current well documented difficulties at Marangoni’s retread plant in Rovereto, Italy. In general, those retreaders who are able to market their products as part of an overall fleet tyre management concept and full life package and those who have
direct access to their fleet customers are best equipped to survive. Those who have to sell through distributors and those whose products are in direct competition to cheap Chinese tyres are the companies who face the bigger challenge. Retreaders who are already tyre distributors have been shown to be more likely to be successful, not only because their profit margins are bigger, but because they are able to have a direct influence over the end user.
The world is full of retreaders from around the world who have adopted an “if-you-can’t- beat-them–join-them” approach and have started selling Chinese tyres alongside their retread products, but there is some evidence to suggest that unless the retreader is marketing one of the top Chinese brands like Double Coin or Sailun, this is more likely to be counter- productive. Retreaders who double up as tyre distributors may wish to consider whether they see themselves as retreaders first or tyre distributors. If they see themselves primarily as retreaders then the question needs to be asked whether chasing a few extra sales by stocking Chinese tyres is beneficial.
It is often said that retreading runs into trouble when the
differential in price between the cheapest new tyres and retreads becomes too narrow. It is clear that many end users simply see things in pure price terms. However, it strikes me that the future of retreading in the light of the challenge from budget new tyres will not come down to price alone. It will come down to service and communication. Historically the retreading industry has been disastrously bad in promoting itself properly and in identifying and keeping customers. I remember several years ago carrying out a market research project on behalf of a major retreading company during which I identified a large number of truck fleets and interviewed them about whether they used retreads and whether they would consider using
them. A surprisingly high proportion of the fleets I visited said they would be happy to consider using retreads if only they had been visited by retreaders to promote their products.
With that in mind, I suspect that in the future the ability of independent retreaders to survive and flourish in the increasingly competitive tyre market will come down to:
- The ability to justify and explain pricing and the ability to measure and explain cost per mile
- The ability to identify potential new fleet customers, the ability to communicate direct with them and service them properly
- The ability to add value added services such as fleet management programmes
- The ability to spot and develop application specific niches where the competition from cheap imports is less severe or where the cost/performance ratio is more beneficial to retreads
Overall, the challenge from cheap Chinese tyres is not going to go away. It may abate for a while depending on exchange rates, raw material costs, tariff levels etc, but ultimately it will come back, so it is up to the European retreading industr y to accept that retreading in Europe is entering a new age, and prepare itself accordingly.
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in other areas that governments are prepared to risk the future of an industry as fundamental as the steel industry, when one’s own government appears to be acting against you, then what chance does a small industry like the tyre retreading industr y have in gaining government support?
The key problem facing Europe is the EU’s traditional stance in favour of free trade. At a time when major markets in other parts of the world are protecting themselves with high import duties, such as Brazil and the USA, tariffs for importing tyres into Europe still remain low. Chinese tyre manufacturers currently pay 4.5% import duty if they want to export tyres to the EU. European manufacturers, on the other hand, wanting to sell into China have to pay 10% duty on car tyres, between 3 and 10% on truck tyres and 15% on motorcycle tyres. For agricultural tyres the tariff can be as high as 25% - so in most cases the Chinese manufacturers are being helped not only by their own governments, but by the European government as well! Now we all hope that the likes of BIPAVER and national bodies like the Syndicat des Professionnels du Pneu (SPP) in France, the RMA in the UK, and
something that will help protect the European new tyre and retreading industries from unfair competition. However, many foresee a further consolidation in the European retreading industr y and a new restructuring of the market. If that happens, what kind of a retreading industr y can we expect to see in Europe, and what can individual retreaders do to make sure they are the ones who survive the shake out? At first sight it appears that mould cure retreading has performed better than pre-cure in recent years. Of course, the mould cure/pre-cure split varies significantly in different parts of Europe, and for different reasons, but according to ETRMA since 2012 mould cure has increased from 49.6% to 51.3% of the total market. However, there is more to this than meets the eye, and this does not necessarily mean that mould cure retreaders are always better equipped to survive than their pre-cure counterparts.
To begin with, many of the continent’s largest mould cure retread plants are under the direct ownership of the new tyre manufacturers, for whom retreading and the opportunity to lengthen the life and therefore cost per km of their
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