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RUSSIA
Russian Retreading Market Caught in Perfect Storm, says VMI
The current state of the Russian market for products and technologies for the retreading industry can be called the worst ever, since, today it faces pressure caused by multiple factors, including the devaluation of the national currency, the absence of any culture for tyre re-utilisation, low interest from business as well as poorly protected rights of private equity. Altogether, it has left very few chances for the industry to see any development within the coming years and
“The conventional technology of cold retreading adopted in Russia provides that the undertread layer is made from uncured rubber, which is prepared separately and stored elsewhere for a while. During retreading it manually excised, pressed, sprayed and then superimposed on the casing. There are general several weak points in this technology. The first one is the quality, as during manual work with the rubber bubbles can form which can appear in the finished product.
enables it to be used for manual pre-cured tread application and automatic stitching. With this configuration the system can produce up to 120 retreads per 8- hour shift. This particular option of the machine is complete with cushion gum extruder, fully automatic tread applicator and automatic stitching. Both tread application and stitching can also be installed on this machine. This allows for up to 165 retreads per 8-hour shift.
Sergey Markov says in the whole world there are currently more than 1,000 VMI machines operating, mostly in North America and Europe although active sales are taking place in South America as well. He also indicated that in general in Russia, just like in India and South-East Asia, there are still large numbers of companies engaged into hot tyre retreading. However, in general VMI believes that the retreading industr y in Russia will turn to precure at some point. Representatives of the Dutch company over recent years have met a lot of people in the Russian industr y, posted several articles in the local media, tr ying to promote new technologies in the area of retreading. However, recent developments in the countr y over the past two years have killed any hopes for success.
Impact of the economy
Ilya Chepyrev says that current situation at the Russian market is probably at its worst ever, since at the current exchange rate of Russian ruble to euro, most companies simply cannot afford to purchase European equipment. “This situation has cut off any possibilities [for new contracts], since previously [prior to 2014] some market participants had been estimating costs, evaluating prices and there was the possibility to purchase foreign equipment, establish retreading lines and, with proper management, achieve a payback period of 3-5 years. Now these figures have jumped to 10 years, and nobody simply has interest in such initiatives,” Sergey Markov explained.
VMI also points to the difficult political situation in the country. Over the last two years, the
Russian government has refused to apply the rules of the World Trade Organization or decisions of the European Human Rights Court. Also there were several prominent cases in the area of private equity protection.
“The main question is how it is possible to develop business in such a risky economical and political context. They [the authorities] might come and say that your business is a squatter development and despite all necessar y documents you have no right to it. As a result, any [illegal] business could be opened for bribes, while other [legal] business could be closed without bribes,” Ilya Chepyrev explained. Here he was referring to recent cases when the Moscow authorities have liquidated several dozens of trade points across the Russian capital engaged in the retail sale of food and other products, primarily near subway stations. The reason for this decision was that according to authorities, these trade points had been ‘damaging the historic view of the city’. However, most lawyers and human right protectors indicated that almost all of these points had been operating for several decades, and there was no any legal right for the authorities to liquidate them without compensation to the owners.
“It is unclear who would be willing to invest money in the property sector of the economy. We really saw some interest from transport companies about 3-4 years ago, as some of them have been considering the purchasing of equipment for establishing of their own small retreading plants to supply their own fleets, as well as the fleets of their partners. This possibly can become important diversification of their business, and there were several projects in this area,” Ilya Chepyrev stated.
According to him, these projects potentially could become important factors for growth of the domestic retreading industr y. However, first of all, these plans have been affected by the shortage of qualified staff in Russia, as well as lack of experience of local companies in the area of operating with high- tech retreading equipment. In addition, most of these
Sergey Markov (left) and Ilya Chepyrev from VMI’s Moscow office
makes forecasts for the future of the business mostly gloomy. This was the view of Sergey Markov, head of VMI Group’s office in Russia, and Ilya Chepyrev, retreading business manager in Russia in interview with Retreading Business.
VMI Group recently participated in Moscow’s Tyre and Rubber Expo presenting its Retrax machines. According to Markov there are currently two factories in Russia using VMI technology, one in St. Petersburg at the Good Tyres Plant and another one in Toliaty.
The representatives of VMI’s office explained that currently most Russian retreading companies are using outdated conventional technologies, which are not only negatively affecting the quality of retreaded tyres, but also pose some threats to the health of people engaged in their operation. By participating at the Moscow Expo and by using other informational campaigns, VMI over recent years has been trying to explain to potential customers, the advantages of Retrax technology.
Air is the main enemy of the quality of retreaded tyres,” says Sergey Markov.
“Since the calendered layer needs to be cut, while trimmings produce additional waste, and because companies need to restore the rubber’s tackiness by using a variety of sprays primarily based on hydrocarbons, it turns out to be quite risky for the operators. The application of our technologies avoids these problems. Our latest version of the Retrax combines the building of the undertread layer with the simultaneous automatic application of the tread layer. It is important that raw rubber is measured, and if needed it can be extruded automatically, so the operator has no need to participate in this process manually,” he added.
During the Moscow Expo VMI’s Russian office presented to potential customers the latest version of Retrax 6011 with the ability to build up to about 240 tyre casings in an 8 -hour shift. According VMI, the machine incorporates a fixed stitcher with a servo-driven wheel hub, which
58 Retreading Business