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LATVIA
the way to Marathon, there is located a parking facility for trucks of a number of transport companies. Most of the fleet here is standing idly by. The struggle for economy among transport companies in the Baltic States, in the opinion of local retreaders, is
one of the main factors why they are opting for cheaper Chinese tyres.
“Several participants of the transport market I’ve been talking with are saying that they have purchased up to 2-3 containers of Chinese tyres. They are much cheaper, so their ability to cover only 40,000 – 60,000 km is not attracting the attention of clients, even despite the fact that the price for them is only slightly lower than price for our
products. Our tyres are covering 150,000 – 200,000 km by comparison,” Guccic said, adding that his facility probably would have gone down already if it had not been supported by the tyre sales department.
“So as a result we are working
today rather in a minus situation. In general, however, the operation of the whole firm seems better, as general performance indicators are still good, and this is the reason we are still standing and why we are not dismissing our staff,” he added.
Guccic claims his company is hoping for an improvement in the situation, since, according to him, similar problems are taking place not only in the Latvian market, but also in Germany, Czech Republic, Slovakia and other European countries, where small companies are getting closed.
“Our main partner Kraiburg has already been forced to close up to three plants. At the same time, they have recently presented in the market a new tread which increases the lifetime of retreaded tyre to 300,000 km. On the one hand this is obviously good, since it gives more advantages to the customer, but on the other hard this leaves us with fewer orders, since clients will have to buy retreads much more rarely,” Guccic explained.
Ciscakovs also believes retreaders across all Europe today suffer from similar problems, so in his opinion some restrictions on Chinese tyres would be justified. However, he does not believe the European authorities will apply such measures.
“I will say it directly, China has learned to produce tyres with all the tread patterns of the European companies, such as Michelin and Goodyear. As a result, now Michelin has closed some of its plants and our partner in Italy, Marangoni, has also closed one plant. I know Russia has introduced some new tariffs on Chinese tyres, and some other countries did the same, while Europe probably will discuss this measure for five years and nothing will happen,” Ciscakovs said.
“Just several days ago we have been visited by our colleague Lates Aleksis, who previously was been engaged in the retreading business in Latvia, but then moved to Uganda and opened a plant there. He says the government there supports retreaders and as a result this industry develops very well there. So today for us it would be probably better to move our facility to Africa as well,” Ciscakovs jokes. However, in his opinion, even with lifting of all sanctions and the introduction of tariffs on Chinese imports, the market will never return to the scale it once had. A similar opinion is expressed by
Amolins, who believes the market is transforming, and there will be no inevitable growth, while success in the current conditions will be only be achieved by those companies who can make the right forecasts on the future market characteristics.
“At the moment retreaders can either sit down and not to do a hand's turn or try to do something, as anyway, there would not be any global rise in the market’s size from nothing. Lifting of sanctions could really give free money to transport companies, and this could improve the situation, but not tremendously,” he adds.
One of the most important impacts of the current crisis, according to him, is that the Latvian market is currently also seeing a reduction in the number of quality casings, since with the competition from China, the sale of new tyres from the European brands is reducing as well, and ultimately this brings retreaders problems with the lack of quality casings.
Guccic says Laneks does not work a lot with casings of Chinese tyres, as they are of poor quality, while Ciscakovs indicated sometimes retreading them is possible, even quoting a situation when a new Chinese tyre was in operation for only one year before running out of tread, while after retreading with good European materials was able to serve for an additional two years.
Retreaders bet on quality
Being unable to offer better prices compared to cheap Chinese tyres, Latvian retreaders have declared their commitment to the best possible quality.
“I’ve been in Latvia and Estonia at several retreading facilities and I have not seen such plant as ours. The most important part of our company is the buffing machine which is automated. Workers only need to set the necessary parameters in the computer, leaving the rest to the equipment. This means minimal interruption of man into the working process. Automation gives good quality of production,” Guccic claimed, adding that in general not all Latvian companies conduct retreading appropriately, and this overshadows the whole industry. “Some clients are coming to my facility complaining about the vibration of the back axle shortly after the fitment of retreaded tyres
Lanek’s Roman Guccic
40 Retreading Business