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LATVIA
In addition, Kokins points out that often for a single tyre he has to use than 100 kg of materials, so he has to be sure about the quality of each part of shipment. Suppliers from the post-Soviet Union market often had problems with working discipline, so it was necessary to closely monitor quality.
“I can say that the main problem of the Soviet Union was unstable quality. I don’t know about modern Russia, since we have not purchased anything there for a while, maybe things are better now, but previously when you ordered a shipment there was a kind of lottery: you could have all the shipment with good quality, all the shipment with
bad quality, some particular products of bad quality, or most products of bad quality and you could never guess what you would have the next time,” he added.
This problem was also complicated by the fact that, according to Kokins, neither supplier from the post-Soviet Union area was able to accept product returns, even if production defects were quite obvious. So as a result, you could pay huge amounts of money for the shipment and get everything with significant defects with no ability to get your money back. “The worst thing is that there could be some defect not seen with the naked eye. So you could conduct the retreading, get the tyre into the autoclave and have
a good tyre at first sight. But shortly afterwards, something could bounce back and this could bring serious problems to everyone,” he added.
No need to look for clients
Kokins also says that the narrow specialisation of his company makes it rather protected from the inflow of Chinese rubber, which over recent years has caused concerns to almost all retreaders, not only in Latvia, but also all the other countries of the European Union.
This is one, but not the only advantage of working with OTR tyres. According to Kokins, the main plus point is that it is much more interesting compared to retreading truck or passenger tyres, since every tyre is different. Kokins shows a huge finished tyre of about 2 metres in diameter, saying that the cost of this one is about EUR 1,100,
while the cost of similar new tyres is about EUR 3,000 – EUR 4,000, so almost all clients in Latvia and even in some neighbouring countries have a clear economic reason to buy retreads.
“I’m not looking for clients, as actually I don’t need to. They are finding me themselves and, of course, our partner Greentread is also looking for casings and is also supplying our facility with them,” Kokins says, adding that the main clients are the mining, wood processing and the industrial machiner y companies of the Baltic States.
“The important point is that we are working almost completely with casings from Michelin and Bridgestone. There are also some other casings available in the market, but actually we are refraining from using them. Let’s say, these are tyres of very huge size, and nobody in the world so far discovered a 100 per cent method for testing casings. I simply cannot sell this casing to client, as I cannot safely say it doesn’t have any hidden flaw. If I supply a faulty tyre to a client, it has the potential to cost him thousands,” Kokins explained. The Riepneks director believes in the near future there will not be any serious changes in the market. According to him, in Latvia there are only about 10,000 OTR tyres in total, compared to 2 million passenger tyres, and this figure is not likely to change in the future. Over the last two years, his company has seen some reduction of orders due to snowless winters, so the municipalities have not been ordering retreaded tyres for snow clearing equipment. However, this factor seems temporar y and already this winter Latvia is expected to see snow again.
“I have been in this business for 22 years and in general I think we have some sort of creeping crisis. Not actually in OTR retreading, of course, but in general in the Baltics, as with time the situation in the market became quieter for some reason,” Kokins suggested.
Despite this, Riepneks feels quite positive about its prospects, as according to Kokins the company has managed to generate a stable profit ever y year of about EUR 10,000 – 20,000 per annum. He believes that most likely this situation will be preserved for a long time.
Baltread Views Quality Retreading as Panacea
for Company Development
Despite the acute market crisis, the performance of Riga-based Baltread has remained stable since the company managed to find its own way of fighting against the harsh business conditions by refusing to engage in low cost retreading and avoiding imported casings, according to Baltread’s director Alexandrs Cerkovnuks. In addition, the company is generating additional profit by selling Chinese tyres.
“Of course, the first year in operation of our company was good, and the peak of production performance took place in the period 2009-2013. After that we have faced decline, but still we manage to retread up to 600 tyres per month. At the moment, our company is growing with the redistribution of tyre sales towards a bigger share of Chinese production,” he
said.
According to Cerkovnuks, several years ago 80 per cent of Baltread’s sales consisted of retreaded tyres and only 20 per cent were new tyres, but today the proportion stands at 50:50. Significant changes have been also made inside the retreading segment.
“Cheap retreading is no longer in demand due to the availability of cheap Chinese products. As a result, starting from the beginning of the year, we completely abandoned any cheap retreading. We are now working only with quality materials, using the technology of Goodyear, NextTread, and in my opinion it competes quite successfully against China,” Cerkovnuks indicated.
According to him, market conditions in Latvia have changed significantly, as locally
Baltread’s director Alexandrs Cerkovnuks
46 Retreading Business