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LITHUANIA
Lithuania today seems to be the worst one among all European countries.
According to Vasiulis Ratola is a small entity without a lot of power to stand against this challenge alone. He reveals that this story started with Ratola, but when the company lost the case in the court, the environmentalists e-mailed the rest of the Lithuanian retreaders and notified them that the taxation system had been
for used tyres. The dual taxation means that for the tyre, retreaded on the imported casing, the company now has to pay EUR 0.20 per kg, and this is obviously a very high figure. In accordance with the new legislation the Lithuanian retreaders now also have to pay a utilisation fee even when they are working on the casings of the client and, in the opinion of Ratola’s executives, this is also unjustified, because when these
had been working on equipment sourced from various countries. In particular, some equipment has been delivered from Finland.
Room for optimism
However, according to Vasiulis, the situation is not as bad as it seems on the first glance, as the company has conducted some business optimisation over the past few years, reducing the
staff, and, despite the harsh market, the situation remains profitable. In addition, in recent months the prices for Chinese tyres at the country’s market jumped by nearly 20%, and the company expects further growth. At the lowest point the price of new Chinese tyres in Lithuania was even lower than the price of the retreaded tyre of the same size, but now situation is slowly changing. “The important point now is the
price of raw materials for retreading, so we hope if they grow, this growth would be smaller compare to the increase in prices for Chinese types. This is the main optimism we have right now, as we are expecting a jump in prices for Chinese tyres. Without such growth, I don’t
really know how the situation in retreading will look like in the future, because at the moment the business conditions are really harsh,” Vasiulis says.
In previous years Ratola was importing casings from abroad, primarily from Germany, at a price of roughly at EUR 50-60 per casing, including the cost of transportation. However, due to the low demand in the domestic market the company is not doing this any more and for two years has been collecting all casings in the domestic market only. The current crisis caused a reduction in the prices for casings in Lithuania, so now the casings of the premium brands in the countr y can be purchased for only EUR 25-30 per unit. At the same time the price of casing of the lesser rated brands is even lower.
In addition, the company has conducted some optimisation, turning to the tyre service business and the promotion of some new Chinese tyres. The entire staff now works at the tyre service facility, leaving the retreading line shut down for the most time. According to Vasiulis, the company’s team starts operation at the retreading line only when Ratola has accumulated orders with enough volume. He explains that this is a kind of policy that allows them to improve the efficiency of the entire business structure and to stay afloat in the hard times.
The new autoclave intended to boost production has hardly seen any additional use
changed for the entire industry. As a result Vasiulis believes that the country’s retreaders now have no other way, but to join forces in this fight because the demand of the governmental agencies is clearly unjustified. “The story is paradoxical as we believe that nowhere else can you can find a situation where environmental-protection agencies are attacking the retreading business. In our opinion, these organisations should be our allies, because our activity to give the second life for the used tyre is obviously good for the country’s waste- management system. However, these organisations say that in their opinion we are considered as the producers of new tyres, so our activity in fact is not ecologically-friendly,” Vasiulis says.
He also specifies that, according to the current legislation, the importers should pay nearly EUR 0.09 per kg for imported new tyres and EUR 0.10 per kg
40 Retreading Business
tyres were imported into the countr y, someone already paid the utilisation fee for them.
“It is necessar y to change legislation and amend the law, so the demands on the payment of utilisation fee becomes transparent. The problem now is that the law says that the fee should be paid, but it is
not certain how it should be performed. Now, in fact, the government agencies have the power to stretch the law, and this where the problem comes from,” Vasiulis says.
In the eye of the storm
In addition, just like all other retreaders in the country, Ratola has been affected by the invasion of Chinese tyres and the consequent fall of market prices.
Prior to the modernisation Ratola
Ratola keeps moving to meet the market and is determined to survive