Page 42 - RB-85-18-2

BULGARIA
Chinese casings. I also don’t like the Cordiant tyres, because, usually, after use they have poor quality and it is hard to retread them. We retread Russian tyres under the brand Kama, as they have rather good quality in our opinion”.
It turns out that many drivers do care about their tyres, removing them in the right time. This is a matter of economy for the transport companies that are trying to save some money on tyres. Too bad, these changes came only now, when the market of retreading has shrunk, and the number of operating retreaders has dropped to a level last seen in 1990s.
The Future is Unclear
Vanina Export says it has no intention of giving up on retreading and shutting down its plant. It could be barely called a money-making business these days, but this is something that was quite profitable in the past, so the company’s managers hope
it will become so once again.
“I cannot make any predictions about the future, but in general, I think if the government would do something and help the tyre industry, it would be wise. I’ve heard that such steps have already been undertaken in Germany, and we hope to see them here in Bulgaria, as well,” Bagerov said. Medina Med shares the same opinion, as the company is not considering shutting its retreading plant, according to the people close to the company. It has a diversified business structure and believes that when one segment of its business finds itself under pressure, the performance of others, on the contrary, is improving.
This seems to be quite justified, as the company among other imports and distributes the Chinese tyres in Bulgaria. If one day the invasion of cheap Chinese tyres should end, the company would see operation of its retreading plant reviving, just as the operation of the entire industry
the moment, so some kind of diversification is necessary, if a company wants to survive.
Maks and timely withdrawal
For Maks, a Stara Zagora-based tyre company, survival is not the challenge. It is running a tyre fitting facility, selling some new tyres to the customers, and recently opened a fuel filling station with one of the Russian energy giants. In many directions, things are going well, and that is why the company was able to afford to not to struggle with the effort to keep retreading tyres. Maks was retreading 16,000 tyres, even 20,000 tyres per year, at the times when the domestic market reached its peak, but recently the production has been reduced to only 50-60 tyres per month, according to Dinko Chervenkov, the top manager of Maks.
It could have been intuition or just a pro-active business attitude, but several years ago the top management clearly realised the need for business diversification. The investment appeared to be ver y timely, because when crisis decimated the market for retreaded tyres, Maks was among the companies that were able to meet that crisis without panic in the boardroom.
“If the situation in the market should improve at some point, we would, of course, start retreading tyres again,” Chervenkov said. “However, I don’t think this is going to happen”.
The reason is the quality of Chinese tyres. Together with his partners, Chervenkov conducted some tests, comparing their actual performance on the road with the performance of new and retreaded tyres. In the end, it appeared that the quality of some Chinese
The once thriving cold retread business is now little more than a hobby
Bulgaria’s Smaller Retreaders Fight to Survive
The number of retreaders operating in Bulgaria has been gradually shrinking over the past few years. It is believed that up to 7-8 plants in the country as the
They have their equipment mothballed and are waiting for a possible revival in the market, meanwhile they have switched to more profitable areas of the tyre
The Maks plant lies mothballed ready for renewed activity
Bulgarians say, “went underground”. This means that they have ceased operating in the retreading industry for the time being, although they are not willing to give up on the business completely.
business. It is very likely that, if no changes are seen in the market, the number of mothballed retreaders will inevitably grow.
It is quite obvious that, at least in Bulgaria, the retreading business is not generating good profits at
“It is just a hobby now,” Chervenkov said. “Our retreading facility re-paid itself several times over in the past, so we are very happy with the investments we allocated to it”.
Maks has now shut down its retreading plant, although the workers from the facility have been reskilled and now are repairing tyres at the service centre located just a few kilometres down the road. If necessar y, they could come back to the plant, power it up and start retreading tyres again. However, that happens very rarely now. Back in 2010, when the retreading industry in Bulgaria was thriving, the retreading plant was generating 80 per cent of Maks’ profits. Now it is generating only a few per cent, although the financial performance of the company has been steadily growing during these years.
products was not so low, as it used to be believed to be, especially among the retreaders, and they were rather competitive on their quality, especially compared to the new tyres of European brands.
Unlike many other retreaders in Bulgaria, Maks is not pursuing profits in distributing Chinese tyres in the domestic market of Bulgaria. This seems to be a kind of principled stance.
“I don’t like Chinese tyres,” Chervenkov claimed. “We were importing some batches several years ago. It was maybe around 5 containers per year. Now we sell only a few Chinese tyres”.
The retreading plant of Maks is still full of raw materials, and the company keeps offering tyre retreading services on its website. In theor y, Maks could consider selling the entire facility or the equipment from it piece by piece, but this is not an option at the
42 Retreading Business