Page 42 - RB-86-18-3

GLOBAL RETREADING CONF.
2017, according to the research by the European Commission.
“In this regard the European Commission concluded that the losses of the tier three are not
since March 2017. In Finland there are certain financial benefits for the companies on tyre recycling costs, including Eur4.6 per retread, including casings. In this country,
according to Hercock. The general market trends have also affected Vacu-Lug, as its remould business also reduced by 12 per cent during this period.
It is quite obvious that retreaders must adapt to these changes in order to stay afloat. Although the presentation’s title originally promised to provide some strategies for surviving as an independent TBR retreader in UK, Hercock decided to make some adjustments part way through, offering the audience to consider his information as the means for thriving, since this was the thing more worth looking at.
“So, in order to thrive it is not good enough to be just a retreader anymore. I was quite fortunate in moving to the industry 15 years ago when I knew nothing about tyres, so I was able to bring some fresh approaches, and this helped us to develop what I call a one-stop shop solution, because I saw that we needed to be something more than a seller of retreads,” Hercock said. A one-stop shop is a place where the customer can have all the services he could possibly need in one place, starting with tyre fitting services and new tyres, as well as retreaded tyres.
This scheme works perfectly both for the fleet and retreader, according to Hercock. The fleet owner gets the reduction in overall costs and has no need to look for different partners to meet his demand for different services. On the other hand, for the retreader this business model ensures long-term supply with the large customers and brings opportunities for margins from fleet performance. All in all, in this scheme, the retreader becomes not only a single service provider, but an essential partner to its customer, which is a new level of cooperation between them.
This business model has showed its viability for Vacu-Lug over the past several years, but it alone would be not enough to secure a bright future for a retreading shop.
“The fleet business segment was important to ensure sales and to fight the new tyre magnates and giants who were planning to push the retreaders out of the way. The key thing, I think, is that we have got an advantage, as the retreader is able to offer a wide range of different products, but as of today, if you want thrive you need to be able to offer a top-class product,” Hercock added.
The new tyre manufacturers would be telling the customers about the competitive advantages of their
products and for the retreaders it is important to be able to demonstrate they have top quality retreads along with economy solutions in their portfolio. On the other hand, Vacu- Lug sees opportunities to not only compete, but also to cooperate with the new tyre manufacturers for their mutual benefit.
“We work with the new tyre companies to give them a retreaded product. That is obviously useful in terms of volume for us, but also it involves us in new retreading programmes and allows us to sell the whole concept of what we are doing. This also gives us the first choice in terms of some casings, which are being returned to the new tyre companies from their customers,” Hercock said.
Also, about four years ago Vacu-Lug decided that it needs to do more on the web and started to try and develop some web shop capabilities.
It is an interesting fact that some tyre equipment companies in UK sell around 50 to 60 per cent of its products to the customers via the Internet. This is not just a new sales channel, but a way to achieve a better efficiency and better profits for the tyre business.
“There are some wonderful margin opportunities from selling on the web,” Hercock said.
Another option for the independent retreader is to use sizes as the advantage. There are some disadvantages of not being a part of the multinational business, but none of them are associated with the decision-making process.
“I already know from talking with some of my colleagues who were working in Bandvulc that now as they have become a part of the international company the whole decision-making takes much more time. We make the best of what we have got using our size and being able to make changes much quicker than the big beasts,” Hercock said. “You know, the dinosaurs did not last forever. We may be the little people, but we have got absolutely huge advantages. We can be dynamic and diverse, we can jump on new things and we can change the direction. And I think this is really a key why we survived and thrived. We are still here, and we are not giving up. Quite the opposite, we are going to attack and I’m sure the dinosaurs will come to an end at some point, and we will still be there,” Hercock concluded.
Retreading industry is still strong in Latin America
Tim Hercock, MD of Vacu-Lug Tyres
The Meyerton Retreading factory
sustainable and put the survival of the entire retreading activity in the European Union at risk. The entire segment is suffering, resulting in the loss of 4,200 jobs. The negative development was mostly felt in the tier three where many SMEs retreaders exited the market and could not benefit from the economic recovery in the sector, which was ultimately captured by low-price imports,” van der Rijken said.
In a view of these conclusions the European Commission proposed a package of provisional measures, including fixed import duties ranging from Eur52.85 to Eur82.17 per tyre. These duties are designed to be set on all Chinese imports, regardless of the producer, brand, size, dimension and other parameters. The registration must be continued, and it is the big question is, when the new duties will be put in place?
“It is not decided yet, whether the duties would be retroactive. If this were the case, they would be in affect from the beginning of February 2018. So, we will have to wait now to see what happens on November 10,” van der Rijken said. At the same time, the positive news is that the retreading industry gets some state aid in some countries of the European Union, and there are hopes this support would grow in future. For example, in Italy the association AIRP is trying to achieve a tax relief for retreads to support their use in private fleets. However, so far, the approval of this measure is being delayed.
In the Netherlands the retreading industry has been included into the guidelines for the public procurement of transport services
all public institutions normally have their own quote on retreads, although there are no legislative prescriptions to do that, according to van der Rijken.
Thriving, not surviving must be the target for independent retreaders
If you look in the UK retreading market, you would see a pretty familiar picture, with a rapid decline in sales over the past four years taking place there, said Tim Hercock, the President of RMA and the managing director for the Vacu- Lug Traction Tyres. At the moment, UK companies release around 475,000 retreads per year, and this figure is believed to be smaller than just several years ago.
What makes a difference for the UK from the other markets is that in this country the retreading industry is dominated by 3 or 4 large producers; Michelin accounts for 26 per cent of retreads, Bandvulc for 24 per cent, Vacu-Lug for 20 per cent and Bandag for 10 per cent, according to Hercock. Michelin for a long time has been the largest manufacturer in the UK, and not all of its products are actually being consumed by the domestic market, as the company still exports retreaded tyres from UK to mainland Europe.
In the period from 2012 to 2016 the UK retread tyre and budget tyre markets showed absolutely opposite dynamics, as the first segment shrank by nearly 30 per cent on the background of the strong growth in the second one. The budget tyre segment is mainly comprised by imports from Asia, and from China in particular,
42 Retreading Business