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RUSSIA
Andrey Funk and his team at Dominant
Market is in its Infancy
Just like many other retreaders in Russia, Dominant LLC has low occupancy of its plant. The designed production performance of the installed equipment is 500 to 600 tyres per month. However, the actual occupancy is ranging between 30 and 35 per cent, according to unk. This is because the retreading market in the country is still in its infancy.
“You have to show to the transport companies that by retreading their tyres, they could get certain benefits. Not everybody understands that. So, we have a big education process underway that we have to pay attention to. In our company we have two managers who spend all their time with transport companies, trying to explain them how they can save money,” Funk said.
This work pays off, as the demand for retreaded tyres is gradually rising, and so is the occupancy at the retreading plant. However, this process takes place slower than the retreaders wish it to.
“The tyres retreaded at our plant have the same mileage as new ones.
We work with different sizes from R17.5 to R24. Among others, we retread bus tyres R19.5 for the Sochi municipal transport services provider. They are very happy with our products,” Funk said. Dominant LLC has a broad list of various clients. In addition to cargo carriers the company sells retreaded tyres to civil passenger traffic companies, both local and those operating on the interregional routes. Some tyres are also sold to construction companies.
“Our strategy is to provide retreading exclusively as a service. There are very few good casings on the market, so our success fully lies on whether we will be able to properly educate our partners or not,” Funk said.
“At the current conjuncture at the local market, purchasing casings and selling finished retreaded tyres to the customers is a road to nowhere,” Funk stressed.
Competition Exists
Dominant LLC has to compete primarily with new Chinese tyres on the local market. This competition is also all about educating clients. “The new Goodyear tyre has a
300,000 km mileage. For the tyres retreaded at our plants this figure is repeated. We use only high-quality European raw materials of Marangoni or Goodyear to make the tyres just like new. On the other hand, the new Chinese tyres have mileage of only around 150,000 km, maybe 180,000 km if you are lucky,” Funk said.
“So, these are ver y simple calculations, with the same price of around Rub 15,000 ($240), our tyre can serve for twice the distance. And most Chinese tyres can never be retreaded”.
The anti-dumping duties imposed against the Chinese tyres in Russia a few years ago have hit their target. They not only made all cheap tyres on the market more expensive, but also changed the business philosophy of the transport companies in Russia.
“I think after the new duties were imposed, the Chinese tyres stepped aside. Their segment has been taken by Russian tyres, such as Kama and
the local retreading industr y.
“We did not feel any support from the 2014 Winter Olympics. It was followed with the economic crisis, and many companies shut down their business, while the others were merged or acquired. We see the actual improvements only now, just in the past year. The transport companies started purchasing new trucks, begin investing, and in general they started applying a new policy”.
Things are looking up
Despite all that, the occupancy at the plant has been growing, and the overall operational performance is getting better.
“At the moment, we cannot catch up with the rising demand. We are fully loaded with orders for 2-3 weeks ahead, and the rise in demand is only gaining momentum. In this regard, I look to the future with strong optimism,” Funk claimed.
Cordiant. The tyres of these brands have better quality, mileage and what is also important, they can be retreaded,” Funk said.
Ups and downs
Dominant LLC has made it through all the ups and downs of the Russian tyre market. The company is located not far from Sochi – the part of the country into which the federal government pumped a lot of money, so that it could host the 2014 Winter Olympics. New highways were built, new luxur y resorts opened, and multiple projects were launched.
It was expected that the economic upturn would be continued, but the bright forecasts have not come true. In 2014 Russia was subjected to tough international sanctions that sparked an economic crisis in the countr y. As a result, many transport companies in the region went bankrupt, and this has also affected
There is no doubt that the number of casings appropriate for retreading will only increase, as public perception of retreaded tyres improves.
“Our clients are confident in our services. We make a ring tread – this is a seamless technology, which is ver y effective. This reduces all risks that could be associated with the use of tread strips. We are also running on the most modern equipment”.
There are several other retreading plants in South Russia, but it would be not fair to say that they are competitors among the retreaders. According to Funk, the market is divided between the local players, as each company operates in its own price segment.
“We provide the most expensive product available at the local market. So, we fully occupy the premium segment,” Funk explained.
54 Retreading Business