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ESTONIA
sanctions were introduced between Russia and the European Union, this severely hit the Estonian transport companies. According to Kõmper, unlike some other Estonian retreaders, his company has never been exporting retreads to Russia, but it had been serving the big transport companies that were focused on shipping some goods on the eastern direction.
“When this all started, these big fleets, they all were left without work. In Latvia, there were some companies that managed to withstand these challenges and keep operating, but, here, in Estonia, most transport companies were not so lucky. Some of them keep working, but the flow is much lower than it used to be,” Kõmper said.
When casings are waste
Vevid is not collecting casings on the domestic market. According to Kõmper, the company imports half of all its casings, primarily from Italy. The rest are customer casings. In this segment, the company purchases some casings from Kargro. Almost 85% of the casings the company retreads are R22.5. “The problem is that in Estonia nobody sells casings. There are a few clients that occasionally sell their casings when they do not want them to be retreaded, but these are miserable figures,” Kõmper said.
As Vevid imports casings, this year the company faced the need to pay a certain fee to the state budget – something that has not happened before.
“We have been told that we are importing waste, although this is not the case. Our suppliers can guarantee that the certain percent of these casings have good quality, so they could be used to manufacture the tyres that would be like new,” Kõmper said.
The government agencies informed us that for importing casings the company could be subjected to a fee limited to Eur32000. According to Kõmper, the lawyers said that the final figure would be much lower, probably around Eur2000 or so, but one way or another, this situation is wrong.
“This evidences that they [the authorities] do not fully understand the nature of the retreading business,” Kõmper emphasised.
As for the raw materials, 70% of all materials used in the production process at Vevid are supplied by Avon. Some raw materials are also supplied by Nokian Noktop, ITG
and Kraiburg.
“We have been working with Avon for more than 10 years. It is interesting that Noktop is in higher demand on the Finnish market, and it is more expensive, but in my personal opinion Avon has similar quality on all parameters,” Kõmper said.
Foreign direction
Historically, Estonia has close cultural and economical ties with Finland, and some retreaders take advantage of that. The Finnish retreading market is believed to be highly competitive, but still, Vevid is
exporting from 20% to 25% of its retreaded tyres in that direction. The company has been also selling some tyres to Sweden, but in 2018 the figures were poor.
“Indeed, the Finnish retreading industry is very strong, but nevertheless, the number of retreaders in that country has been seen shrinking. On the other hand, exports to Finland are taking place despite the logistics costs and in general rising production costs at our company,” Kõmper said.
In general, developing exports is a hard task, because competition is tough on all markets, and there are always logistics costs that you need
to take into account, according to Kõmper. Being located in Tallinn, right across the sea from Scandinavia in some way helps, but this factor hardly could be called an important competitive advantage. “Taking casings from anywhere abroad and returning retreaded tyres to a customer is very expensive, and any advantage in costs that we may have, would be killed by logistics. So generally speaking, we plan to export more retreaded tyres to Finland. That’s it. In Latvia, I’m not so sure, that we could supply something there, because the average prices there are lower,” Kõmper said.