Changing Strategy in Siberia

A changing market environment and growing consumer demand in Russia has encouraged Matador to target the increasing opportunities offered by the market. The Slovakian tyre manufacturer is preparing for the future by initiating a new brand strategy and further investments into its Russian joint venture in Omsk. 2005 is an appropriate year for Matador to contemplate future development of its tyre business, as it will celebrate two important anniversaries during the coming months. In May the company will celebrate its 10th year at the Russian factory Omskshina, followed by its 100th anniversary in the autumn.

Adopting the right brand strategy is fundamental to the future success of Matador, as with any other manufacturer on the Russian tyre market. The joint venture Matador-Omskshina situated in Omsk produces “Matador” and “Matador-Omskshina” branded passenger and light truck tyres. 75 per cent of the “Omskshina” brand tyres are then shipped out to the Sibur group. This network of different brands will be unscrambled during the coming five years, explains Jozef Rucek, general director of the joint Slovakian-Russian venture, in an interview with Tyres & Accessories. This step will leave the Matador brand with a clearer profile and – hopefully – with a bigger impact on the changing market.

According to the companies’ plans the two brands “Omskshina” (low budget segment) and “Matador-Omskshina” (passenger car and light truck tyres; 13-16 inch) will be taken out of production over the next five years. In 2006/2007 the original core brand of the joint venture partner Omskshina (“Omskshina” brand) will disappear from the market, explains general director Rucek. Then, in 2009, the joint tyre brand “Matador-Omskshina” will have done its bit and will be taken off the market too.

Replacing these two brands will be a new tyre called “Cordiant”. The Sibur group will own the new tyre brand. Sibur’s plans allow for an additional production base within the corporation on top of its existing four tyre factories. According to Jozef Rucek this could be the Sibur factory Voltayr (Volga Tyre Plant) in Volzhki close to the Caspian Sea. Initially the Cordiant tyres will be produced in sizes 12 to 16 inches; then 17 inch tyres will be added to the range. General director Jozef Rucek explains that the new brand will predominantly be a brand for the Russian tyre market and will be positioned beneath the Matador brand. The proposal is to export the Cordiant brand outside of Russia, or at least to markets within the former Soviet Union. However there are no specific plans of how to do this as yet. Cordiant will be a passenger and light truck tyre brand only; if Sibur does have plans to produce truck tyres they are not known in Omsk or elsewhere in the Sibur group. In the future Matador-Omskshina will only produce and market two tyre brands: Cordiant for the Russian market and – in a higher segment – Matador for the Russian and export markets.

A new structure in Omsk

Apart from changes in the brand portfolio of the joint venture, the partners are also trying to enter other fields. For example as of 1 January, the Joint Stock-Company Matador-Omskshina rented machinery and buildings in Omsk from Sibur. This lease contract will expire in five years. After this period the joint venture intends to completely take over the respective machinery and buildings for future production. The plan is to turn the Matador-Omskshina joint ventures into a ‘mere’ production company. The idea is that the joint venture will use Matador and Sibur’s retail network and distribution channels on the basis of a common trade agreement. The Sibur group for example founded a new distribution organisation in 2002, the Sibur-Russian Tyres Company. This will eventually be turned into a separate Sibur tyre holding company managing all tyre business including production. Matador has also recently founded a new distribution company for the Russian market, SlovShin-Trade, which stands for “Slovakian Tyre Trading” (‘shina’ is the Russian word for ‘tyre’). The newly founded company SlovShin-Trade is organising the export of Matador and Matador-Omskshina branded tyres to other markets and to the Russian market itself, explains Dusan Perger, general director of SlovShina-Trade.

Another important step for the joint venture company has been the installation of a new mould factory in Omsk, Matador’s first one in Russia. At present about 30 million euros have been invested into this new facility, said Jozef Rucek whilst taking T&A on a tour around a building that looks like a Soviet depot from the outside, but offers Western standards if not more inside. At the heart of the somewhat empty building is a brand new CNC milling machine that will be used for the production of moulds. Jozef Rucek is proud of his new project: “It is the first time in the history of our joint venture that we have actually produced moulds in Omsk.” Until now the moulds were produced in Puchov, in Slovakia. At present the joint venture can’t produce moulds, but it can repair defective moulds, something that was seldom done before. Company employees are currently undergoing training with experts from Puchov on the use of the new machinery so that the new mould factory can move into production. According to the plans the new mould plant will not only cover the joint venture’s and Matador’s demand for moulds, but will allow for contractual work too. In fact, the joint venture already has a loose agreement with competitor Amtel on the production of moulds. Details on this have not yet been disclosed.

Last year the joint venture produced 1.75 million passenger car and light truck tyres. This year the figure should increase to 3.35 million units. This increase is not down to the installation of a new production line or to the millions that have been invested, but to the fact that Matador, Omskshina and Sibur are implementing their strategy immediately. Because Matador-Omskshina is renting some of Omskshina’s production facilities, the tyres produced in these facilities are then attributed to the joint venture.
About half of the 3.35 million tyres that will be produced this year will be Matador branded tyres (roughly 1.7 million pieces), the second half will be Matador-Omskshina, Omskshina as well as Cordiant brand tyres.

Siberia in motion

There will be a lot of things going on in Omsk this year. Brothers Stefan and Miroslav Rosina, president and vice-president of Matador respectively, are at the forefront of “things in motion in Siberia.” This was evident at the company’s last event at the “Kubok Sibiri”, the Siberian Cup in Omsk’s ice-oval. At temperatures of –30 degrees celcius Stefan and Miroslav Rosina took part in a traditional Lada race; man against man. Stefan Rosina Jr and Graham Middleton (last year’s winner of the British National Rally Championship and managing director of Matador Pneu Sport UK, based in Wales) also fought for honour against the competition. The Slovakian tyre manufacturer and the local joint venture Matador-Omskshina have sponsored the Kubok Sibiri in Omsk for the past five years. Specially revamped Ladas that are more like stock cars than street cars drove in circles on specially adapted Matador ice race tyres with rubber ‘as soft as butter’ despite the low temperatures, tyres that proved to have extraordinary grip. From a sports perspective there was not much to win for Matador’s contestants, but nevertheless the competition was a big event – and Matador again improved its grip on the Siberian and the Russian tyre market.