‘The Best News is the Worst News’

“Unfortunately, the best news is the worst news for many Russian news agencies,” according to Sibur press attaché, Anna Stepanova. The Russian tyre manufacturer’s spokesperson made these comments in response to reports stating that the company had reduced first quarter tyre production by 25.5 per cent. While the reports were not inaccurate, Sibur’s management does not agree with the conclusions drawn by Russia’s Analytical News Agency (ANA) and says that numbers went down due to production improvements and capacity transfers.

The ANA reported that Sibur reduced tyre production by 3.02 million units in the first quarter of 2005, compared with 4.053 million units for the same period a year ago. In particular the report detailed how this affected each of Sibur’s individual factories: Voltire cut tyre production to 585,000 units from 701,000 in 2004; Omskshina decreased output to 732,000 tyres from 1.425 million the year before and Yaroslavsky Tire Works cut production to 1.244 million from 1.493 million. At the same time Uralshina Ltd improved tyre output to 459,000 from 433,000 units. In total 3.121 million tyres are reported to have been shipped, a decrease of 586,000 tyres compared with the same period a year ago.

However, according to Ms Stepanova the reports do not pay attention to any “objective reasons” that Russian companies mention in their press-releases.

Sibur says that the changes in production levels were due to improvement programme undertaken by most of the company’s factories. Ultimately this has been aimed at increasing the “efficiency of the holding tyre business and increase in quality of tyres,” Ms Stepanova reports.

This programme is said to include the implementation of “huge” projects including the specialisation of tyre factories, optimisation of model range and the introduction of new brands. The company says it is in the process of phasing in its Tunga and Cordiant brands, while also managing the relocation of production from one factory to another.

One specific example of this occurred when Sibur transferred automobile and light truck tyre production from its Omskshina factory to the “Matador Omshshina” joint venture. The company report that it is still in the process of transferring the manufacture of agricultural tyres from Omskshina to Voltyre. Meanwhile the manufacture of light truck tyres at Uralshina and Voltyre is said to be “systematically developing.”

In February 2005 the company made the decision to close one of its production lines at the Yaroslavl Tyre Plant. This brought the production of truck, light truck and agricultural tyres at the factory to an end. In order to balance this the company will, again, transfer production capacity to its other plants. The production of agricultural and light truck tyres will be shifted to Voltyre, while the manufacture of truck tyres will be moved to Omskshina.

Meanwhile, the company has started the modernisation of another automobile tyre assembly/vulcanisation shop for the production of Cordiant Standart RG1 tyre. Sibur reports that by the end of the upgrade process the line will be able to produce up to two million tyres annually. This plants improvement programme will conclude with investment in its truck tyre production equipment, designed to increase the quality and volume of all steel tyres and trucks.

“The changes occurring in the company today at of ‘Sibur,’ lay the success foundation to the new tyre holding that will be created on the basis of our company in the second half of the year 2005. Actions such as the specialisation of tyre plants, transmission of industrial capacities from one factory to another, the removal of obsolete and unprofitable tyres from the manufacture line and market launch of new brands are rather long and the labour-intensive processes, inevitably accompanied with insignificant recession of volumes of manufacture. They are not calculated on momentary economic benefit. This is a work on perspective,” said company CEO Vadim Gurinov.

“In a view of occurring and future changes -which will substantially alter Sibur’s tyre business, it is more correct to consider the data on results of work in first quarter 2005 within the dynamics of the current year – that is in comparison with the last month. Thus we do not refuse statistics in comparison with year 2004 and, by tradition, we show it openly and in full,” he added.