Retreading Companies Remain Confident

The size of today’s Russian truck tyre market is about 12 million units per year. Together with improving road infrastructure – in particular in urban areas – and the increasing importance of Western products and technology, the retreading industry too is moving ahead in Russia. It is not only the demand for retreaded truck tyres, which is growing, but also the demand for truck tyres that were retreaded in Russia and other former Soviet states. But one problem remains: in general casings have to be imported because Russian-made truck tyres are not good enough quality to be retreaded, say most market experts.

According to Marco Mandrioli, the new managing director at Ellerbrock Reifenrunderneuerungs-Technologie GmbH in Germany, and sales director Christian Asmuth, the Russian retreading industry has changed in several ways over the past year. In 2005 the demand for retreaded truck tyres increased to 300,000 pieces, explains Asmuth in an interview with Tyres & Accessories, although it is difficult to get hold of reliable market statistics. During the same year, the number of retreaded truck tyres produced in Russia rose to about 100,000 pieces, accounting for a market share of about 35 per cent. During last year’s Tires & Rubber exhibition, the estimates for the 2004 business year counted some 50,000 Russian-made retreads. If these figures are correct, domestic production has therefore doubled within a year.

The vast majority of truck tyres that are chosen for a second life are generally retreaded with prefabricated treads (precure or cold retreading). Hot cure retreading is virtually unknown in Russia except for some traditional 20 inch truck tyres. “But these tyres will soon disappear from the market,” Christian Asmuth predicts confidently.

On the Russian retreading market Marangoni Tread, together with its German subsidiary Ellerbrock, describe themselves as market leaders. According to Marco Mandrioli who joined Marangoni last year, every second precure retread that is produced in Russia is a Marangoni/Ellerbrock tread. During 2005 the company was able to double its turnover in the whole region (Russia, Ukraine, Belorussia, Baltic States). Those responsible at Marangoni and Ellerbrock view this as a starting point for further progress in these markets.

For retreading companies on the Russian market Profil Liner treads are commonplace today, both managers say. Furthermore, there are customers that are producing retreads according to the patented Ringtread technology. Together with one facility in Russia there are four more retreading plants in Ukraine that make Ringtread retreads. “There certainly is a demand for these products on the Russian market,“ Mr Asmuth continues.

The fact that the number of retreaded truck tyres sold in Russia is increasing can also be demonstrated from the growing number of professionally working retreading plants in the country. According to Marangoni and Ellerbrock there are currently about 14 such plants based in Russia. A year ago it was 11. “It is the recent trend which is important to us,” Marco Mandrioli points out. There are in fact more than just 14 retreading plants in Russia, but these facilities only produce retreaded truck tyres for their own consumption. These retreads are not produced for the market but for the retreader’s truck fleets. The 14 known retreading plants produce “a significant number of retreaded tyres that are sold at least on a regional market,” which is Ellerbrock’s definition of a market relevant retreader.

“The biggest bottleneck still is the availability of retreadable casings,” Mr Asmuth acknowledges. Even now, a major proportion of these casings have to be imported. Big retreaders have now started to establish their own casing trade. At least the situation is improving slightly. However, Russian truck tyres are still regarded as being more or less unretreadable.

For Gummiwerk Kraiburg Austria too, business in Russia and other states in the region has improved significantly. According to Robert Renner, turnover increased by 20 per cent over the past year, which was a “record-breaking year” for the Austrian company, explains the area sales manager. However, the basis for such a comparison – the figures from 2004 – follow a relatively weak 2003 and helped make 2005 a record-breaking year. At the moment Kraiburg has three retreaders in Russia on its customer list. Only last year, the Austrian retreading specialist signed up with two new customers in Russia. This signifies some “good prospects” for the tread and material supplier. Although Kraiburg identifies an increasing number of retreading plants in Russia – according to Robert Renner there are up to 20 potential customers – “most of these plants operate on backyard levels.” Among the 20 Russian retreading plants there are several that only produce retreaded truck tyres for their own fleets or maybe for two or three known customers.

A growing demand on the Russian market for retreaded truck tyres is clearly visible to experts, says Robert Renner. However, a major boost to the market growth is coming from increasing numbers of imports because local retreading plants have increased their output by less than the amount that the market grew in the same period. One of the major obstacles for a flourishing Russian retreading business was and still is the availability of retreadable casings. As a result of the growing numbers of imported Western truck tyres, the number of retreadable casings is improving too. At any rate, today there are more and more customers that have contact with retreaded tyres – demand follows supply, which follows demand.

Less positive news comes from Bandag. It was announced during the Tires & Rubber show that Bandag (who exhibited together with the Kargro group) had lost one of its three franchisees in Russia at the end of February. The St. Petersburg company “Good Wheels” retreads about 18,000 to 20,000 truck tyres every year, explains Luc Slembrouck, business development manager at Bandag and thus responsible for the CIS states including Russia. The length of the contract was set at five years but it was terminated by Bandag after just one year, Mr Slembrouck continues: “They had a different approach and we had to distance ourselves from them.”

According to Bandag’s franchise system contracts, franchisees are frequently prohibited from taking on another competing precure retreading system. Today, the retreading plant in St. Petersburg is supplied by a competitor. This setback on the Russian market will not cause changes to Bandag’s market approach, the business development manager announces. However, about a year ago Bandag launched a “Value Line” under its own banner. These cost-saving retreads are made for conditions where even premium retreads would be destroyed prematurely.

However, Russian customers mainly ask for premium line retreads. At the moment Bandag has two franchisees in Russia; one in Vladivostok (running 15 outlets) and another one in Bryansk. Together these two Bandag customers produce about 15,000 retreaded truck tyres per year. This means that roughly 15 per cent of precure retreads made in Russia are Bandag retreads. Luc Slembrouck is confident about the future: “Currently we are having close negotiations with three companies. Possibly they will be signing the contracts by the end of this year.” If these expectations bear fruit, Bandag will instantly boost the number of Bandag retreads produced in Russia by 50 per cent.

A company which has just started to regard the Russian market as a possible destination is Reifen Ihle GmbH. This year the retreading company from Southern Germany was exhibiting for the first time at the Tires & Rubber show. Reifen Ihle wanted to find out how the land lies, says Thomas Wurst. Before the show no truck, OTR or passenger car tyres which were retreaded according to the Rigdon system were sold on the Russian market. This however will change by the end of this year now that Reifen Ihle has obtained all the necessary registrations and permits. It is expected that the demand for retreaded tyres on the Russian market will grow steadily. Only last year demand grew by 20 to 30 per cent up to 300,000 retreads, acknowledges Alexander Borowski from Chemplast, which acts as an importer for Reifen Ihle in Russia. Quality retreads like those produced according to the Rigdon system can be sold for half the price of a new Michelin truck tyre and are still profitable.