New markets in Eastern Europe

Stagnant markets in Germany and Western Europe have made many retreaders, as well as material, machinery and system suppliers, search for new sales markets right on their own doorstep: in Eastern Europe and Russia. In recent years many of these companies have been able to establish a respectable market representation, as has been the case for RuLa GmbH from Schraden, near Dresden in Eastern Germany and its subsidiary “Berliner Runderneuerungswerk”. Today, every second retreaded tyre produced in the company’s two production sites close to Dresden and in Berlin is sold in these new export markets in Eastern Europe and beyond. And as managing director Detlev Biermann confides, even his “vision” of eventually establishing a production site in Russia is feasible.

RuLa GmbH has, as a retreader, a number of unique qualities. In a market containing many traditional and well-established retreaders, a newcomer like RuLa – which was only founded in 1992 – is a noticeable exception. Back then Hans-Josef Biermann (today 65 years of age and retired) had the idea of opening a retreading plant because that’s what the tyre dealer from Paderborn in Western Germany had always held a passion for, as his son Detlev Biermann explains. The founder of the company underwent vocational training as a tyre vulcaniser (a specific course for this was available in Germany) and – without initially knowing much about retreading – decided this was something he would like to do: to return to the basics of his apprenticeship. Unfortunately, the local market in Western Germany where he had (and still has) his tyre trade business was already divided up amongst other market players – unlike in Eastern Germany immediately after the country’s reunification. Together with a partner he then decided to head east and founded the “Runderneuerungswerk Lauchhammer” (English: retreading factory in Lauchhammer), in short: RuLa.
In a short space of time the company developed from a very small four-employee-shop with a daily output of twelve retreads to a large company playing a major role on the national retreading market. Today the company has about 40 employees in the Dresden facility plus another 40 employees in Berlin. The latter facility was taken over in 2000 and before then was known as the “Berliner Reifenwerk” (English: Tyre Plant in Berlin); the Biermann family renamed it into Berliner Runderneuerungswerk and retained its acronym: BRW.
When RuLa was founded in the early 1990s, the company was able to benefit from the good relations its founders had with Goodyear, as the managing director says. Back then Detlev Biermann’s father sold a good number of Goodyear truck tyres, which led to RuLa becoming one of the “Goodyear Authorized Retreaders” (GAR) that produce and offer Goodyear’s Next Tread retreads according to a strict quality controlled system. RuLa also offers Next Tread tyres as retreads produced according to a ring system (“UniCircle”). Although the percentage of Next Tread retreads among RuLa’s output is declining at a time when the Goodyear-Dunlop group is focusing more closely upon its own in-house retreading facilities to promote the product, as Mr Biermann points out, the tyre giant does not constrain the production or distribution of Next Tread retreads produced by its GAR’s. In the Berlin facility the company does not operate a ringbuilder, thus there are no UniCircle retreads produced there. At the Berliner Runderneuerungswerk it is instead primarily mould-cure retreads being produced; the company has 40 curing presses installed there.
Today, RuLa, together with its Berlin subsidiary, produces up to 90,000 retreads per year (2007), as Mr Biermann continues. This said, the retreading facility in Berlin is in fact slightly larger than the parent company in Schraden, close to Dresden. However, the capacity of both facilities is at least twice as high as the actual output, the managing director adds; staff currently work on a one-shift system. Mould-cure retreads at present account for about 20 per cent of the output, but it is expected that this ratio will change in the future in light of the growing demand for these particular products.
While during the early years RuLa mostly produced its retreads to be marketed on a very regional basis in Eastern Germany, in order to step from there into the wider German market the importance of sales markets has changed quite dramatically in the last few years, as Mr Biermann points out. The emphasis is much more on export markets today than in the past. Last year, for example, every second tyre produced in Berlin and Schraden was exported, with the not too distant markets of Eastern Europe and Russia and the CIS the most common destinations. And it is within these markets that the managing director is expecting strong growth rates in the future, growth rates that could be very beneficial to a company like RuLa/BRW. The Russian tyre market is – although there are others – the most important export market for the German retreader: about 70 per cent of its exports are shipped there. The factories in Dresden and Berlin exclusively ship pre-cured retreads to this market. By purchasing a RuLa retread customers in Russia are showing that product quality is important even though they are usually not willing to pay for a tread from a top-of-the-line premium range. Instead, consumers in this market are more interested in a good cost-performance-ratio.
Although Biermann still calls this “his vision”, some day RuLa may actually install its own retreading facility in Russia. This, as Mr Biermann points out, would and could only take place if a local partner joined such a venture. However, the market situation in Russia is currently difficult to predict, not to mention the market situation with retreadable casings. Part of the reason for this unpredictability is also the growing imports of cheap Chinese new tyres coming into Russia. These imports have increased “quite substantially,” as Mr Biermann is informed by his Russian retread customers, who are also important truck tyre dealers. “Every single new Chinese tyre is taking away from us a retreaded tyre.” But at least there seems to be light at the end of the tunnel: In Germany, RuLa’s home market, demand for new Chinese truck tyres seems to be decreasing, which is – as Mr Biermann believes – a reaction to unsatisfied quality expectations. Another factor determining the establishment of a retreading facility in Russia is casings, which usually have to be bought from casing dealers because they are not returned fit for retreading. Next to the Russian tyre market it is Poland, the Baltic States as well as the Ukraine and Belarus that purchase most of the retreads exported by RuLa and Berliner Runderneuerungswerk. Mr Biermann hopes that Poland will soon become a member of the single European currency; this would help him to increase exports there considerably.

RuLa to realise construction plans

Currently, RuLa GmbH has plans for the construction of a new retreading facility. As Detlev Biermann says in an interview with TYRES & ACCESSORIES, a new and modern plant will be set up in the state of Brandenburg near Berlin. This plant will become operational in the course of this year, and will be completely owned by RuLa, unlike the Berliner Runderneuerungswerk, where the retreader is only a tenant. For the construction of this new retreading facility RuLa has already acquired 20,000 square metres of land and building permission was applied for in February. The new factory in Eastern Germany will produce both pre-cured as well as mould-cure retreads. Additional permission required to comply with the German Federal Emission Protection Law has also already been granted. Mr Biermann does not want to disclose figures relating to the sum to be invested in this latest venture.