Treadsetters Accelerates its Business

Since its establishment in 1999, Treadsetters' turnover has grown from £6 million to over £27.5 million. Having successfully operated a wholesale model based largely on selling exclusive tyre brands for a decade, the company is now developing its own brand of tyres under the name Torque with a view to expanding this success into a truly international scale. Tyres & Accessories met with Treadsetters managing director Tim Davies in mid November at the company's new, larger warehousing site in Telford to find out more about the strategy that is behind both the company's recent HSBC business thinking award nomination and its recent growth.

To say that Treadsetter's recent growth has been strong is something of an understatement. If the company hits its 2010 targets – and so far there is every indication that it will – the business will have experienced 750 per cent turnover growth and 1000 per cent enhancement in our profitability in the last 5 years. Bearing in mind the wider market conditions of recent years and the fact that the company has not only maintained but increased profits amidst rapid growing sales total, this really is something of an achievement.

To put it into concrete figures, Treadsetters’ annual sales have grown from £4.7 million in 2005 to £27.5 million for this year. During the same period pre-tax profits have swelled from £137,398 to £1.018 million. The initial numbers are not as large as those associated with the biggest European or even British wholesale operations, however the speed of growth and the width of margins clearly make sense.

The other thing that will have singles out Treadsetters for the attention is the firm’s performance against the tide of apparent doom and gloom in British business. Between 2008 and 2009 the economic downturn was at its height (or should that be depths?). But while many were complaining about poor access to credit and supply issues, Treadsetters was wildly outperforming the market. Research shows that during 2009 the global tyre market shrunk something like 14 per cent, with some estimates putting UK market shrinkage at 12.6 per cent during the same timeframe. While all this was going on Treadsetters’ results appear completely unaffected, with the business reporting a 29 per cent turnover growth in the period.

With this and five years of achieving it targets in mind, the company is aiming for similar expansion in the business during 2011. As a result the new goal, according to Davies, is to achieve sales in excess of £37.3 million next year.

Interfacing with suppliers

Recognising that its suppliers, which are now mainly based at modern but perhaps not the best known factories in China, would benefit from the size and range forecasting, flexible and cooperative payment terms,  contacts and distribution, it has to offer, Treadsetters aims to act as an “interface” between its partners and various markets.

Currently the company trades with 30 countries around the world. In addition to selling tyres in Treadsetters’ home UK market, the firm reports that it is experiencing its fastest growth in North and South Africa, Central and South America, Turkey and Mexico. Argentina is another market that is said to be “well on the way.”

Most of the revenue described above is generated through the sale of Treadsetters’ exclusive brands such as HiFly and Durun produced by tyre manufacturing partners in China. However, in order to move forward and achieve the company’s ambitious future growth plans it was decided that another brand – and you could say another strategy – was needed. That’s where the new Torque brand comes in.

Talk the Torque

If you thought Treadsetters growth and targets were ambitious up to this point they look somewhat conservative compared to those that factor in the future progress of the new Torque brand. While Treadsetters’ dealings with exclusive distribution partnerships have served the company and its customers well up to now, these also bring inherent limitations with them. Tyre suppliers often – understandably – want to control distribution zones and perhaps offer regional exclusivity. Developing and marketing a new brand on the other hand gives the company a completely unrestricted market place.

The short story is that Treadsetters is aiming to achieve massive growth with the Torque brand. Just 1 per cent of the European or US markets would add £250 million to the company’s sales. However the company’s medium term projections are considerably more conservative than that. Between 2012 and 2016 the company is aiming to see total turnovers rise to at least £56 million and £115 million respectively. With non-Torque revenues during this period expected to amount to £39 million (2012) and £57 million (2016) what also clear is that the Torque brand will become an increasingly important part of the business.

However that is not to say that this will be to the detriment of the company’s existing exclusive brand sales. The above figures clearly show that non-Torque sales will continue on their current strong growth paths. Nevertheless, having already spent tens of thousands of pounds registering the Torque brand name in markets all over the world, Treadsetters’ commitment to its latest expansion project is clear.

As far as the product portfolio is concerned, the company is aiming to offer truck and bus, passenger car, 4×4 and even steel wheel lines, with the truck radial range reportedly already in production.

With the company moving into its new premises earlier this year offering 40,000 square foot of warehousing to go with the 20,000 to 25,000 square feet the company has on a sessional site, and with the firm recently upgrading its IT systems to SAP, the necessary logistical foundation has already been laid to prepare the company for its future growth plans. All that remains now is for the company’s staff and management to talk the “Torque” and make this impressive vision a reality.

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