Starco confident of reaching growth targets

A lot is happening within Starco, says group marketing manager Brian Lorentzen. Some of this activity was witnessed in the days and weeks before he spoke with Tyres & Accessories; during this time the firm announced the establishment of a joint venture with Argentine agricultural tyre and components manufacturer Buco plus the pilot rollout of its first online shop. These two events are part of a wider growth strategy covering the next few years, Lorentzen shares.

“Starco has laid out a strategy for the years 2010 to 2014,” the group marketing manager elaborates. “As part of this we want to grow aftermarket from 40 to 50 per cent of our business and by 2014 double our turnover from 100 million to 200 million euros. We are confident of reaching these targets, Starco has solid plans in place that will assist us in doing so.” While some aspects of these plans remain confidential other aspects can already be seen. One is the aforementioned ‘STARCOshop’, which will be introduced into all markets where the Danish company is active within the aftermarket sector. The first of these online shops – de.starcoshop.com – has already gone live in Germany as part of a series of pilot launches. Lorentzen reports that the next of these national market launches will take place in Denmark in May and will be followed by Belgium and the Netherlands, France and then the UK at the end of this year.

Online ordering means greater resources for customer contact

While each new STARCOshop will boast a layout and user interface familiar to those accustomed to online browsing and shopping, Lorentzen reports that the true innovation lies behind the scenes with the integration of web shop with the company’s product catalogue database and Starco’s enterprise resource planning system. “The STARCOshop will minimise the time involved in handling orders and enable us to invest more time in face to face contact with customers,” he explains. “Reducing the internal demands of our sales teams will free up more resources for external roles such as visiting customers at their sites or inviting groups of customers to us for more in-depth training on the best use of our products and other related things.” The aim is to channel a large proportion of the more standard orders through the online system; Lorentzen says Starco hopes the new German site will eventually process more than 50 per cent of orders: “Those still handled over the phone will be more specialised orders for tailor made products such as wheels, and the extra resources Starco will gain from being freed up from standard ordering will enable us to take the time with these other orders to meet specific requirements.”

This desire to invest time resources in specialised orders goes hand in hand with a change in direction that has gained momentum in recent times. “We have changed our vision – we want to become a global player for specialty wheels,” states Lorentzen. Tyres will definitely remain a large focus and Starco continues to develop its tyre business, yet the role its factories in Croatia and Switzerland play has increased in the last few years. A strength of the factory in the eastern Croatian town of Beli Manastir is its ability to produce large or very small quantities of wheels to the same level of quality, an achievement beyond the capabilities of many small scale wheel producers, Brian Lorentzen notes. A customer can contact Starco with specifications for the required wheels and receive them within a short period of time. “Product quality remains the same regardless of whether a customer places an order for two or two hundred wheels,” he adds. The plant in Switzerland specialises in dual wheel systems, a product are where Starco foresees growth in the coming years.

Starco-Buco joint venture

In South America, Buco S.A. is established in the development and manufacture of injected rubber products for the agricultural, automotive and industrial sectors. The products developed for the company’s Buco Agro business complement those in the Starco portfolio and Brian Lorentzen comments that the Danish company has built up its relationship with Buco over more than a decade: “We have been in communication with Buco for a good number of years but were waiting for the right moment for Starco. This moment is now and we signed the group venture agreement some five months ago. Starco has now reached a level within the agricultural sector necessary for this deal, we have a good programme and are introducing new products.”

Central to the Buco joint venture is Starco’s appointment as exclusive European distributor for the Buco brand range of semi-pneumatic tyres and wheels plus its corrugated hoses and telescopic tubes for seed drills. Lorentzen notes that while the last two of these may not seem to fit in with Starco’s core business, they are a product often sold together with Buco’s semi-pneumatic tyres. “They are a product that customers want and it is advantage both to the customer and to us to provide both product lines from the one source,” he comments.

The Argentine firm’s range will be distributed through Starco sales points throughout Europe, giving Buco direct access to an important market. “This initiative underlines the continued commitment of the Starco group to the agricultural sector by extending our coverage of products and components for both OEM and aftermarket agricultural customers, as we integrate the Buco product range with our existing Starco special wheels, tyres and related components – to present the most comprehensive and compatible agricultural product range in Europe, supported as always by the engineering, manufacturing and logistics excellence of the Starco group,” Lorentzen continues. He also points out that the joint venture is not restricted to distribution: We will be a part of the future development of the Buco portfolio. Our engineering team in the UK will work closely with Buco to develop the Buco range to a higher level. Starco is also a part of what Buco is doing in Argentina. This deal brings mutual benefits to both firms.”

Reducing dependency on rubber

The short-term plans of many companies active in wholesaling have been restricted by availability issues. This is an area where Starco’s dual role as a wholesaler and manufacturer is advantageous, and will help the company markedly reduce the affect of one issue now affecting so many within the tyre industry. “When you look into our business and particularly what our future business will be, a big part of it is wheels,” Brian Lorentzen explains. “These utilise steel as a raw material rather than rubber. Of course there are also issues regarding steel but these are much less severe than those linked with natural rubber at the moment, and decreasing our dependency on rubber is a key point in our strategy. The availability situation is not a threat to us. We are in a niche segment, we will find what we need.”

That said, no manufacturer or wholesaler active in the tyre business is totally immune to rising raw material prices. To combat these, Starco is implementing price increases on June 1 and cannot rule out further increases. Lorentzen reflects that aftermarket customers have largely accepted the necessity of price increases. Higher prices, he adds, can also be made more acceptable by offsetting them with value-added benefits such as a good level of service: “For example, we offer 24 hour service in all markets. We can tell a customer straight away if something is not in stock locally and then it can be shipped from our Central European Warehouse in Germany within 48 hours. Our levels of delivery security are already high but we are still aiming to reach higher levels.”

Focus on the aftermarket

To reach its goal of a 200 million euro turnover by 2014, Starco must increase its sales. During the coming year the company anticipates its main growth will occur through the agricultural original equipment sector and the aftermarket. “We are spending a lot of time developing a range of wheels and tyres for the agricultural sector – the aftermarket is a focus,” says Lorentzen, adding that Starco’s well-established aftermarket trailer and caravan wheel business is another growth focus area for 2011.