Quality a focus for Respa

Despite a marked trend towards increased industrialisation, business remains good for medium-sized retreaders in Germany. A good example of the companies within this segment, who promise quality through their own brands and have secured market position through a shift to higher-margin products over a number of years, is Respa GmbH. The retreader from Passau, near the border between Germany, Austria and the Czech Republic, is today one of only a few remaining high-profile passenger car tyre retreaders in Germany, and the company has established for itself a substantial market position in both the mould cure and precure retreading sectors. During a plant visit, Respa managing director Ferdinand Wenzl spoke with Tyres & Accessories about “an industry that is rich in variety.”

Wenzl shares that years ago Respa, which between 1979 and 2004 was an affiliate company to the then-insolvent retail business Reifen Schwarz (also based in Passau), actually considered getting out of mould cure retreading. Much of the credit for the decision to continue with the process goes to the now 58-year old managing director, who has been an enthusiastic supporter of the mould cure process since its early days. Ferdinand Wenzl joined Reifen Schwarz in 1978 and over time was promoted from clerk to managing director. Through a combination of study and hands-on experience, he got to know both the commercial and production aspects of the business. “To win over with quality was and remains the top priority,” says Wenzl, who considers bead-to-bead mould cure retreading the benchmark in terms of technology and safety, not to mention the finished product’s appearance.

Today, after 49 years in the business, Respa produces a total of 60,000 truck tyres a year, of which almost 50,000 are mould cure retreaded in one of the company’s 25 presses. Respa operates so many presses to produce its modestly-sized range as it means the moulds only need to be swapped occasionally and tyres can be retreaded without a pause on production days. While other companies manufacture perhaps five days a week, Respa operates a four day, ten hour a day week. This arrangement reduces energy and labour costs, Wenzl comments.

Tyres produced by Respa are exclusively marketed under the “Respa Ökon” brand (a name that gives a nod towards the tyre’s eco and mileage qualities) in southern Germany, Austria and the Czech Republic. Wenzl notes that Respa doesn’t actually view the border town’s neighbouring countries as export markets, rather as the company’s home market. At present only every one in four tyres is sold outside the “reliable markets” of Germany and Austria.

It is also a matter of pride for Wenzl, plant manager/quality control manager Wolfgang Köberl and the company’s 50 or so employees that Respa has prospered without any partnership or franchise arrangements since 2004. Back when Respa was still an affiliate of Reifen Schwarz GmbH & Co. KG (the retreader itself was never insolvent, incidentally), it had a relationship with Bandag; this came to an end before managing director Wenzl purchased the retreader from the Schwarz family.

Following his new beginning as a self-employed businessman in 2004, Wenzl needed to take care of a few important tasks. The most pressing of these was to attract new customers, as previously the firm’s retreaded tyres were solely distributed through Reifen Schwarz; the managing director was able to rely upon his many contacts when seeing to this. Of particular help in the business takeover – which was accomplished without external assistance from within or outside the industry and which Wenzl today describes as a “highly risky” deal – was an exclusive contract signed with Profi Reifen- und Autoservice GmbH, a company that currently operates 40 outlets in Austria and as a Continental subsidiary counts as one of the country’s market leaders. Today Respa still supplies retreads to the Profi network. “This success in Austria was a big deal for us,” says Wenzl, who is well aware that his path from 2004 onwards has been greatly assuaged through the agreement.

A valued extra business at Respa is tyre repair. As the managing director reported during a tour of the production facility, company employees have the necessary know-how to repair agricultural, OTR and other types of tyres. And demand for skilled tyre repair, particularly with the expensive, larger tyre sizes, shouldn’t be underestimated.

When Ferdinand Wenzl joined Reifen Schwarz in the late 1970s, many firms were still active in the passenger car tyre retreading business; back then, a quarter of all passenger car tyres plying Germany’s roads were retreaded. Today only Respa and one other retreader, Reifen Ihle, produce passenger car retreads in Germany. Yet even though passenger car tyre retreading has lost most of its former importance in recent years and today accounts for less than one per cent of the market, and despite the fact that competition from suppliers of budget new tyres has increased significantly over the same period of time – Respa is making money in this low-margin niche.

When the internet retailing boom began making the forecasting of sales and thus the forecasting of production a more difficult affair several years ago, Ferdinand Wenzl resolved he would only produce mould cure passenger car retreads on the basis of orders received from a handful of larger customers. At the same time Respa specialised in the production of retreaded winter tyres and removed summer tyres from its product portfolio. Therefore the company now manufacturers retreaded passenger car winter tyres throughout the whole year. This decision secured this line of business’s survival, Wenzl states. Last year the company retreaded notably less passenger car tyres than in the boom year of 2010 and the managing director estimates it will produce around 120,000 passenger car retreads this year, of which some 90,000 will be sold in Germany through trade customers. Respa is of course also active in the truck tyre retreading business and has ordered four new 16-inch moulds this year. Investments in moulds are made regularly. It is important, Wenzl continues, not to attempt to offer a complete passenger car retread portfolio. Instead of producing small 13-inch and every possible 14-inch dimension, the German retreader concentrates on the sort after dimensions between 14 and 17-inches. This decision is easily justified; the extra materials required – at the same duration of heating – for a larger 17-inch retread offers much better margins in comparison to those made from a small tyre. This business is however constricted by a shortage of casings; hardly any retreadable casings are available these days, Wenzl comments.

The direction in which the passenger car new tyre business will further develop in 2012 remains uncertain. All signs indicate the market will switch from being a seller’s market to a buyer’s market, and this may well result in pressures upon sell-out prices. And since retreaded tyres – whether for cars or trucks – are sold at only a certain markdown compared with new tyres, Wenzl believes the year to come also brings uncertainty for retreaders. The proposed increase in minimum winter tyre tread depths from 1.6mm to 4mm in Germany next winter may bring further life into the business – we can only wait and see.