Could Europe witness a PCR retread revival?

A few years ago our March 2005 Retreading Special questioned the future of passenger car retreading in Europe after the decisions of Reif Reifen + Autotechnik GmbH and Nokian Tyres to exit the segment sounded a death knell for the industry. Despite this, a few companies have managed to cling on, but due to the huge rise in production of car tyres in so-called low-cost countries such as the Far East, retreads have struggled to compete at this end of the market. At the same time the trouble caused by the ongoing financial crisis has put pressures on businesses and consumers alike, with some markets such as the UK experiencing a sharp increase in the sales of part worn tyres. This in turn has led sections of the market to declare war on part worn tyres they see both as questionable in terms as safety and as a threat to the sales of better quality and higher value products. With all this in mind, Tyres & Accessories asks if there is a middle ground for passenger retreaders to occupy in the pressurised mature markets of Western Europe.

There is no question that as sales of low-cost tyre imports have increased passenger car retreading has seriously declined. However, it seems news of the industry’s death may have been overstated. No one is suggesting that there is going to be any kind of sudden explosion of passenger car retreading, but the way the market is shaping up recent developments suggest there are a number of opportunities for creative individuals seeking to carve out a niche for these products. The right conditions for a resurgence of any kind are not likely to be uniformly distributed across the continent, so for the purposes of this article let’s focus on the UK market where things could be looking up for passenger car retreads.

Is comeback king Colway returning?

The last passenger car tyre retreader to exit the UK business was C-Tyres, which shut its doors at the end of 2007 after producing the Colway and Greenway brands for about six years. In January 2008 the Colway brand and equipment owned by County Durham-based C-Tyres was bought by Polish retreading company, MarkGum. The business had begun in 2002 when Gary Oliver and Peter Morris formed C-Tyres by purchasing the assets of retreaders Colway and Motorway from the receivers. Tyres & Accessories’ coverage of this story at the time notes that “one or two quizzical eyebrows were raised” when it became known that C-Tyres would focus on passenger car retreading. You can expect one or two more if current market speculation materialises. In short, there are signs Colway could be making a comeback.

Four years after MarkGum bought C-Tyres’ brand and its assets, Tyres & Accessories understands that Eastern and Western Europe retreaders are cooperating and that the Polish company is in the process of developing a UK-orientated Colway manufacturing programme. When he sold the company to MarkGum at the start of 2008, C-Tyres managing director Gary Oliver was clear about his hope that a British company would take ownership of the assets. Not its seems these hopes are being fulfilled. MarkGum boss George Krzyzagorski always believed in the strength of the Colway brand, but now it seems the business’ Polish owners are standing behind the brand and hoping to get the business moving over here. According to those in the know, this idea is relatively straightforward: export British casings to Poland for remoulding and re-entry under one of the Colway brand names.

The business plan appears to focus on sourcing the right quality and quantity of casings from British retailers before producing retreaded tyres that capitalise on both the production cost advantages and foreign exchange rate benefits the zloty in particular and Poland in general have to offer. This product is expected to be marketed as something of volume item, offering both an economic and ecological advantage over new tyres as well as a more acceptable alternative to part worn tyres. However, getting the economies of scale right will also be key seeing this enterprise off the ground. It is, of course, also highly dependent on secure casing supply. Suddenly you can understand retreaders’ renewed antipathy for the recent in growth in part worn sales. But who is likely to take up the passenger car retreading mantle in such a scenario? A market stalwart, a new player or a combination of the two?

A stalwart or a new player?

Perhaps the best known passenger car tyre retreader in Britain is Kingpin Tyres, which was founded in 1973 by Jack Crangle (who remains the company’s chairman today). Apart from the likes of Panther Tyres, which has a niche business supply taxis from its base in Liverpool, this firm is pretty much the only player remaining in this segment – all of which tells its own story about the decline of passenger car retreading in the UK as well as Europe. Nevertheless Kingpin continues to produce retreads against no small measure of prevailing wind in the market plus three significant fires during the course of the last five years and losing its Tyre Industry Federation Responsible Recycle status back in 2008. 

At its peak Kingpin supplied in excess of 20,000 retreads a week directly to the domestic market, a figure that was only exceeded by Technic Group. Prior to its demise at the turn of the millennium Technic was making as many as 50,000 passenger car retreads a week, many of which were destined for export. Shortly after Technic Group entered the hands of the receivers, Technic Tyre plc saw the business resurrected through the sale of the business to Phil Blood (one of the original company founders) and Lucia Farmer. 

Now the word on the street is that a team of experienced tyre and retreading professionals is in the advanced stages of plans to get a new local car tyre remanufacturing operation off the ground. The idea is to produce a new range of niche market retreads on a the platform of ex-Technics machinery returned to the UK from the mothballed Canadian plant that bought it a few years ago. In order to implement the plans, the group currently known as Evo-Tech Europe, is aiming at upgrading the moulds and modifying the older machinery. All this is being done with a view to producing specialist products such as run-flats for 5-7 year old BMWs and other less than brand new luxury models.

Again the model rests heavily on being able to successfully source enough of the kind of quality casings that are removed at professional tyre depots up and down the country. And again mean that those involved won’t have received certain retailers’ plans to destroy all tyres at the point of removal well. However, while there are similarities in terms of concept and timing between the two fledgling UK passenger car retreading operations, there are also significant differences. Unlike MarkGum’s plans to produce larger numbers at lower cost, Evo-Tech is being set up to be a more targeted operation – shorter production runs focused on producing just the right numbers of higher value products. The good news for both companies is that the two differing approaches are unlikely to overlap, meaning they won’t be competing for casings that are scarce enough already.

Something else the targeted model offers Evo-Tech is the opportunity to sell on a different basis to price. As we all know retreads are the most ecologically sound use of the fossil fuel-derived virgin resources that go into making a new tyre. And it is hoped that this will enable to the venture to take a leaf out of the Scandinavian book and sell retreads to fleets and government departments on the basis of their green credentials. While not yet operational, that is something that is expected to follow in the last quarter of 2012, Tyres & Accessories understands that premises are available and that the process of selecting the right personnel to join the management trio has already begun.

With two well advances strategies already beginning to take share and with investments being made in kick-starting passenger car tyre retreading in Britain, you can understand why certain sections of the retreading business have been up in arms about TyreSafe et al’s recent commitment to drill the sidewalls of any tyres pulled off at their depots. As all of the above is predicated on the end of any “destroy all casings” campaigns and the free flow of casings into their factories, if the opposite turned out to be implemented a difficult business in a difficult market place at a different time could suddenly get harder. However, as the plans also demonstrate, there is certainly hope for those enterprising and ambitious enough to make a go of it in Britain. Apart from whether or not they will be successful – only time will tell – just one more questions remains. If the collaboration of East and West can and does work as planned between Poland and UK; and if external forces do not close down casing supply routes can the above car tyre retreading markets be employed in markets in other European states?