Fewer exports: RuLa and BRW successfully alter course

After focusing heavily in recent years on expanding exports to Eastern Europe and Russia, RuLa and its subsidiary the Berliner Runderneuerungswerk (BRW, or Berlin Retreading Plant) is now concentrating primarily upon the German domestic market and specifically upon further developing its mould cure retreading and logistical capabilities. To achieve this, investments are being made in the company’s Königs Wusterhausen-Zernsdorf site south of Berlin. At the same time, company owner Detlev Biermann and his firm continue to develop their presence in Eastern Europe and very recently acquired a large, modern pre-cure retreading facility in Poland. As Tyres & Accessories learned when visiting the company, both of these investments should ‘weather proof’ RuLa, one of Germany’s largest retreaders, against further structural changes in the sector.

Prior to the opening of the company’s new, predominantly mould cure retreading facility in Königs Wusterhausen in 2009 and the closure of the old Berliner Runderneuerungswerk site a year later, Detlev Biermann determined that a significant part of the company’s future would lie in Eastern Europe, Russia and the CIS countries. But the situation has changed since then – BRW managing director Jörg Wolter shares that as virtually no retreader these days can compete in the East against imports of brand new tyres from China, exports to this region have slumped for many retreaders. Indeed, while in 2007 RuLa and BRW sold every second of its retreads outside of Germany, with 70 per cent of these going to Russia alone, in the last two years exports to Russia have been “virtually nil.”

That said, when viewing the situation in Russia and the crisis in Ukraine, the fact that Russia is taking almost no retreads can perhaps be seen in a positive light; who wants to develop a dependency upon a market whose future is so entirely opaque?

While current output from the group’s two plants in Germany remains virtually unchanged at 80,000 pieces a year (2013), the aforementioned externally-driven developments in export markets have drastically changed the ratio of pre-cure to mould cure retreads. Four years ago, pre-cure retreads accounted for two-thirds of total production. Today mould cure retreads hold a two-thirds share. And exports are now ‘only’ 30 per cent of all production, and this share is evenly distributed between Eastern and Western Europe. An export share of 30 per cent in Eastern Europe alone would be virtually impossible today, states Wolter.

Eastern Europe and particularly Russia have traditionally been strong pre-cure retreading markets. The consequence of their gradual decline has been felt in RuLa’s production. RuLa and the Berliner Runderneuerungswerk have already adapted to the obvious trend in Eastern European markets and made corresponding investment decisions to facilitate a renewed orientation upon Western European markets and particularly upon the domestic German market – and the emphasis to this end is on mould cure retreading. In the last four years alone, six modern presses have been purchased and installed to replace older presses at the Königs Wusterhausen site; currently 24 presses operate there. And during the course of this year the company has invested in new Steinbichler shearography equipment and in a new nail hole detector. Both units support casing checks during entry control and will help to further raise product quality. Jörg Wolter estimates that the two last-mentioned investments totaled approximately a quarter of a million euros, while new presses are hard to obtain for less than a six-figure sum these days. “We’ve made significant investments in quality,” the BRW managing director told this publication. Quality is the be-all and end-all for successfully competing in markets such as Germany, where tyre majors are increasingly offering their own retreading portfolios. While elsewhere – such as in Russia – numerous customers are seduced by price arguments alone and place retreading on the same level as used tyres, customers in Germany and Western Europe have long had an understanding of the clear advantages retreading offers and the qualitative characteristics of retreads. The tyre majors’ retreading operations, including those from Michelin, Goodyear and Continental, have helped to enhance retreading’s good reputation, and comparative high levels of quality are expected in Germany and Western Europe.

RuLa and BRW also focus on quality in terms of product innovation. This year two new mould cure tread patterns have been introduced under the “Berliner” brand name. The B228 (315/80 R22.5) drive axle mixed on/off road fitment has recently been introduced and will be joined by the B225 (available in 315/70 R22.5 and 315/8- R22.5) regional and long-distance drive axle winter tyre. Both treads were developed by Kraiburg and are also offered as pre-cure treads; RuLa and BRW – both good, long-term Kraiburg customers – use the Kraiburg tread design in their own moulds for mould cure retreading.

All up, RuLa and particularly the Berliner Runderneuerungswerk, with its mould cure retreading in Königs Wusterhausen, have invested a fair deal in developing modern products and in broadening their product portfolio. These investments are reflected in the growing turnover earned through mould cure retreads in Germany and Western Europe. Although the newer Königs Wusterhausen site was previously split between pre-cure and mould cure retreading, tread strips are seldom affixed to casings there these days; pre-cure retreading is now almost exclusively performed at the company’s headquarters site in Schraden, near Dresden. The Schraden site, in turn, has no mould cure retreading presses.

In addition to product range development, RuLa and BRW also desire to continually improve their logistics services in order to remain competitive. Such investments don’t just include the new, 2011-inaugurated 2,400 m² warehouse at the Königs Wusterhausen site. Above and beyond this, it includes substantial investments in delivery and casing management. The two companies now have eight vehicles traversing Germany – three 20-tonne trucks, three 12-tonners, and two vans – delivering tyres and taking care of the return flow of retreadable casings needed to ensure continued retreading in Königs Wusterhausen and Schraden. These vehicles cover virtually all areas of Germany, and are supplemented by two field employees who focus upon customers in that market.

It appears these investments are paying off for RuLa and the Berliner Runderneuerungswerk, as demand for mould cure retreads has risen and continues to rise, and – as constantly high plant output over the years proves – it can amply compensate for the declining demand in Eastern Europe and especially in Russia

RuLa acquires Polish retreader ATB Truck

While some years ago owner Detlev Biermann viewed establishing a retreading facility in Russia as part of the company’s “vision”, today such a step is no longer being considered. Despite, or perhaps because of this, at the beginning of last year RuLa acquired the Polish Warsaw-based pre-cure retreader ATB Truck, whose former owner – the state-owned Pekaes logistics operation – had consolidated its business areas and divested itself of those on the fringe. A “very favourable opportunity,” as Jörg Wolter recalls. The ATB Truck production facility in Srem, south of Poznań, was built in the 1990s and completely modern by Western standards. The retreader had already operated according to ISO9001:2000 and ECE-R 109 standards for ten to twelve years; following the Pekaes acquisition of ATB in 2002 the company acted as licensee for Bridgestone and Goodyear – and this also led to high standards of production. But Wolter says the German investor hasn’t acquired ATB Truck in order to relocate its production from Königs Wusterhausen or pre-cure site Schraden to Poland.

On the contrary: Biermann purchased the plant in order to gain a stronger presence in the Polish market. The pre-cure ATB Truck retreads are almost exclusively sold in Poland, more specifically by tyre dealers, as is the practice of RuLa and BRW in Germany; more than 70 per cent of the business is contract work (customer own casings), compared with the 30 or so per cent for RuLa and BRW in Germany. The main logic behind the acquisition is that a growing number of mould cure tyres retreaded in Germany should be sold through ATB Truck and its established networks. The new business in Poland will give the two German production sites fresh growth impetus.

“This is running well so far,” comments Wolter to Tyres & Accessories, adding that the initial results a year or so after the acquisition are entirely satisfactory. “There’s been no relocation of production,” he continues, noting that the 80 employees of the two German businesses needn’t worry about their jobs. According to Wolter, the ATB Truck plant has an annual production capacity of “around 70,000 to 80,000 pieces”; output at the site is nowhere near this high, however. The site has a 40-strong workforce. Shortly after the acquisition, incidentally, Biermann terminated the rental agreement it had with Pekaes for a further ATB Truck retreading facility in Tychy, near Katowice, and transferred the capacity from there to the Srem plant. The purchaser declined to detail the conditions of acquisition.

A further interesting side effect of the ATB Truck acquisition is that the company is a scrap tyre disposer and operates a completely new recycling facility in which end of life tyres are shredded. This is a totally new business area for Detlev Biermann, and it could also help the group – RuLa, BRW and ATB Truck – become ‘weather proofed’ against future changes within the industry.