Nokian Tyres president and CEO Kim Gran has been nominated to the board of directors of Finnish building systems and construction services company YIT Corporation. Mr. Gran has served in his current capacity at Nokian since 2000; prior to that he acted as Nokian Tyres’ vice president (1995 to 2000) and in the UK as managing director of Pechiney Cebal between 1992 and 1995.
Hankook Tire’s claim to be one of the world’s fastest growing tyre manufacturers was given a boost today by the release of its 2007 results. The South Korean company posted global sales of KRW 3.2 trillion (£1.77 billion) in 2007, an 11.8 per cent year-on year increase. Profit margin dropped slightly to 8.1 per cent while consolidated operating profit increased 5.1 per cent to KRW 263.6 billion (£144 million). While this latest profit margin is down 0.6 per cent on that recorded in 2006, Hankook defends the still respectable figure by pointing out that the previous year’s – and the current – margin was the highest amongst all major tyre manufacturers, last year’s outstripping the nearest competitor by two points.
Other milestones of note for the company include European sales – in the fourth quarter these increased by 9 per cent on the previous year – along with year-on year UHP tyre sales across all global markets; these increased 10.5 per cent. Hankook’s CEO believes his company’s efforts to build upon both product and brand quality has been instrumental in all such positive results.
When JK Tyre & Industries vice-chairman and managing director Raghupati Singhania introduced truck radial tyres onto the Indian market in 1976, people questioned the sense of the decision. Yet more than three decades on JK Tyre has not only been vindicated through the widespread adoption of the technology by its competitors; today the manufacturer holds a 70 per cent market share in this segment.
Speaking with India’s Financial Express newspaper, Mr. Singhania expressed no doubt that decisions, such as that he made in the 1970s, are vital for a company’s well being. “That’s what leadership is all about. It may not be the popular view but you have to have your own understanding and judgment.” This understanding and judgement has aided JK Tyre during its occasionally bumpy journey from a small player with an annual capacity of 500,000 units 30 years ago to today’s tyre major with a presence in 75 national markets.
After more than 10 years of losses, it seems Continental AG’s eternal optimism about the success of its Americas business is beginning to pay-off. At the beginning of February Continental announced it had managed to get into the black in 2007. According to one Welt am Sonntag report, this means “single digit millions” of operating profit. The business had been loss-making for 10 years, costing the company roughly 1 billion euros, the paper said. Earlier Continental chairman, Manfred Wennemer told journalists that he expects at least 50 new dealers to join the company’s US network this year, bringing the total to more than 600.
“We have rigorously implemented our turnaround plan strategy and are happy to reach an operational break even,” said Dr. Alan Hippe, Continental Executive Board member and CFO and – in his capacity as president of Continental Tire North America, Inc. (CTNA). “In the current year we foresee further growth in profits.” Dr Hippe continued: “With a volume increase of 12 per cent in 2007, our replacement business expanded at a much faster rate than the market as a whole, finishing well in the black. In 2004 we were still deep in the red in this area. Since then we have managed to up the price obtained per-tyre by more than 20 per cent.”
However, breakeven has not yet been achieved in the region’s OE business. According to Hippe, this is because the company has been unable to “sufficiently pass on to the customers the raw material price hikes of the past two years.” Continental’s original equipment deliveries in North America have been reduced by roughly 25 per cent since 2005. According to the company, this was achieved by not renewing unprofitable delivery agreements, but was also partly a result of the decline in US car production.
Dr. Hippe underscored the fact that in addition to rigorous cost optimization in production, logistics and administration, the turnaround was also helped along by a complete overhaul of the product range, target groups and market strategy. “Around fifty per cent of the passenger tyres we’ll sell in North America this year weren’t even thought of at the beginning of 2005. These new products, both in the premium Continental brand and our newly positioned US brand, General Tire, resulted from in-house market analysis as well as from an intensive dialog with our customers,” said Dr. Hippe. “Setting up a sort of advisory forum, we made a point of capitalizing on the experience and counsel of our dealers, who we regard as partners, and actively integrated what we learned into our planning. We didn’t want to repeat past mistakes, but, where possible, we wanted to avoid making new ones, too.”
Continental has set clear geographically target areas. In North America the company initially zeroed in on California and Florida in the US as well as Quebec and Ontario in Canada. Texas and the surrounding states will now follow.
Matthias Schönberg, head of Passenger Tire Replacement the Americas, explained: “In parts of these target regions we control eight per cent of the market. We proceeded similarly in Mexico and Brazil, where we were also able to post two-digit growth in 2007. What is more, our product selection allowed us to come close to achieving the targeted market coverage of eighty percent in North America – from approx. fifty percent at the start. Also contributing to our success is the winter tyre business, where we have been recording above-average growth since 2005 and have experienced an approximately fifty-per cent surge in volume.”
The sprawling Continental Tire North America headquarters site in Charlotte, North Carolina will soon be re-born as a business complex following its sale to a developer. Philadelphia based Patriot Equities, a company specialising in the purchasing and leasing back of corporate buildings, has agreed to acquire the tyre manufacturer’s offices and former factory for US$29.4 million.
CTNA has taken out a ten-year lease on a portion of the site, and will continue its tenancy there in a reduced capacity. Of the 1.7 million square feet of commercial space contained in the site, the company will now lease and occupy 600,000 square feet.
During the month of January 2008 CTNA made the significant disclosure that its North American operations, in the red for several years, seem likely to have broken even in 2007. It is not clear if, or to what extent, the proceeds from the headquarters sale have contributed towards this return to the black.
Manufacturer of OTR tyres for the mining, construction and port handling industries, American Tire Corporation (ATC), has finalised the development plans for its new factory. It intends to place a total investment of US$500 million into the Washington based facility, a 130 acre site housing seven manufacturing plants, two warehouses, a distribution centre and a research and training building.
These ambitious plans were announced on February 3 and are intended to aid in the expansion of the company’s US operations and the development of a more “aggressive” growth strategy in the OTR tyre sector. According to a press release published on the PRWeb website, ATC will “build the most advanced tyre-building machines and vulcanising machines on site.” All related equipment, construction and raw materials will reportedly be procured via tender during the first half of this year. ATC is inviting tyre equipment and raw material manufacturers, along with construction companies, to submit offers before March 31.
Pirelli has plans to invest as much as £150 million during the course of this year to build a second factory at its Slatina tyre manufacturing site in Romania. According to Romania’s Ziarul Financiar newspaper, who quoted Enrico Malerba, chief executive of Pirelli’s Romania unit, work on the factory will commence in the summer. The completed facility will have an annual production capacity of 4 to 5 million tyres and will provide around 1,400 new jobs.
Amtel-Vredestein N.V., Russia’s largest passenger car tyre manufacturer, has announced that Mr. Rafael Nagapetiants (managing director and head of the Corporate Finance Department at Alfa-Bank) has been appointed chairman of the company’s Supervisory Board. Director Hendrik W. ten Bosch has been elected as vice-chairman. Maxim Ignatiev, who served as acting-chairman of Supervisory Board, will continue as a director and member of the Remuneration and Appointment Committee.
In ceremonies yesterday, Kumho Tire Co. formally signed an agreement to build a US$225 million tyre manufacturing facility on a 127-acre site in Sofkee Industrial Park in Macon, Georgia. Attending the signing ceremony were Sae Chul Oh, Kumho’s CEO and president; Georgia Governor Sonny Perdue; Ken Stewart, commissioner of the Georgia Department of Economic Development; Macon Mayor Robert Reichert; and Charlie Bishop, chairman of the Bibb County Board of Commissioners.
The first phase of the greenfield plant, said Kumho, will cost $165 million with an annual production capacity of 2.1 million passenger and light truck/SUV tyres, destined for both OE and replacement markets in North America. The second phase will cost $60 million and will raise annual capacity to 3.1 million tyres. The 5.5 million-square-foot plant will feature Kumho’s automated APU manufacturing system, and will eventually employ 450 people.
The lab-coated boffins at Jurassic Park may have produced one on the big screen, but it is not every day that one gets the opportunity to deal with a real Tyrannosaurus. But Cape Machinery International did so, and magnificently, in mid-2007 when they brought a fine specimen from Finland and delivered it to Credential Automotive. Okay, so the Tyrannosaurus we’re talking about here may not be a predatory prehistoric carnivore – this particular specimen is sustained by steady diet of tyres – but it is nevertheless impressive.
“It’s a unique machine,” comments Cape Machinery’s managing director David Hennessey. Manufactured in Rauma, Finland by materials handling systems specialists BMH Enviro, the Tyrannosaurus is a machine whose design has strongly drawn upon the experiences of equipment operators. “The story behind it,” he elaborates, “is that the company took current machine designs, looked at what was good and what was bad, and addressed feedback they had received from operators.” The result was a 90 tonne behemoth that attracted the attention of the UK’s largest tyre recycler.
Yokohama Rubber announced on January 30 that it has signed a long-term contract with Barrick Gold Corporation for the supply of OTR tyres. Under the terms of the contract, Yokohama Rubber shall deliver approximately 1,300 tyres a year to Barrick for ten years, from 2009 to 2018. To meet this new demand, Yokohama began building the third plant at its Onomichi facility in Japan’s Hiroshima Prefecture in October 2007. The Onomichi plant specialises in the manufacture of OTR tyres and the additions to the facility currently under construction are scheduled to begin operation in January 2009. Yokohama Rubber plans to invest approximately 5 billion yen (£23.57 million) into the third plant’s construction.
Headquartered in Toronto, Canada, Barrick Gold Corporation is the world’s largest pure gold mining company, and owns approximately 30 mines around the world. The company is expanding its mining operation to meet a fast growing demand for gold from the decorative and industrial use markets, thus needed a secure tyre supply in the current environment of global shortages.
Towards the end of last year Michelin signed a deal with Newark based recycling firm Charles Lawrence International, guaranteeing that, each year, a minimum of 6,000 tonnes of its truck tyres will be used to make children’s play and sports surfaces. Each week some 200 tonnes of material are to be shipped from Michelin in Dundee and Ballymena to the Nottinghamshire recycler.
The deal is a mutually beneficial one, as Charles Lawrence International managing director Roger Hicks explains: “The formal agreement to take 6,000 tonnes of Michelin tyres per year comes after extensive trialling and a lot of discussion. We needed to be sure we could take a consistent amount of tyres each week so that we had a secure supply of materials and so Michelin could find other uses for the old tyres we can’t use – which I know they have done. The figure is a minimum standard and we would realistically expect to be taking at least 10,000 tonnes per year.”
The president and chief executive of Kumho, Oh Sae-cheul, has described plans for his company’s $165 million factory in the US state of Georgia as being part of Kumho’s efforts to become a global tyre manufacturing leader. The signing ceremony for the new 123.6 acre facility took place on January 29, and was attended by Mr. Oh and Georgia Governor Sonny Perdue.
“With this plant in the United States, the world’s biggest tyre market, we want to save shipping costs to that market and to emerge as a global leader,” said Mr. Oh to South Korea’s JoongAng Daily newspaper. The establishment of a facility in the US marks Kumho’s first step out of Asia in terms of production; currently the company operates three facilities in China and one in Vietnam in addition to its three South Korean factories.
Kumho has announced it will invest US$165 in the first stage plans for a new facility in the US state of Georgia. Proposed total investment in the factory, which will have an annual capacity of 2.1 million units, has not as yet been disclosed.
When football teams run out onto Moscow’s Luzhniki BSA Olympic Stadium at the start of a match, it is a safe bet that few, if any, players realise that the “grass” under their feet was once black and round and fitted to a car. But despite this unawareness, the tyres we deal with every day have a strong connection with the beautiful game; the Luzhniki stadium was one of the sites at which the UEFA trialled the use of synthetic turf several years ago, and was subsequently granted the honour of hosting the first ever UEFA Cup qualifying round to be held on an artificial surface. The synthetic turf gracing the ground at Luzhniki is FieldTurf – a product produced by FieldTurf Tarkett, a Canadian company that, in addition to supplying numerous UEFA and FIFA approved turf installations, also happens to be Credential Automotive’s largest rubber crumb customer. FieldTurf’s requirements currently account for two-thirds of all Credential’s annual output of recycled tyre product.
“We’re quite proud to be playing our part in sporting excellence around the world,” comments Credential Automotive director Steve Patterson. But while Credential’s supply of tyre derived rubber product helps provide a natural feeling yet durable surface for our most popular sport, tyre recycling is much more than just a game for the County Durham based recycling and waste management specialist. Vast quantities of end of life tyres arrive at Credential’s Newton Aycliffe premises each year – Steve Patterson reports that Credential will process approximately 11 million tyres in 2008 – and the company collects tyres plus other automotive waste from fast fit centres, car dealerships, ELV dismantlers, farmers, councils and other tyre collectors in many regions throughout Great Britain, from Southwest England to Scotland.
Credential’s ability to process so many tyres was in 2007 aided by the installation of the “Tyrannosaurus”, reported to be the world’s largest shredder. This machine of Cretaceous proportions was installed in May 2007 after arriving from Finland, and it is “operating well,” reports Steve Patterson. “The machine completed commissioning in August 2007 and will have processed 2.5 million tyres by then end of January 2008.” With a line capacity of 20 tonnes per hour, the equivalent of 3,000 car tyres, the Tyrannosaurus can make short work of end of life tyres. “The processing capacity is very high and depends on the material produced, but at a 50mm tyre chip the machine could process over 80,000 tonnes per annum on a two-shift basis.” Credential’s hardware is able to effectively process 4×4 and van tyres without encountering any of the problems experienced by operators using smaller machines, and Patterson reports that the company is also able to process or find outlets for tyres containing a range of technologies, including run-flat or uncured tyres. He adds that tyres containing anti-puncture sealants may provide a less than satisfactory result should they arrive in sufficient quantities, but at present very few of these appear in the mix so they pose no problem.
The output from Credential Automotive’s facility, or at least the one-third not taken by FieldTurf, is supplied to numerous rubber manufacturers, whose end products include mats, flooring, insulating products and children’s playgrounds. According to Steve Patterson, Credential is easily able to sell everything it produces. “We currently have outlets for all of our outputs, he says. “Most are contracted and a proportion is placed on spot markets. We balance the risk/reward of contracted supply and spot markets constantly.”
The ETRMA reported last July that the UK was Europe’s leading tyre recycler, with 93 per cent of tyres previously destined for landfill now diverted to various forms of recycling. While Credential, as a past winner of the Motor Traders Association ‘Environmental Award’ and NTDA TAFF environment award nominee, is recognised for its environmentally sound policy and practices, Steve Patterson believes that legislation remains fundamental to our high recycling levels. “In general terms most people within the industry recognise the benefits of recycling a high quality product like tyres, but you need legislation and strong enforcement to push the minority into compliance because they wont do it for the sake of it.” He adds: “While a number of responsible producers take an active interest in what happens to scrap tyres, a number do not, and it is economics that drive the market. If the landfill ban was not enforced then the UK would still send a higher proportion of tyres to landfill, or at least until the landfill tax made it uneconomic.”
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