Industrial Tyres
The positive business results of Alliance Tire Company have been rewarded by a vote of confidence from investors’ side. The company is currently producing around 120,000 agricultural tyres at around US $ 42 million a year and has been the second best Israeli stock market investment of the year. Company share grew at 160% from the beginning of 2005.
This year Trelleborg is 100 years young. The company’s name is fairly well recognised in the UK market but there is still room for improvement. Ask where the company comes from, what it’s up to on the UK market, or how Trelleborg Wheel Systems (TWS) fits into the picture and the response is often vague. However the manufacturer is addressing these brand awareness issues and is beginning to focus more and more on its agricultural division as well as marketing itself as a specialist in agricultural tyres. Tyres & Accessories spoke to Ian Gillespie, managing director of Trelleborg Wheel Systems UK, to discern its UK market approach.
Amtel Holdings Holland NV has completed its acquisition of Vredestein Banden BV from Vredestein Investment Consortium (VICO) for 195.6 million euros in cash. Amtel says it plans to use the opportunity to expand its global operations in Europe, Asia, the former Soviet Union and North America. Combined production capacity will now amount to around 22 million tyres a year.
Watts Industrial Tyres has won two of the Fork Lift Truck Association’s (FLTA) Annual Awards for Excellence. Watts Industrial Tyres received the ‘Environment’ award, which recognises the progress Watts has made in the difficult field of ‘Solid’ tyre recycling. Watts now has a number of programmes in place that enable its tyres to be either ‘Remoulded’ or processed into ‘rubber mulch’ for equestrian and playground use and also into rubber crumb to be re-manufactured into a variety of rubber products.
UK Equipment Ltd has appointed Warren McKay as its area sales manager for the North-West. He has over twenty years experience in the automotive industry, primarily in the wheel service and parts industry.
The small Czech rubber group Ceská Gumárenaská Spolecnost (CGS) took over Continental’s agricultural business unit, Agrotyres, in November. As part of Continental the division demanded more attention to become truly successful, and CGS claims that it is now satisfying that. Of course, the moment the Czech company gained full responsibility of the business and its profit and loss statement, it was always going to receive its full attention. The newly acquired factory at Otrokovice is said to have transformed the business. Along with this and its new business ethic CGS is now in a position to focus on its core business.
Under Continental the unit was worth 100 million euros, yet its costs were so high that they ate into its profit and the agricultural business was not profitable until 2001; the year Thorsten Bublitz, CGS’ managing director of marketing and sales, believes the business truly “came into its own.” Under CGS the goal was to reach a double-digit profit by the end of 2004 and during an interview with Mr Bublitz in November he said: “It looks like we’ll make it.” In 2003 CGS’ turnover was 223 million euros, now, following the acquisition it is 320 million euros. The entire tyre sector turns over somewhere in the region of 230 million euros and tyres account for around 72 per cent of the company’s overall business. When it comes to the tyres, 60 per cent are agricultural products which rake in a turnover of around 130 million euros. The remainder of the company’s tyre sector is largely made up of industrial tyres.
The Czech company signed a license agreement with Continental giving it the right to use the Continental, Barum, Semperit and Euzkadi (sold only in Mexico) brand names. As far as its commitment to the Continental brands goes, it has signed a contract for the next 10 years, with a possible five year extension if it so wishes. The Conti and Barum brands are of the most importance to the company, followed closely by Mitas. The Barum brand is dominating its sales, and claims 80 per cent of the eastern European market according to Mr Bublitz. At present it still produces under the Uniroyal brand that belongs to Michelin and is licensed to Conti, but in CGS’ words the brand has a “short life.” The brands have been seen as lower quality in the past and CGS is tackling this quality issue by assuring the standard of the products in the market. The company wants the Conti brand to equal quality and will try to achieve this by stabilising its position in the market. By striving to improve brand image, it is attempting to gain more influence in the market.
With the amount of brands on the market increasing and the amount of shelf space decreasing, many retailers are concentrating on the premium brands and the higher margins that go with them. Because of this budget brands are being pushed off the shelves. Does CGS believe its budget brands will survive a reorganisation in the market? Mr Bublitz thinks so, as far as the tyres’ quality goes, he claims that the customer is getting “more than it pays for,” and he suggests that the decrease in customer claims against the tyres speaks for the improvement in quality.
Russian tyre company, Sibur, has conducted a conference for its dealers in which to discuss the future development strategy of the business and to form a plan to increase the effectiveness of the regional commercial partners.
The company directors gave a presentation on the current state of the business, emphasising that an increase in the effectiveness of the tyre business is the company’s top priority. The company has already initiated a new development strategy for the tyre business in April last year, in order to improve the quality of production and to meet the requirements of today’s market.
In its recently published third quarter results, Alliance Tire has announced a net profit of $102,000 for the third quarter of 2004, compared with a net loss of $1.66 million in the corresponding period last year. Although this period represents the company’s third successive profitable quarter, quarter-on-quarter figures show a slight drop in growth.
Compared to 2003, Alliance reports that sales grew 26.3 per cent to $29.7 million. In the second quarter Alliance’s sales totalled $31.6 million. The company’s export figures continue to show impressive levels of growth. Alliance’s export sales grew by 37 per cent to $21.8 million compared with the same time last year. Agricultural, multi-purpose and industrial tyres for export make up approximately 75 per cent of Alliance’s export. Local market sales increased 4 per cent to $7.9 million, a figure that represents 27 per cent of total sales.
In the first nine months of 2004, the tyre manufacturer reports that net profits grew to $3.7 million compared with losses of $8.3 million in the corresponding quarter of last year. In the same period, sales increased to $93.4m, an increase of 29 per cent compared with the corresponding period in 2003.
Alliance chairman Isia Tchetchik said the third quarter growth was hindered by the port strike that prevented sales of $1.9 million. Despite this, he said, the company managed to achieve positive results that prove that Alliance is experiencing an improvement in business performance.
Joseph Anglister, Alliance’s president, said the break-through in sales to Central and South America continued in the third quarter, in particularly in Brazil where sales doubled to $5.1 million in the first nine months of the year. The company president also stated that Alliance continues to implement efficiency measures, something that likely to prove useful in the face of rising raw material costs. According to Mr Anglister, production costs per ton of output fell 2.5 per cent to $2.38 per ton, while production increased 19.4 per cent, to 27,527 in the third quarter of 2004.
Watts Industrial Tyres Plc has signed an agreement with Continental AG to supply solid industrial tyres to its industrial tyres business unit. Continental is going to use the tyres to develop the US and Asian markets. The tyres will be manufactured to Continental’s specification at Eu-Retec (Pvt) Ltd in Sri Lanka.
The Industrial Tyre Association (ITA) and the Fork Lift Truck Association (FLTA) have warned that there are inadequate recycling facilities for industrial tyres in the UK. Although solid industrial tyres only represent one per cent of the total tyre arisings there are no dedicated facilities for their disposal and there are fewer and fewer landfill sites accepting whole tyres of any sort. The ITA and the FLTA sought some flexibility from the Dti and the Environment Agency, but have been told that the regulations will be rigidly applied.
Figures show that Trelleborg Wheel Systems achieved sales for the first half of the year of 1,470 million Swedish Kroner (SEK), or 160.2 million Euro. Operating profit was up 33 per cent to SEK 84 million (9.15 m Euro), compared with last year’s first half figure of SEK 63 million (6.87 m Euro). During the second quarter, turnover was SEK 713 million (77.7 m Euro) and operating profit was SEK 39 million (4.25 m Euro).
The industrial tyre sector consists of some very specialised products to suit very specialised vehicles and applications. But it is not all about just supplying products, as the fitting and servicing of industrial tyres is a job for experts, involving considerable investment and commitment. Understandably, the user of industrial equipment wants service immediately – idle machines are losing money – which puts even more pressure on the service provider.
Galaxy Tire & Wheel has signed a five-year, $27.5 million off-take and technology sharing agreement with Yugoslavian company Trayal. Trayal will produce Galaxy and Constellation skid steer and industrial tyres and the two companies will develop a line of off-road radials to replace Galaxy’s current line of port tyres. They will also collaborate on a line of special trailer radials and, when these are available, Galaxy will market wheel/tyre assemblies to OE trailer manufacturers.
The National Tyre Distributors Association has formally endorsed the new Tyre World event, scheduled for October 2003 in Earl’s Court, London. Buzz Carter, of organisers IDEX Media, said that London had been chosen after extensive research showed that it was the preference of domestic and international visitors. Tyre World will include a programme of seminars and associated events, including the NTDA’s annual conference Intyreactive and the national “Tyre Technician of the Year” competition. Further details are expected soon.
MRF was established in Chennai, India, in 1946 as a general rubber goods manufacturer and gradually progressed into tyre production in 1961. Today, the company enjoys the distinction of being the largest tyre company in the Indian subcontinent and the 13th largest in the world. The Far Eastern Economic Review “Annual Review 200”; rated MRF as one of India’s top ten companies and among the 200 most admired companies in Asia, for the last seven years consecutively. MRF was also rated the No. 1 Ethical Company in India by the Business World magazine. MRF operates six manufacturing plants in India at Tiruvottiyur, Arkonam, Kottayam, Goa, Medak, and Pondicherry and manufactures the largest range of tyres in India´s heavy duty truck/bus tyres, light commercial vehicle tyres, passenger car tyres, off-the-road/industrial tyres, 2-wheeler tyres and farm service tyres. Five of these plants and the conveyor belting factory at Arakonam are ISO 9002 certified. The plant at Pondicherry is QS 9000 certified. MRF Tyres are exported to over 65 countries in the Americas, Africa, Middle East, Australia and Asia. With the focus on exports, the company plans to increase market share and start operations in several new countries. MRF also manufactures conveyor belts and precure tread rubber, and its subsidiaries manufacture toys, speciality paints, leather and leather products.
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