Further to Tyres & Accessories’ detailed report on Qingdao Doublestar Tire Corp’s expansion plans last week, the company has released further information about the truck and OTR tyre joint venture it is setting up in Kazakhstan.
Things are tough in China, but not every company is going under. While some are struggling others are expanding quickly. During the course of the recent Reifen China exhibition in Shanghai, Tyres & Accessories spoke with Qingdao Doublestar representatives and found our more about the company’s ambitious plans for rapid change despite the turbulent market conditions.
A new study from Frost & Sullivan says that Eastern Europe and Central Asia offer very interesting opportunities for the light vehicles sector which includes passenger cars and light commercial vehicles. The study analyses this market in Kazakhstan, Uzbekistan, Ukraine, Azerbaijan, Belarus, Kyrgyzstan, Turkmenistan and Tajikistan, and finds that by 2021 the annual light vehicle sales volume in these eight countries is expected to reach nearly one million.
You might not think of Kazakhstan as a centre of the international tyre industry and – on a global scale – it isn’t. However, in light of renewed reports of factory investment from Indonesian-based Multistrada as well as the historical context of Nokian’s ill-fated joint-venture there it is worth reporting a little of what else is going on in the country.
According to Indonesian news agency Antara News, tyre maker PT Multistrada Arah Sarana – manufacturer of the Achilles, Corsa and Strada tyre brands – has signed a contract to build a production facility in Kazakhstan. The agency quotes Kazakhstan’s ambassador to Indonesia, Ashkat Orazbay, as stating that “a contract has been signed between Multistrada Indonesia and a Kazakhstan-based company to build a tyre factory.” Antara News did not report the name of the Kazakhstani company or give any further details about the project.
As Iranian business envoys court representatives of the various global markets at the 2014 World Economic Forum in Davos, Switzerland, details of the country’s recent tyre market development have also emerged. Of course, the Iranian enterprise bigwigs have been intent on smoozing with the self-styled “masters of the universe” in order to make business in-roads now that certain automotive and petrochemical economic sanctions have been lifted by the west. During a recent interview with the BBC one such envoy described Iran as a very developed and highly educated market poised for further development, but it also has to be said that the geo-political environment makes things complex.
According to unverified news published by Indonesian business publication Kontan and repeated in English by Reuters, tyre maker PT Multistrada Arah Saran has cancelled its plan to build new plants in Egypt and Kazakhstan this year. Even Go, investor relations officer at Multistrada, said this decision was taken due to concerns about political instability and security within the Middle East region.
Nokian Tyres has announced it will open four new Vianor Industrial outlets in Sweden at the start of next year, and the company says it also plans to expand the concept into Russian and Kazakhstan. At present 34 Vianor Industrial outlets are in operation; Norway is the currently the largest single Vianor Industrial market, with 16 outlets, followed by Sweden, with 12 outlets. The Ukraine and Nokian’s home market of Finland each boast three Vianor Industrial outlets.
Eurotire has opened up a new location in Karaganda, Kazakhstan. Karaganda is located in Kazakhstan’s northeast mining region, an area rich in both coal and hard rock mining. Seeing as Eurotire’s focus is on providing the world’s emerging mining markets with OTR bias and radial tyres/OTR tyre services, the company obviously saw the value of the latest move.
A new facility owned by the Kazakhstan Rubber Recycling company has become the Central Asian country’s first end of life tyre recycling plant to enter operation. The facility, located in the capital city of Astana, is equipped with machinery built by Germany’s MeWa Recycling Maschinen und Anlagenbau and holds a capacity of around 11,000 car and truck tyres per annum.
Amongst the announcements made upon the public release of the Nokian Tyres 2008 financial statement is news that the company’s joint venture in Kazakhstan has been put on hold. The project with Ordabasy Corporation, agreed upon in 2007, has been paused by mutual agreement, Nokian reports. The company adds that the project may be re-launched, at the earliest, in late 2010. An agreement has been made to return an advance payment of 12 million euros, made for technical support, to Ordabasy.
At least 5 per cent of Nokian’s Ordabasy-Nokian Tyres Kazakhstan joint venture tyre production plant will be exported. According to the Ordabasy Corporation manager in charge of joint venture projects, Adilkhan Umerbayev, some of this 5 per cent will be exported to EU countries. The joint venture will see a 4 million unit capacity passenger car tyre plant constructed in the Central Asian state by 2009, the Ordabasy executive explained in a report published by the Reuters news agency.
Finland-based tyre manufacturer, Nokian Tyres, is planning to open a new Vianor retail outlet in the city of Almaty, Kazakhstan. The heads of Nokian Tyres Kazakhstan LLP are expected to take part in the shop’s opening ceremony which is scheduled for 15 April. The new retail business will be owned by a local partner and run as a Vianor-branded retail franchise. According to a Nokian, the opening of the latest store brings the total number of Vianor stores in Kazakhstan to five – situated in the cities of Aktobe, Almaty, Astana, Karaganda and Kostanay.
Speaking on behalf of Nokian Tyres, e-Communications manager Anssi Mäki explained the thinking behind the retail expansion: “The goal is to have [a total of] 15 partner outlets in the big cities by the end of 2008 and continue growing also after that.”
Nokian Tyres has officially confirmed the rumours that it is negotiating a factory project in Kazakhstan. The company reports that negotiations are ongoing, and as of August 24 no agreements have been made. Nokian aims to finalise the negotiation project before the end of the year.
According to previous information supplied to Tyres & Accessories, Nokian tyres may be manufactured at the US$200 million factory being built in the national capital by Kazakhstan’s Ordabasy Corporation. This new plant will have an annual capacity of 4 million tyres when in full production.
With news of Chinese product recalls and revised tax rules, some people are looking elsewhere to source their tyres. But if a tyre manufacturing colleague said they were about to expand capacity by entering into an off-take agreement in Kazakhstan, they would probably be met with either a blank “where-exactly-is-that face?” or a stream of Borat-related quips. Joking aside, Nokian Tyres, a company that has made a real success of its niche market approach, has reportedly taken the plunge and broken ground on $200 million-worth of production capacity in Astana, the former Soviet country’s capital city.
Although Nokian staff have not immediately confirmed their involvement in the deal, it would see Nokian gain another low-cost production base to supplement its very successful St Petersburg, Russia operation and – just as importantly – a strong and growing market in which to sell its high quality winter tyres. The winter conditions in Ukraine and Kazakhstan are harsh, making studded tyres popular.
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