How big is the Chilean tyre retreading industry?

Chile imports a little over 900,000 truck and bus tyres annually, and about 150,000 tyres are retreaded. Unfortunately, the lack of regulation on the entry of lower quality tyres has made the sector more complex. We hope that with the future implementation of the Chilean Extended Producer Responsibility Law we will be able to retread more, thus giving real environmental and economies benefits to the country.

How would you describe the Chilean tyre retread industry? What is the role of your association?

We have around 40 companies in the business. Some retreaders have a long tradition of giving a terrific good service; others are young and small companies that are starting up. Also, we have specialised OTR retreaders, who provide services to mining companies mainly located in the northern Chile. We have a small but diverse retread sector in our country.

The Chilean Association of Renewing and Retreading of Tyres (ARNEC – Asociación de Recauchadores y Renovadores de Neumáticos de Chile) was founded by the end of 2012. Our purpose is the promotion and safeguarding of the activities related to the Retreading and Renewing of tyres, both at the national and international level, by mainly participating actively in the national discussion, incorporating at each moment, the principles of circular economy. We aim to change the perception of the public and the authorities regarding the important contribution that retreading and renewing of tyres makes in terms of environmental care, safety and their economic benefits. We currently represent around 70% of the retread production and work side by side with the Government and other related associations.

There have always been threats from low-quality new tyres for the retread business? Coupled with this, regulations, finding skilled workforce and investment in equipment are challenges for retreaders. In this scenario, how do you see the viability of the retread business?

The difficult reality you describe makes it necessary to demand a service from our associates that differentiates and clarifies the important benefits of tyre retreading. As ARNEC we must push everyone (authorities and related associations) to guide them to the new times, where we will aim at leading the entry of circular economy principles, validating from day one that our sector is an extraordinary example. Tyre retreading extends the use of the original product, reduces the need to manufacture new tyres and therefore contributes to a more efficient use of raw materials, energy and water required in the manufacturing process. In addition, tyre renewal generates a considerable decrease (one third) in CO2 emissions. An additional issue to the above, but of equal value, is that by renewing or retreading tyres, the stockpiling of end-of-life tyres is drastically reduced as are the risks of fire and the proliferation of infections that bring with them. We must be proactive and read the new times as the opportunity to become main actors in the future tyre industry.

What kind of support do you expect from the governments?

More than expecting from the authorities, we play the cards they offer us, such as executing projects with state funds to improve the processes of retreading and we assisted in generating a standardise norm to validate our process. This standardise norm is a voluntary one, but we have managed to include it in the EPR law's tyre governmental decree to make it mandatory. We must be able to understand how the authorities work and be capable of elaborating a strong reasoning, showing the real benefits of developing a strong retreading sector.

Mining is a huge sector in Chile. How do you see the opportunities for tyre retreading for the mining industry?

The main retreading companies for the OTR mining sector are members of our association. They do an extraordinary job, and every day they have more work and get new tenders with mining companies. On the other hand, the transport companies that provide their services to the mining companies have difficulties due to the lack of knowledge of the safety departments of the mining companies whereby some of them, with no technical reason, prohibit retread tyres. We are trying to make our point, but it is sometimes hard and always exhausting. Our main critic is us... retread companies need to understand that just one bad service can damage the whole sector...for years and even decades. It is a historical burden and one that is also present worldwide. We hope that with a new storytelling, including the concepts of circular economy, will succeed in building a path that will bear fruit in the short term.

What are the challenges in the Chilean tyre retread industry?

Education of our clients on safety, economy and environmental benefits of the use of retreads; training of our members to offer a quality service; monitoring and control in the implementation of the EPR law in the tyre industry; and, last but not least, an active participation on every occasion where the circular economy topic is mentioned, to explain there and then the excellent and clarifying example of our work.

Tyre companies are the most significant stakeholder of the tyre industry eco-system. What kind of support retreaders need from them?

Ideally, tyre producers should fully understand that retreading is their hallmark in the development of circular economy. They should understand that EPR models around the world, which originally sought only to clarify the logistics of an end-of-life tyres, are now being transformed into a model that incorporates circular economy, which means that the hierarchy of valorisation begins with promoting tyre retreads. In the tyre family, retreading should be considered as their surname; not as the family's independent younger brother. We often hear from tyre companies about the benefits of retreading, but in practice, they are only interested in selling more units of their new tyres. We hope that they will change their work in line with the paradigm shift brought by circular economy.

What is the impact of COVID 19 on the retread business?

Historically, tyre retread industry has been important in times of crisis. The benefits of product life extension through reuse that allows retreading at more convenient operating costs compared to single-use tyres, make this activity even more important. At the beginning of the current crisis In Chile we have seen some decrease in the demand from the retread industry but not in the dramatic way that this crisis hit other industries. We can also add that our members have adapted their activity by implementing all possible preventive measures within their facilities. Also, we have given great importance to share with our associates every information emerging from the study of COVID-19 behavior, so that they are aware of the risks that non-compliance with prevention measures implies for their families.

Bridgestone Americas announced the launch of Firestone Direct mobile vehicle service for car owners and fleet operators. Firestone Direct brings Bridgestone’s automotive services directly to vehicle owners’ homes or workplaces to offer maximum convenience with safe, contact-free service.

This service uses specially equipped vans operated by certified technicians to perform a wide range of maintenance services, including fluid and filter changes, tire repair and replacement, battery check and replacement, and more. 

Through 2021, Firestone Direct will continue to grow into additional markets across the southeastern U.S., with plans to expand nationwide by 2023. The new service launched first in Nashville and Atlanta and expanded into Orlando and Tampa in March.

Angie Oleson, director of Firestone Direct, said, “Customers are increasingly turning to online shopping and at-home services for convenience and safety, and Firestone Direct is at the forefront of this movement for at-home car care. By bringing trusted vehicle care featuring the latest automotive technologies directly to the customer, Firestone Direct can leverage the expertise of our trained technicians with the ease of online booking and at-home service for maximum convenience.” (TT)

The global electric vehicle (EV) market has taken a tremendous leap forward, with new registrations reaching record market shares in nearly all countries. For the tyre development landscape, the accelerating growth of the EV market means a pervasive transformation.

Boosting circular economy

At Black Donuts, the impact of the EV trend can be seen everywhere, from the tyre designers’ desks to the new practices of tyre testing. Beyond meeting new demands of the EV sector, the procedures and practices are tuned to serve the company’s strategic goal: to spearhead the industry’s shift towards a circular economy.

Black Donuts launched the first EV tyre development projects with its tyre manufacturer customers in 2018. The internal research on EV tyres was initiated even before, at the time of the first EVs entering the market. “The first research project addressed the primary technological challenges: rolling resistance and noise,” says lkka Lehtoranta, Head of Tire and Material Development at Black Donuts.

In tyre design, it is essential to focus on specific aspects to ensure optimal performance for electric cars. Compared to combustion cars, tyres for Evs must carry a heavier load withstand high instant torque – and be efficient and quiet. 

Lately, the focus on tyre technology has shifted towards more comprehensive sustainability. Bio-based materials and compounds are opening new possibilities, and the rapid growth of the EV market accelerates the pace of development. ”The EV trend has highlighted the sustainability of tyres. The demand for bio-based materials and tyre recyclability has significantly increased,” says Jarkko Mällinen, Technology Development Manager of Black Donuts.

In cooperation with its partners, Black Donuts is investigating new possibilities to replace fossil-fuel-based raw materials with bio-based or renewable materials in all products, including studded tyres. The company is currently testing the use of bio-based plastics in stud bodies.

Also, end-of-life tyres are a hot topic in the industry, and Black Donuts is researching how the waste tyres can be recirculated and recycled back into the process. Even the tyre development process is undergoing a renaissance. New design tools for faster tyre development are being introduced, emphasising the key features of sustainable, future proof tyres.

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European PCLT (passenger car and light truck) tyre manufacturing capacity has risen over the past decade to meet increased demand, but there has been a major shift from plants in Western Europe, towards Central Europe and Russia. The move eastwards reflects substantial differences in operating costs between the two regions, specifically in terms of labour costs. Hourly labour rates in Central and Eastern Europe can typically be half to one quarter of those in the highest cost Western European countries. In particular this significant differential has resulted in the transfer of production of lower priced non-premium tyres to larger plants in Central and Eastern Europe. Numerous PCLT plant closures and downsizings in Western Europe have either been announced or enacted during the past 18 months.

In 2019 Cooper Tires ended PCLT tyre production at its small plant in the UK, and Michelin recently closed the PCLT tyre plant in Dundee that manufactured tier-1 brand tyres in lower rim-diameters (≤16”), a shrinking segment of the European market. These closures leave just the two PCLT tyre facilities operating in the country: the Pirelli plants that focus on low volume but high-margin premium tyres.

In Germany, Michelin has announced plans to close its Bamburg plant that also focused on lower-rim -diameter tyres, whilst Goodyear is restructuring operations at its PCLT tyre facilities located in Fulda and Hanau. Total capacity there will fall, but there will be an increase in production of premium tyres.

Pirelli has recently ceased production of car tyres at its Bollate plant in Italy, its only facility in Western or Central Europe that was manufacturing non-premium car tyres. Apollo Tyres plans to downsize PCLT capacity at its plant in the high-cost Netherlands, focusing the facility on high value tyres with short production runs. Management had stated that the company lost money on 70% of the PCLT tyres that it sold from the facility.

Despite these closures in Western Europe, expansion to the east is expected to result in the net addition of 30 million units of PCLT tyre capacity across Europe* by 2026. New plants that have been recently opened, or are currently under construction, are located in either central and eastern Europe or Russia. In 2017, Apollo Tyres opened a greenfield plant in Hungary, with first-phase capacity increasing to 5.5 million PCLT tyres and almost 0.7 million TBR tyres. Supply from the facility has substituted imports from India and now permits the planned downsizing and specialisation of production in the Netherlands.

In 2018, Hankook announced plans to add production of TBR tyres at its plant in Hungary, however this expansion was put on hold in late 2019. In phases, the company has already expanded PCLT tyre capacity until it is now one of the largest such facilities in the world. Meanwhile, Nexen has begun the ramp-up of capacity at its new plant in the Czech Republic; this will have added substantially to the country’s capacity by 2023.

In addition to further investments across Central and Eastern Europe by Continental Tire, Bridgestone and Pirelli, an expansion of premium tyre capacity in Slovenia has also been announced by Goodyear.

In mid-2019 Toyo Tire announced its intention to build a new tyre plant in Serbia, consolidating the country’s position as the leading location for new PCLT tyre manufacturing capacity in Europe. This follows Linglong’s decision to build its new European plant in the country and Cooper Tire’s plan to double the size of its facility. Based on analysis by Astutus Research of all announced capacity actions (plant opening and expansion net of closures and downsizing), Serbia will account for over 40% of planned capacity additions between 2019 and 2026.

Toyo expects to invest €390 million in its new facility that will have a capacity of 5 million units. It intends to start production in early 2022 and reach full capacity the following summer. Linglong’s facility will have a capacity of 12 million PCLT tyres, alongside truck and radial agricultural tyres, built in three phases and representing a total investment of over €800 million.

Serbia as new hub

Although there is demand for both replacement and original equipment PCLT tyres in Serbia, the domestic market is amongst the smallest in Europe and production will be export focused. The country has already emerged as a key source of budget tyres to the European Union and to Russia, predominantly from Tigar Tyre, Michelin’s low-cost tyre subsidiary, that has significantly increased capacity and production in the past decade.

Geographically, Serbia is well located to supply the major markets of the EU and Russia, and benefits from free trade agreements with both. Labour costs in the country are significantly lower than in the Czech Republic or Hungary, and labour availability is good, with a higher rate of unemployment.

At present Toyo imports tyres to Europe from its facilities in Japan and Malaysia; Linglong utilises its PCLT tyre plants in China and Thailand. Both companies aim to develop their presence in Europe, and local production should help them in this quest, particularly in the original equipment segment where the significantly shorter lead times will improve the competitiveness of their offer. Similarly, the opportunity to increase their share of the OE business was one of the motivations for Nexen and Apollo to replace imports to open a plant in the region.

Whilst the influence of the Covid-19 virus may slow the pace of some planned investment in central and eastern Europe, it has already accelerated the pace of closures in the west. Furthermore, we expect that it will result in further plant closures there, as the decline in European tyre demand dramatically reduces plant utilisation rates.

*Europe refers to Western, Central and Eastern Europe, including Russia and CIS, but excludes Turkey which we include in the Middle East & Africa region.

For capacity data: ‘Western Europe’ includes plants in Germany, France, Spain, Italy, the UK, Portugal, the Netherlands, Finland and Luxembourg. ‘Central Europe’ refers to Poland, Romania, Hungary, Czech Republic, Serbia, Slovakia and Slovenia. ‘Russia and CIS’ refers to Russia, Ukraine, Belarus and Uzbekistan.

• Simon Hodson is Research Director at Astutus Research shodson@astutusresearch.com

The WHO has said that the outbreak is now officially a Pandemic. People/ companies/ organisations are still coming to grips on how to address the situation. Government heads of various countries are trying to curb the situation by restricting entries of people who are affected by countries that are affected the most. Thus, airlines would have only diplomats and other certain levels of people allowed to fly.  Many airlines have suspended a good number of their flights.  Many companies will be looking to take a hair cut on what they take back with them, just to see that business can be sustained during the trying situations. 

The virus has led various markets to crash, courier services have been curtailed in certain countries. All types of cancellations, be it sport, expositions or business, have affected the business world over. The transaction value in the losses may be difficult to gauge currently, however, it could be in the millions. Contracts would have to be reworked, and companies may have to come with new strategies. 

However, in every situation, there would be also a business opportunity, if you work your strategy right. The sale of masks, gloves, hand sanitisers, medical devices would be able to generate good business. Though it is seen that the outbreak is from China, you also got to give to them as to how they are trying to contain the situation by building hospital/s within 10 days. In other countries, this would easily have taken a much longer time period. 

It is a given that the business scenario is not going to be the best for most of the companies; Therefore, companies may have to think and reevaluate the way they are currently running their company. Companies will look to get leaner in every possible way. Cut down on unwanted expenses. Many companies have started asking their employees to work from home. Some may look to have lesser number of people and look to automate some of the work, especially in the factories.  Commercial properties being an expensive asset to maintain, some companies may look to perhaps go on rented co working spaces. Use less of one time use items like plastic and use more renewable/ reusable substitutes. Use of more environment friendly methods going forward will be the mantra. 

This hit on our social system in a way will make us pause, think and have better suggestions as to how to look after ourselves and our environment at large.