Opportunity in crisis

“In our experience,” Norman said, “Companies respond to a crisis in one of two ways. They either stop everything and just try to survive. Or they continue to invest and hope to come out of the crisis in a relatively better position than their competitors. We have taken the second approach.”

VMI did the same thing over a decade ago, after the 2008 – 2009 financial crash. During this period, VMI invested heavily in additional R&D and that led to the fast-track development of the MAXX tyre building machine. The recession, in other words, prepared the way for VMI’s greatest commercial success. During the past few months, the R&D team at VMI has again been working hard on new concepts, improvements to existing products and capability enhancements, moving into such comparatively new areas as software and data analytics.

All manufacturing companies depend on their Intellectual Property (IP) to differentiate themselves in the market, and VMI is no exception. VMI’s patented technologies are at work across the Asia Pacific region: in China, Japan, Korea, India, Thailand, Taiwan and Malaysia. VMI works hard to safeguard its IP in all the countries where it operates. India is a key market for VMI because the independent judiciary there has an excellent track record in protecting the innovations of overseas companies entering the Indian market.
 

“Returning to ‘normal’,” comments Mike Norman, “may not be a realistic option, because our market in the next few years is likely to be very different from the recent past. You will not move from survival to growth by doing the same old things. The companies that stay successful will need to think and act differently.”

Recovery roadmap

So, what exactly will the future look like? And how can businesses in the tyre industry build a roadmap out of the crisis and towards a more confident, successful future? The Covid-19 crisis, after all, has just accelerated trends in the market that were already evident will not go away when the virus is contained.

The industry was in a state of rapid change long before the virus struck. Demand was dropping, globalisation had stalled, the industry was facing much stricter environmental regulations, while electric vehicle growth was rising fast, with a need for more tyre variants in smaller production runs… It is not possible to be certain of what other long-term changes might happen as a result of the Covid-19 crisis, but it’s pretty clear there will be many of them. This means that being more agile is not a “nice to have”: it’s a basic necessity.
 

“No-one is likely to recover entirely on their own,” as Mike Norman puts it. “We need to look for ways we can work together, support each other and rebuild as partners.” How to do that? Norman suggests three ways to accelerate recovery and build a stronger, more successful future, no matter how uncertain the market seems. First, work smarter and be more agile. Second, optimise everything. Third, focus on Total Cost of Ownership (TCO).

Work Smarter, be More Agile

No-one accurately predicted the economic impact of the Covid-19 crisis (even though potential pandemics were seen as a priority risk by most governments). The moral of this? We need to be ready for anything and everything. There will probably be a major crisis of some kind every decade and the industry must respond better to the next one. The best advice is to make your whole business more agile and resilient: easy to say but a lot harder to do!

Dealing with Change

“You don’t make a business agile overnight,” says Mike Norman, “but you can start to gain the benefits from carefully planned change pretty soon. And the benefits grow as you make more progress in the right direction.” Becoming more flexible and ready for the unexpected depends on the strategic choices you make. In particular, two factors will define how ready for the future your business becomes: Platforms and Data.

From Machines to Platforms

When VMI launched the MAXX tyre building machine over ten years ago, it was the first step towards building production platforms, rather than standalone machines. Platforms are the key to future-proofing a business, because they can stay up to date, no matter how fast and unpredictable market and technology changes may be. Every major production platform is built from components that are constantly being worked on, improved, upgraded, replaced and added to with new capabilities. By investing in a platform, your equipment can always stay at best practice level, so your investment need never become obsolete.

Updating the MAXX

With VMI’s MAXX machine, for example, in the past 10 years 7 major upgrades have been taken to market and many customers have simply replaced (for example) the original vision technology with the hugely improved PIXXEL system.

PIXXEL includes a greatly improved camera, now built in-house to meet a very precise specification and higher protection against dust and even water. As an integrated system designed from the ground up, PIXXEL also removes the need for a separate PC and transforms performance in such key areas as component guidance, breaker and tread splice monitoring and carcass drum monitoring. It enables more proactive intervention, can enhance process efficiency, and contributes to better use of machine data and management insights through analytics.
 

This is one example of how the platform approach, enabled by intelligent retrofitting, helps make investments go further, while improving agility. No company can afford to rip out and replace its existing investments, just because a hot new technology is being introduced. It’s about evolution: always being competitive with, or preferably, ahead of the market.

Making Better Use of Data

Production machines of every kind generate vast amounts of data, but our industry has not traditionally been very inventive about using this for competitive advantage. If you are going to build a more agile business, then data is going to make a very important difference. Data in the future will enable:

• Predictive and proactive maintenance, reducing unplanned downtime and leading to more efficient management of production equipment.
• Analytics to spot emerging trends, from faults to potential process optimisation opportunities.
• Managing groups of machines from a central control area, reducing human touch points and speeding production.

Data is not a magic ingredient, of course, and neither is it new. The big change here is the ability to apply analytical tools and create insights for action in real, or near real time. This means the tools to enable greater flexibility are available now. We just need to use them more effectively than before.

Optimise everything

Change on a large scale can cause anxiety and, let’s face it, by now everyone has suffered enough disruption to last them for a long time. As Mike Norman puts it: “We don’t want to suggest anything that makes life harder at a difficult time, so the key to moving forward, we think, is step by step, keeping risk as low as possible.”

Process optimisation should be carried out on an incremental basis. As you work to analyse and improve all aspects of your production processes, you begin to find that complete stages can be cut out, time will be saved, resources used (energy, materials, people…) will be reduced and every saving goes straight to the bottom line. These are the tactical changes that drive immediate improvements, while buying time for longer-term, strategic changes.
 

Optimise Core Processes

Nobody tolerates inefficiency or poor-quality processes willingly, but sometimes it is easier just to let things stay as they are to avoid difficult decisions and potential disruption. Now is the perfect time to rethink processes and optimise them.

Places to look include materials storage and handling, transportation through the plant, improved testing to identify faults early in the process… This is all about organising the people and assets you already have, to make them more efficient. VMI’s experience is that you can remove over 10% of costs from production processes before you need to do anything disruptive. That’s additional profit every company needs to bank.

Optimise Service Options

Service within the tyre industry has traditionally been about break fix, supply of spares and providing engineers on site fast. These remain important and necessary, but service can and should mean a whole lot more, especially now we are using data to identify emerging trends and manage production equipment more effectively.

Rich data flows and new analytical tools enable you (and your service provider) to identify issues before they become faults and redefine policies to make routine maintenance more agile, responsive and proactive. This helps ensure that assets run as efficiently as possible, with minimal downtime.

“We at VMI,” Mike Norman said, “are becoming more ambitious about how we define Service. We think it is about helping customers be more successful in a strategic sense, often by fine-tuning their assets and processes to be more efficient.”

This goes beyond maintenance. Data analysis, backed by responsive service, helps tyre building companies respond to market needs more flexibly, constantly making their production environment more flexible. It’s not just about the machines, therefore, but about how you optimise technology across their entire life cycle for better response to changing patterns of demand.

Optimise People Management

In the end, all businesses depend on the quality of their people, and we believe this difficult period gives manufacturers a much-needed opportunity to look at who they employ, the skills they possess, the training they receive and how they interact with production equipment. Here, as well, expert service support can prove valuable.

“We possess a huge resource in the form of expertise, domain knowledge and insight,” Mike Norman comments. “This is at the disposal of our customers and we encourage them to make more use of what we can deliver in human terms.” The aim is to transfer skills and knowledge in order to help customers improve the quality of their own human expertise.

The future is likely to be more about extremely flexible, extremely smart systems, delivering precisely to the ever-changing needs of the market. Maximising the potential of these systems is going to need smarter people, with improved training and access to specialised expertise.

“We respect people too much to treat them without due care and attention. We assume our customers feel the same way.”

Employees have many of the right answers to tomorrow’s problems in their own heads. We need to maximise this human capital.

Solving the cost equation

Every company in our industry has taken a financial hit. Sales have been stopped in their tracks in many cases, so cashflow projections are no longer relevant and income streams have dried up. At times like this, nobody makes friends by suggesting that the right option for investment could be the one with the highest capital cost.

Why is TCO so important? It’s about getting into production and turning investment into profit as fast as possible. VMI’s engineering approach is designed to ensure that each machine works out of the box. It does not require long months of fine tuning and commissioning work on customer sites to reach peak efficiency. Installation leads to delivery right away- that’s the idea, ensuring that your investment leads to profit as fast as possible.
 

Yet, for businesses that believe in their own long-term future, all the investment decisions you make in this, the worst of times, will be critical in defining how well you compete once the crisis is over. Mike Norman’s view: “The three points we think you should always bear in mind are Total Cost of Ownership (TCO), Quality and Value.” Here is why.

Total Cost of Ownership

Production assets, such as VMI’s MAXX machines, are designed to stay fully operational for around 20 years. By the time owners get to year 5, the key to profit will be productivity and efficiency day by day, month by month, year by year.

The machine is designed to work efficiently, with planned maintenance and regular upgrades as new options appear. “Our customers can make promises to their own customers with confidence,” said Mike Norman. “They know they will be able to deliver as planned, on time, meeting contracts every time.” You cannot operate successfully with demanding end users unless you have this assurance.

If you buy a machine that does not work at once, you need to consider the major hidden costs due to being slow into production once it is delivered. These should be added to the true investment cost. So should downtime, scrappage, extra power usage, extra employee time through the entire product lifecycle… It mounts up. If you believe your company has a long-term future, then TCO is the only financial measurement that counts.

Quality as the Key

Tomorrow’s market will almost certainly require shorter production runs of high-quality products, with many more variations. We won’t be able to afford the scrappage levels that have been normal in the past. High product standards must go hand in hand with higher levels of environmental efficiency, lower energy usage, near elimination of waste and new levels of production flexibility. Assured quality will be the key to staying competitive in this new reality.

Moving up the Value Chain

In an uncertain market, ambitious companies need to aim for higher value products and prove they deserve to charge premium prices to meet their profit targets.

VMI machines can create auditable data that will show, not only what the product is, when it was produced and where, but also full operational conditions at the time. This can go into such fine detail as the materials used, cuts and splices made, length of storage, when and how the compounds were mixed: the entire life cycle from design to delivery.

Tyres have their own pedigrees, that is already taken for granted, but now it is possible to review all relevant data in much greater depth than before. Those companies able to prove their own quality standards will move up the value chain and maximise their profits. Those that can’t, will not.

Facing the Future

Where does all of this leave us as we face the task of rebuilding economies, our industry and our businesses? Especially in countries that are strongly dependent on a globalised marketplace and are facing real concerns about the future of free trade?

South Asian companies will continue to find opportunities in the global market, but they may need to rethink their strategies to maximise these. There is a model in other industries for the changes that need to happen in our own. For example, India has developed from being an offshoring centre for low cost IT processing to becoming home to global leaders in quality and innovation. VMI expects to see tyre producers in Asian countries follow a similar path, from cost competition to quality leadership. We are ready to help in this process.
 

Mike Norman’s view is that companies need to build their own road to recovery, and keep their nerve as they move forward. “The market will come back,” he says, “but it will take time and there will be some rough patches ahead.” But there are plenty of actions that can be taken here and now to bring recovery closer and help secure the long-term future of dedicated and ambitious companies.

“Being more agile, more flexible in everything we do is a non-negotiable requirement,” he emphasises. “It’s not enough to talk about unpredictability, or expect the unexpected: you have to build the capabilities that lead to true agility.” The good news is that it is possible to take short-term action, without high cost and improve performance relatively fast.

“Flexible production platforms, more and more creative use of data and analytics, straight through production with minimal stops for materials handling, building to precise market needs; these are the big prizes that ambitious companies need to aim for.”

There is no “either-or” about this. By making small-scale, rapid improvements, companies make space for the larger changes that will transform their long-term prospects. Will it be easy? Probably not, but, as Mike Norman says: “We have to face up to the challenges of our own times, whether we like them or not. If we believe in the future of our companies, we will accept the challenge and be successful.”

 

Pirelli is all set to become the official tyre supplier to MotoGP from 2027. A new five-year agreement is in the works and will see the Italian tyre company become the single tyre supplier for the MotoGP, Moto2 and Moto3 categories.

With the new MotoGP bikes and technical regulations scheduled to take effect in 2027, the approach of using a single supplier will offer the ideal progression ladder for the future champions to refine their skills while advancing to the top. Pirelli currently supplies tyres for Moto2 and Moto3 categories. With the new development, Pirelli will expand its presence to MotoGP and into MotoE, the electric world championship.

Michelin will remain the exclusive supplier for MotoGP and MotoE until the end of the current technical regulations at the close of the 2026 season, continuing to provide technical support, its products and world class technology over the next two seasons.

Nexen Tire’s NBlue 4S Van tyre has won the Best Light Commercial Tire award at the 22nd edition of the Tire of the Year Awards.

Neumáticos & Mecánica Rápida organised the esteemed awards ceremony, which took place on 30 January at the Novotel Madrid Center hotel. It honoured the top tyres of 2024 in the passenger vehicle, SUV, truck and agricultural tyre divisions. Key figures from the business, including executives from well-known tyre manufacturers such as Pirelli, Continental, Yokohama, Michelin and Bridgestone, attended the event. Raúl Jiménez, Nexen Tire’s Business Development Director for Iberia, accepted the award on behalf of the company from Eusebio Albert, Director of the Transport area at Versys Ediciones.

The NBlue 4S Van, a tyre made to satisfy the exacting requirements of commercial fleets and drivers, is recognised for its superior performance, safety and fuel efficiency with the Best Light Commercial Tire award. This accolade comes as Nexen Tire solidifies its position as a top producer of premium tyres by expanding its footprint in Europe and throughout the world.

Jiménez said, “We are honoured to receive this prestigious award, which is a testament to our ongoing dedication to providing award-winning products for our customers. The NBlue 4S Van is designed to offer superior performance and durability, and this recognition reinforces our commitment to delivering the best solutions to the commercial sector.”

Pirelli is mulling expansion of its tyre production capacity in the US to offset the impact of US tariffs that came into effect from 4 March, company executives said on a 2024 financial results call.

The company has a contingency plan in place to deal with the US imposing 25 percent tariffs on imports from Mexico and Canada. CFO Andrea Casaluci clarified that although Pirelli's US business accounted for over 20 percent of company sales, the amount of tyre manufacture there is restricted. The company's Georgia plant can produce about 400,000 tyres annually. Pirelli imports about half of its US supply from Mexico and around 40 percent from Brazil and Europe in order to fulfil market demand in the US.

Pirelli has a backup plan to boost imports from Brazil and expand US production capacity in order to lessen the effects of tariffs. According to the CFO, the Italian tyre manufacturer has already begun modernising the automated MIRS production processes in Georgia. This will serve as the foundation for the initial phase of capacity development in the US.

Additionally, the inflationary scenario will be used to examine the group's commercial approach. The CFO stated that since 30 percent of the US tyre market is imported, some inflationary pressure is to be expected in the wake of tariffs. The contingency plan also includes cost-cutting measures, in addition to the EUR 150 million in savings in 2025 that are anticipated under its industrial plan.

Nokian Tyres has launched the Seasonproof 2 all-season tyre for the Central European market to provide top-class safety on snow and slush as well as exceptional performance in summer for its customers.

The all-season Seasonproof 2 was created to satisfy the demands of drivers in Central and South Europe. By the fall of 2025, the product line will be accessible to customers in sizes for contemporary passenger cars, SUVs and CUVs. All-season tyres are made to function safely in Central European circumstances throughout the four seasons. The Nokian Tyres Seasonproof 2 is legally certified for winter use since it bears the Snowflake emblem (3PMSF). 

The tyre range includes up to 38 percent recycled, renewable and ISCC PLUS certified materials, with two percent coming from bio-based, bio-circular and/or circular feedstock that has been certified using the ISCC PLUS mass balanced technique. The introduction is a significant step toward the company's non-financial goal of increasing the proportion of recycled and renewable raw materials in its products to 50 percent by 2030. Additionally, it is the first tyre range available on the market to be manufactured in Nokia's new Romanian facility, the first fully operational tyre factory with zero CO2 emissions.

Tommi Alhola, Senior Vice President of Passenger Car Tyres, Central Europe for Nokian Tyres, said, “Central Europe is an important strategic growth area for Nokian Tyres. Nokian Tyres Seasonproof 2 is produced in our zero CO2 emission tyre factory in Oradea, Romania, close to the Central European consumers and customers. Furthermore, launching a tyre range using up to 38 percent renewable, recycled and ISCC PLUS certified materials takes us significantly closer to our goal of using 50 percent renewable and recycled materials in our tyres by 2030.”

Teemu Soini, Vice President of Innovations and Development at Nokian Tyres, said, “By incorporating renewable materials, we have been able to boost the tyre’s performance while also lowering the rolling resistance. We are committed to finding renewable or recycled options for traditional fossil-based materials, and together with various partners keep researching for new innovative options.”