Despite difficult market conditions, Bandvulc’s group turnover remains north of £60 million per annum
In recent months we have heard much about the decline of retread demand and production at the same time that Chinese truck tyre prices have plumbed to new depths. Of course this paints a very negative picture for the retreading business in the UK – where low-costs imports have historically been more popular than the average European state – and also across the European tyre markets. The premium new tyre makers have suggested they will weather the storm by pointing out their uniquely strong position with regard to large fleet customers. Because they also produce their own retreads, these firms pointed out that their businesses will remain relatively sheltered by the low quality, oversupply problems facing other independent retreaders. However, such a reading of recent history relies on two premises: 1) that the market remains in undeniable decline and 2) that premium manufacturers with their own retreading options are best positioned to get over this particular bump in the road.
But, it ain’t necessarily so. While ETRMA-based data is clear that retread market demand has been clearly hit by the situation described above, and while other market research appears to support this – for example one source told Tyres & Accessories that the UK new:retread ratio increased from 67:33 at the end of 2014 to 75:25 at the end of 2015; all this from levels nearer 50:50 ten years ago – the bigger picture is more nuanced.
You see, the same data that suggests the share of new tyres is on the increase also specifies that it is the specifically the share of new premium tyres that is driving growth. These in turn have the best chance to pull through a great share of retreads as well. This development is said to be coupled with increased moves towards (steer, drive and trailer) axle-specific tyres as opposed to all-position non-specific fitments. In other words, there is also some evidence of a counter budget mentality emerging.
At the same time Chinese tyre manufacturers are beginning to raise their prices, according to numerous factory and importer sources. Planned price increases range from 2 to 5 per cent, which doesn’t signal an immediate turnaround, but it does suggest that the tartarus-low depths the market has sunk to could be as low as things are going to go. If this is the case, the situation could therefore be looking up for retreaders.
With all this in mind, it is worth considering the cases of the largest independent retreaders in the UK, companies such as Bandvulc. Over the years, these firms have grown into very professional businesses, with fleet sales strategies of their own. In Bandvulc’s case, the retreader has evolved into a multi-faceted business, with tyre sales, retread manufacturing, compounding and fitting divisions as well as some of the largest blue-chip fleets as customers.
The downturn and the aforementioned oversupply issues in the market are clearly a problem for retreading in general, but while no-one is saying the last few years have been plain sailing for Bandvulc, group annual turnover remains north of £60 million mark. Meanwhile Bandvulc Plus+ (the firm’s fleet arm and the largest single part of the Bandvulc group) turns over roughly £40 million a year by. This therefore means that the remaining £20 is split between the firm’s retread manufacturing, compounding and Tyre Maintenance service and fitment operations. So how has Bandvulc been bucking the trend?
“Speed is the new currency”
“For our business, speed is the new currency”, Phil West, Bandvulc’s Group commercial director told Tyres & Accessories during an interview at April’s CV Show, adding: “It is all very well and good having the latest technology, telecoms and communication systems, but this needs to run parallel with employees who are motivated to manage the service levels to their full potential and deliver on the promises made by the business to its customer”.
We have all been on the receiving end of service which has disappointed us and usually the ‘system is to blame’, but is it really? In truth, the fault often lies with an employee who has not had sufficient training or demonstrated the care and attention that is required of their role. For Bandvulc, it is this personal touch that differentiates the firm from the general tyre market place and enables it to maintain steady growth in its core marketplace.
West readily admits that tyres and especially retreads, which represent 3 to 5 per cent of any transport operator’s costs, have seen a turbulent few years. Likewise he concedes that the introduction of Chinese tyre products have brought challenges with them. However, in his view their entrance into the market only enhances the importance of service.
At the same time as the number of imports entering the market has swelled, tyre purchasing models have also evolved and the operator now has a range of different options to consider – something Bandvulc only sees increasing in the coming years. Underpinning all of these however is the service and delivery of said commitments. The argument is that operators need to consider if it’s value for money for their operation rather than just low entry price.
Another reason for Bandvulc’s continuing success is the firm’s ongoing commitment to investment. Indeed investment is spread across it’s the entire group and is founded upon pro-actively enhancing and improving its delivery where it interacts with the customer. The development of the firm’s Galahad software as a customer interface is designed to enable “total visibility and transparency”. The investment includes in-house developers, ensuring reduced lead times in programming, enabling real-time reporting and bespoke analysis tailored to each customer’s requirements. Galahad is also the platform integrating Bandvulc with its Key Service Provider Network. It enables swift and accurate data exchange between organisations, resulting in up-to-date transaction reporting, stock control and accuracy.
The largest area of growth within the Bandvulc Group is that of tyre management and 24/7 support. This suggests that that the firm’s admittedly “unique” approach is also able to deliver. For Bandvulc, it is less about selling the tyres themselves (a relatively easy part of discussions, according to West), it’s about the process of control, delivery of product, reliability and the efforts to assist cost reduction which bring repeat and long term business.
Indeed, Bandvulc’s BV Plus+ division continues to evolve too. Nowadays, it offers not only manufacture and management, but also the delivery of the agreed service via its own tyre distributor, Tyre Maintenance.
West explained: “Having all these elements enables us to provide more control and focus to deliver what our clients require. We are a responsive team that, with quick decisions, can resolve any concern and develop any forward thinking ideas to assist the business. This flexibility and dynamic approach enables us to respond. Whilst investment in systems and technologies is key, Bandvulc also recognises that investment in people is the foundation of our business. A great number of our commercial team members have been with the business for many years…This suggests benefits of continuity, training and strong customer and business relationships, with staff and supporting teams getting to know the clients. It’s common sense”.
Bandvulc wins Wincanton
Of course, the proof of the pudding is in the eating. That’s why Bandvulc believes its blue chip portfolio and loyalty is a testament to the team’s service delivery commitment. Examples of this include the winning fleet supply deals with the likes of Wincanton and Searon.
Wincanton is a leading provider of supply chain solutions in the UK and Ireland, which operates 4,000 vehicles across 200 sites in the UK and Ireland. Earlier this spring, Bandvulc negotiated a deal with Wincanton that saw the company agree to supply Hankook new tyres as well as committing to the company’s fleet needs.
According to the company, Bandvulc was awarded the deal following “an extensive tender process” and will now supply tyres to Wincanton’s vehicles across the country with bespoke operational considerations and policy options to meet the various needs of its specific fleet operations.
Phil West was delighted with the deal: “Wincanton has long remained a target client of ours and we are absolutely delighted to be awarded such a prestigious contract. It is testament to our staff and our consistency in delivery and response to everything that we do that has enabled this success. The agreement will see Bandvulc Plus+ utilise its extensive network of service agents throughout the UK including, of course, our in-house arm, Tyre Maintenance.”
Chris Kingshot, Wincanton’s managing director of manufacturing commented: “We are dedicated to providing industry-leading service to our wide range of customers by improving the efficiencies of their supply chain and reducing their environmental impact. Our parternership with Bandvulc will provide better tyre management, providing us with greater control from production through to waste. Bandvulc’s commitment to develop and innovate is refreshing and we look forward to a long term relationship in the future.”
BVPlus+ awarded Searon deal
The news that BVPlus+ is to supply Searon Logistics Ltd represents another important fleet win for Bandvulc. As a result of the deal BVPlus+ will be responsible for the management of Searon Logistics’ fleet of more than 200 assets, primarily based in the Port of Felixstowe and serving other major UK rail hubs.
Searon Logistics is involved in the management of containers across the UK and operates to tight time constraints. BVPlus+’s offer provided confidence in the ability to meet all of Searon Logistics’ requirements in an especially time sensitive operation.
Commenting on the deal Phil West said: “In the transport sector every second counts. Companies need their vehicles on the road around the clock and we’re here to ensure that this happens. Searon Logistics’ requirements in the container sector are stringent, as you would expect. Our delivery of services is important to our continued growth, so we make sure all aspects of every offer is deliverable.”
Rob Lewis, Searon’s fleet manager, added: “Bandvulc’s offer was cost effective, forward-thinking and provided room for future development and changes as the business continues to grow.”
And therefore, with the market looking like it has passed through the worst, Bandvulc believes that continual investment, experienced personnel and a commitment to deliver the service it offers are the reasons why the company is bucking the trend.