As US automotive sales figures revealed that the US domestic product was facing a massive slump in sales compared to almost universal increases by imported marques, sales of the Ford explorer held up against the national trend with sales rising 3.8% on the 1999 figure, despite the bad publicity onslaught from the Firestone recall.
Under the new French employment laws Michelin are to hold a referendum of its 27,000 French employees on the establishment of a 35 hour working week. The proposals include a reduction of the working year by 15 days, a 5% pay increase for the coming year and inflation linked increases for the following two years, more flexible working patterns and includes the employment of another 1,000 workers. According to Michelin the offer is more generous than that dictated by the recently introduced regulations for a 35 hour working week. The referendum will take place on the 25th January and is part of French government proposals to reduce unemployment.
Pirelli Tyre ceased operations at its Hanford, California plant. This follows a six month notice issued to the facility in October 2000 stating that the plant’s cost structure was not competitive with other Pirelli plants’ costs. Production capacity will be transferred from Hanford to plants in Europe and South America.
It is reported that the German company Siemens has developed an “intelligent tyre” in collaboration with Continental. The tyre incorporates small sensors that can give advance warning of wear, low pressure or imminent sudden deflation. They can also detect on-road hazards such as black ice and can help to keep the car under safe control in these conditions. In addition to the sensor technology, the tyres will be more fuel efficient and last longer. Testing in extreme conditions is currently being carried out and Siemens says that the tyres should be on the market in 2001. Not so, is the reaction of those close to the market, saying that there is no way that the tyre could be produced as a range this year. Nobody from Continental was available to comment.
The Tun Abdul Razak Research Centre (TARRC) has been deeply involved for the past two years in an EU-funded CRAFT project, the aim of which is to achieve better assessment of new tyre casing integrity in order to increase the number of tyres retreaded in Europe. TARRC hosted a seminar to discuss the impact of existing and proposed regulations on retreaders and some findings from the CRAFT project. The reason for the CRAFT project was based on a concern by retreaders that the quality of some new tyre casings was decreasing, with the danger that the industry could be deprived of its basic raw material. Principal research objectives included the development of new tests in order to predict the retreadability of new tyres, the establishment of a best practice drum test and a league table of tyre brands, rated according to their retreadability. The project will be finished this year. In investigating retreadability, TARRC tested a number of tyres in accordance with Regulation 54, the standard against which new tyres are tested. Under this standard, tyres are drum tested for 47 hours. The results were extremely surprising and indicate that either Regulation 54 is deeply flawed, or that the tyre industry has a problem. Testing 295/80 R22.5 M-rated tyres, the results showed a failure rate among new tyres of 20.8%. The new tyre manufacturers usually carry out their own tests and their failure rates are nothing like this figure, which begs the question why is there such a disparity between manufacturers’ results and the findings from TARRC? Under the new retreading Regulation 109, tyres are chosen and tested at random by an outside agency. Is there any independent validation of the in-house testing of new tyres? A proposal was made that new tyre manufacturers and retreaders cooperate in a programme of cross-testing new tyres in order to try and solve this apparent anomaly. Whether or not this will happen remains to be seen.
The worldwide market for tractors has seen many mergers over recent years but, with four big groups, this now seems to be coming to an end. Consolidation among tractor producers was regarded by their suppliers as a negative move, because the tyre manufacturers knew very well that the pressure on oe prices would intensify. In the European original equipment market for tractors, the three market leaders Michelin (including Kléber), Pirelli and Goodyear have a combined market share of 85 percent. This dominance was threatened in 1994, because the big tyre companies all trusted the (completely wrong)forecasts of their oe customers. Instead of the market contracting, the tractor producers found they could increase their sales. This was the hour of smaller tyre market competitors in the field, such as Continental or Firestone, “oe exotics” like Taurus or Galaxy – and even the hour of some specialist wholesalers: when before had vehicle producers been forced to go to dealers asking for tyres? However, the attack of the smaller tyre competitors was stopped, as the better service of the larger companies asserted itself, and the customer also helped things to return to the status quo. Unlike with car tyres, many buyers order their new tractor fitted with a certain brand of tyre. Because few farmers ask for Titan, Vredestein or Stomil, Pirelli, Goodyear and Michelin/Kléber regained their shares and the market returned to normal, once they had built up enough capacity to satisfy the oe business. Within recent years, market settlement also occurred because the number of independent tyre producers (but not the brands) has dwindled. Specialist producer Taurus (Hungary) and Stomil (Poland) became part of the Michelin group; Barum is a Continental brand. Others were looking for alliances and so the Romanian brand Danubiana (Tofan Grup) was on the wish list of Goodyear, because the US tyre concern found out that it lacked a brand at the economy level. (Later Goodyear managers considered Sava could fit the bill.) The US brand Titan has had a lot of problems in its North American home market and had to sell some niche segments. Israel’s Alliance closed one of two factories, Vredestein suffers under the high prices for raw-materials, Finland’s Nokian even gave the order to Michelin’s Poland plant (Stomil) to produce agricultural tyres because it did not seem sensible to produce this kind of tyre in the Finnish factory. Consolidation in the segment of agricultural tyres has not yet come to an end.
At the end of November Michelin invited motor journalists to a so-called “Winter Workshop” at the “Arctic Driving Centre” near Rovaniemi (Finland). The main topic of the event was of course the capabilities of winter tyres. Despite the very mild climate at the end of last year the tyre industry expects that with 18.4 million winter tyres, sales will reach a new record this season in Germany: Based on this Michelin says that customers will spend some three million DM for new tyres and service. As well as such basic market data, the Winter Workshop gave those present the chance to check out the advantages of modern winter tyres. To illustrate this the tyre manufacturer had prepared four different sections, focusing on influences on winter performance such as the tread depth, the age of the tyre and the tyre speed index and dimension. All in all, 24 combinations were tested and more than 50 journalists driving the test cars led to a great number of – sometimes astonishing – results, and the data allowed the establishment of average values for each section. Michelin says that the results of the workshop will have a bearing on future developments and the criteria for choosing the right tyre. Learn more about this in the January edition of NEUE REIFENZEITUNG.
A year ago, the conference of the European Tyre Recycling Association (ETRA) was held in Schwerin, dealing with the present situation and future perspectives of scrap tyre disposal in Germany. Many questions and problems that were left unanswered in 1999 were also discussed at the following conference in Leipzig, which took place at the beginning of last December. Also this time there were few new answers to be found concerning the well-known problems in this area. Why is it so difficult to solve these problems connected with the recycling business? Some answers: the participants in this market are very diverse – and so are the individual aims. In addition, the market situation for recycled scrap tyres is still not the best, and new ideas for sensible and economical applications are few and far between at the moment. Even if they exist, they may still be blocked in many cases, e.g. the use of rubber in road surfaces. On the other hand there is a requirement for European quality standards for products which are already distributed. Furthermore, the knowledge of some companies in this sector is quite limited: it is either the tyre-, disposal- or the marketing-know how that is missing. In many cases the financial backing for new projects is insufficient. Not to mention a number of scandals concerning illegal landfills, which has negatively influenced public opinion about this business sector. Finally the serious market participants, as well as their association ETRA, have run up against a wall of disinterest on the part of the state and the tyre manufacturers.
Late – at least compared with other businesses – but not too late, the tyre industry and trade have realised the importance and the possibilities of e-commerce and for today’s business. But this late “discovery” is not really a surprise because automotive and related companies are naturally not so closely related to the topic as, for example, the electronics or the communications businesses. It is therefore perhaps not surprising that a study by Economist Intelligence Unit (EIU), carried out in co-operation with KPMG Consulting, reveals a lower interest among companies in the automotive sector – again only in comparison with other businesses – to expand their e-business activities, although in the meantime the internet is becoming more and more accepted in the tyre business. Two or three years ago there were only a few investing in this “new” media. But since last year, the number of tyre and wheel related online shops or portal sites is constantly growing. And even the tyre manufacturers themselves are investing more and more in internet facilities. Details can be found in NEUE REIFENZEITUNG’s e-commerce feature in January.
From the beginning of the year, only one sales rep in each region will be selling all Continental group brands. The company believes that the benefit will be greater synergies for itself and for dealers; so said Jescow von Puttkamer, head of sales for passenger car replacement tyres in Germany, Austria and Switzerland, in an interview with Neue Reifenzeitung. In Germany, the group has 60 sales reps on the road, selling passenger car tyres. Whether “one rep for all brands” is the correct decision or not, only time will tell. We remain pessimistic.
One of the Holy Grails of the auto industry, and the tyre industry in particular, has been a car which would stop in 30 metres from a speed of 100kph. Continental AG has recently demonstrated a highly upgraded version of a compact-sized car that will achieve that goal. The development of a car able to achieve this goal, the 30-metre car, has been set as a target by Continental, and others for some years, but Continental is the first claiming to have achieved the target. Continental’s team dedicated to the project was entitled “Reduced Stopping Distance” project. The current “best” stopping distance from 100kph from a compact car is 38.5 metres; so attaining a reduction of 8.5 metres is a quite a considerable achievement for the Continental team. The project brought together development researchers from Continental’s tyre business, with experts from Continental Teves, the brake and electronic systems operation; the latter now part of Continental Automotive Systems Group. This expertise, combined with existing knowledge of air suspension, mounting and chassis systems, were all brought together within the ContiTech Group to place the group at the vanguard of the chassis development sector. According to Dr. Stephan Kessel, “We want to be the forerunner in total chassis management so we’ve also got to have the appropriate damping and steering skills.” This suggests that further acquisitions may be under consideration in the near future.
The disastrous sales of winter tyres in Germany at the end of last year have shown at least one thing: hope has no place in the calculations of business administration, and whoever has not yet understood that will have no future in this business. All the hand wringing of the tyre retailers does not help in this situation. Considering declining gross yields and the many new distribution channels for tyres, tyre retailers are forced to diversify and widen their service offers in order to compensate for loss of profit. One example of how this can be achieved is car servicing, which brings in gross yields between 40 and 50 per cent on average. A lot of business members have long ago realised this fact and extended their range of service offers. So car servicing is no longer a question of “if” but of “how”. The differences between the service offers and the quality of tyre retailers engaged in car servicing are huge. They range from the traditional Fast-Fit-Sector, covering the classical elements (exhausts, brakes and shock absorbers) to the fully equipped and professional working car repair station, offering every kind of car servicing. In this issue of NEUE REIFENZEITUNG the present level of involvement of German tyre retailers in the car servicing business will be explained and described, including some examples.
Bridgestone/Firestone Inc is recalling 8,000 Wilderness LE tyres made in Mexico and fitted on GM SUVs because of adhesion problems. Around 150 tyres, made on April 24 last year, are affected, but one week’s production is being recalled to be on the safe side.
Watts Industrial Tyres (WIT), the UK market leader for industrial tyres, has signed a joint venture agreement with its Brazilian distributor to manufacture and distribute Watts brand solid tyres in Brazil. The company is ‘Souza Pinto Industria e Comercio de Artefatos de Borracha Ltda.’ and production begins this month at a new factory near Sao Paolo.
A report in the magazine Which? – published by the UK Consumers Association (CA) – has accused fast-fits of recommending unnecessary work in almost a quarter of cases. The CA took a test car to 93 depots, belonging to seven of the UK’s largest fast-fit chains, and says that 23, split across all seven chains, recommended unnecessary work. In response, one of the companies involved – Kwik-Fit – says that it has not been given detailed information by the CA but, on behalf of all the companies involved, it takes exception to the implication that so many in the trade would intentionally mislead the customer.