Kumho Tire Co., Inc. donated 3,290 units of tires equivalent to USD100,000 to Islamic Republic of Iran in humanitarian support in the aftermath of the catastrophic damage in terms of both human life and property following an earthquake.
ArvinMeritor, Inc. announced that Terry O’Rourke is resigning from his position as president and chief operating officer (COO), as well as from the Board of Directors, to pursue opportunities outside of the company. The COO position will be eliminated.
Goodyear has announced that it intends to commence a syndication being arranged by JPMorgan and Citigroup for the addition of a new 300 million US dollar term loan to its existing 1.3 billion US dollar asset-based credit facility. In addition, Goodyear announced that it intends to commence discussions with the lenders under its senior secured credit facilities to amend those facilities to allow for future capital markets transactions. Those transactions may involve the granting of junior liens on some collateral securing the company’s senior secured U.S. credit facilities. “These actions enhance our near-term liquidity and position us to access the capital markets as we gain traction in our turnaround plan during 2004,” said Goodyear Chairman and Chief Executive Officer Robert J. Keegan. “I have a high level of confidence in our strategy and in the execution of our plan as we move forward.”
The middle of winter may not be motorcycle weather, but it is time for the motorcycle sector to be considering their purchases for the coming year. T&A looks at the players, the brands and the market developments for 2004.
The Agricultural tyre sector in the UK has had a tough year. It began with the aftermath of Foot and Mouth. There was an extremely wet start to the year. Then a prolonged dry period – the driest – if not the hottest – in 25 years.
Wet weather usually means more sales for the agricultural sector, but too much rain just stops the market in its tracks – no pun intended. That was the case early in the year. When the weather turned dry the public lapped up the sunshine and the long dry spell, but farmers anticipating the traditional UK summer were faced with their own dry weather difficulties.
However, tyres and traction were not amongst their troubles. Dry fields do not create traction problems and the agriculture sector stretched the mileage of existing tyres well beyond their expected lifespan. The result has been a drop in the overall market of something around 10 per cent.
The wider agricultural market is dominated by Michelin, Goodyear, Continental and Bridgestone in the UK – with the big players accounting for around 60 per cent of the market. Although just how big the market is no-one can say. That 60 per cent represents almost two thirds of the premium brand tyre market. It does not include the figures of the budget brand sector. As with the car and truck sectors there is no hard evidence to confirm the sales figures at the bottom end of the market. Asking tyre companies about market share results in a sum that is greater than the whole. But general consensus places Michelin group at the head of the market, followed by Goodyear Dunlop, then Continental and Bridgestone followed by Trelleborg/Pirelli and Vredestein.
In order to sell tyres it is, in every sector, important to know who, or what, the customer is and what is being sought. It might be a fair assumption to say that the farmer expects tyres to do the job they are asked to do. That, in itself, is open to interpretation. The contractor may be keeping an eye on the slip meter in the cab and be watching for the point of diminishing returns from a set of tyres; changing them at the point when they become inefficient for his purposes. Another farmer using the same tyres may take a different approach, saying that so long as they hold air they will stay on the tractor. Somewhere in-between there are those who only change tyres when they are damaged beyond repair – they may change the tractor at the same time as the tyres. In marketing tyres to the top end of the agricultural sector though, there must be an assumption made that the people prepared to pay the premium price for a leading brand tyre must have some concept of tyre management and an eye on productivity and efficiency.
Every car needs at least four, but the consumer doesn’t see them, doesn’t know why he needs them. And why should he buy two when only one has failed? Some things never change, but dampers are a market sector we simply cannot ignore.
The new Chairman of the NTDA Tyre Wholealers’ Group, Peter Gaster took to the floor at the NTDA TWG luncheon to offer one or two points for the trade to consider. Gaster opened by highlighting the fact that whilst he was looking at things from a wholesale point of view, it was worth remembering that many at the event had a foot in both retail and wholesale camps.
He outlined the importance of the role of the wholesaler, comparing the ability of the multi-brand wholesaler to that of the tyre manufacturer and how the result was benefiting the tyre trade as a whole. “The true wholesaler performs a vital and necessary function in the UK distribution market in providing a variety of products and deliveries to all retail sectors in the industry and it is here that the wholesaler performs the most vital function which is service. We are all aware of the cost of distribution and I’ve always felt that manufacturers have at the best misunderstood and at the worst miscalculated the cost of distribution and the reality of the logistics and practicality of delivering one tyre to one customer on a daily basis.
Perhaps the most successful consumer auto show in the UK has bolted on a tyre industry section. T&A will be visiting the show to find out how the trade has responded to being bolted onto a successful consumer show.
To Continental, National Tyres and Autocare and Viking International and associated trimmings were a collective albatross around the neck of the UK division. After years of loss-making Conti made the decision to cut its losses.
The company and its assets were bought from Continental for a figure that, depending upon how the numbers are crunched, is either 15 million, or 24 million pounds. Some would say that was a lot of money for a business on its last legs. The long and the short of it was though that National came into the ownership of the Axle Group, a parent company formed during the management buy out of National, where most of the management team had built careers out of the fast fit trade – almost all having been employed on the shop floor at retail level at some point in their career. Alan Revie had been manager at Smiley’s Langside outlet and had taken on John Caldwell as a fitter – now Revie heads the Axle Group and Cauldwell heads the wholesale operation. The people at the helm of National were thoroughbred fast fit experts who knew the business inside out.
The fiscal arrangements of the business have been, by now, well documented but the purchase price of the business was met largely through the revaluation and sale of properties no longer required by the Axle Group. The outcome is that the Group has no debts and is currently in a very strong position, and Alan Revie makes a point in talking to T&A of emphasising that fact.
‘Europe was top dog in the 1800’s, America was the great power of the last century and the next 100 years will belong to Asia’ (The Times).
A recent report by Goldman Sachs forecast that China will overtake America to become the world’s largest economy by 2040. As China’s economy grows, it will act as a magnet for raw materials and goods from surrounding Asian countries, giving a boost to the whole region. It remains one of the most exciting growth areas in Asia, with its potentially vast consumer markets and its low manufacturing cost base.
Singapore is a recognised gateway to Asia, attracting leading buyers from the whole of South East Asia and Australasia as well as the key decision makers from China and other Asian markets, providing a comprehensive mix of buyers and sellers from across the entire region.
The Asian region offers the tyre industry major opportunities for those companies committed to its long-term future. With Asian tyre consumption accounting for over 35 per cent of world demand combined with the enormous potential of tyre markets such as China and India where companies are making a name for themselves in the global tyre market, the Asian region offers investment opportunities to manufacturers and suppliers alike.
Tyrexpo Asia 2004 will be the 4th in the series of Tyrexpo Asia events that focuses on the fastest areas of growth in the tyre market and it is the only established tyre event of its kind in Asia. The 2004 event will be the largest yet and exceeds previous Tyrexpo Asia shows by over 25 per cent. The 2001 exhibition attracted visitors and exhibitors from over 63 different countries making it a truly international event. The show will once again be sponsored by Tyres & Accessories and Neue Reifenzeitung in addition to being strongly supported by specialist trade press and sponsors IE Singapore (International Enterprise Singapore). Tyrexpo Asia 2004 takes place from the 17 to 19 February at the Singapore Expo Centre and provides the perfect forum for the tyre industry to be stimulated by new ideas, products and market opportunities which reflect the importance of globalization within the region. The show focuses on every aspect of the tyre industry from tyres, retreads, tyre changing & repair equipment, to fast fit, garage equipment and parts & accessories. Amongst exhibitors are:
A-Z Formen und Maschinenbau, Big Wheel, Clipsal Airtec Pty Ltd, Collman, Columbus McKinnon, Del-Nat, Elgitread, DuroTyre, Federal Corporation, Fujikoki, Global Traco, Gummiwerk Kraiburg, Hangzhou Zhongce, Hock Lee, Italmatic, Jantsa, Kenda, Konimpex, Leka-Reifengrosshandel, Liew Koon, Mace Engineering, Midas, Mindtrac, Mohawk International, Myers Tire Supply International, Newera, Nexen Corporation, Pirelli Speciality Products, Pt Gajah Tunggal, Pt Mega Tires, Rema Tip Top, Samik Corporation, Sicam Tyre Equipment, Stamford, Tech International, Treadway Exports, Tyre Trading International, Value Tyres, Viewtum, Vipal and many more.
For the full year 2003, Bandag reported consolidated net income of $60.2 million, or $3.11 per diluted share, compared to 2002 net income of $2.8 million, or $0.14 per diluted share, which included the write-off of goodwill, primarily of TDS (Tire Distribution Systems, Inc), of $47.3 million net of income tax. Consolidated net sales for 2003 decreased nine percent to $816.4 million from $900.5 million in 2002.
Alliance Tire has some unusual barriers to overcome in its search for continued success. However the Israeli tyre manufacturer is focussed and determined to grow.
Most tyre manufacturers have the ability, in today’s global market, to sell anywhere in the world, certainly to their neighbours. Alliance is denied that opportunity by being an Israeli company. Yet despite being perhaps a key industry in Israel, Alliance still has to operate on a free market basis. Denied access to the obvious Middle East market, for reasons we may not always comprehend but certainly cannot have failed to have noticed over the past 50 plus years, Alliance has to work doubly hard to gain market share. That takes determination. It takes loyalty. There is no possibility of failure, therefore everyone must work to win. To understand that drive is to understand why Alliance Tire, a small, single plant manufacturer in a beleaguered state, has the potential not only to survive but to take a leading role in its chosen market sectors.
Alliance has long taken the view that developing niche products for specialist markets is the way to proceed. It has therefore developed its own technology and products to gain respect and a leading market share in its chosen agricultural sector. The requirement to develop and refine placed a burden on the company loans. However, with the appointment of Joseph Anglister as General Manager there was a turnaround in fortunes at Alliance and once more the company was back in operating profit. The turnaround came as the result of efficiencies created by the investment allied to a reduction in the workforce. Today the Alliance workforce has vastly improved its efficiency in production. However, the investment continues and next year will see the installation of a new state of the art calendaring line for inner liners.
Michelin signed a three-year agreement to supply Volvo Group with truck tires as original equipment on Renault and Volvo trucks assembled in Europe. The agreement confirms Michelin’s position as a major supplier of tires to the Volvo Group in Europe. The deal comes at a time when global radial truck tire production capacity is saturated, even as demand is expected to experience growth in the future. It is in line with Michelin’s commitment to balancing its operations in the original and replacement equipment markets in order to deliver optimal service quality across all markets, while maintaining its profitability.
Hankook Tire’s operating profit for 4Q03 came in at 21.3bn Won (14.39m Euro), 59 per cent lower than IBES consensus estimates of 51.2bn Won (34.595m Euro). 4Q03 net profit was also thin at 1.9bn Won (1.184m Euro), disappointing street forecasts by a whopping 94 per cent. Operating profit also fell below consensus estimates for the full year, coming in at 170.4bn Won (115.147m Euro). There appear to be three key reasons for the disappointment: payment of 25bn Won (16.894m Euro) in bonuses during 4Q; a sharp increase in freight rates (increased by 52 per cent YoY); and a general rise in most raw material costs. Discounting the bonus figures, the company would have met estimates.
Bridgestone Corp. said yesterday it expects a group special profit of around 60.0 billion yen (445 million euro) related to plans to return 65.0 billion yen in pension assets to the government in 2005. The Japanese tyre maker said that on a parent basis it expects a special profit of around 60.0 billion yen. Since the move is planned for 2005, the size of the special profit it will book may change, the company said. Many companies in Japan have opted to return the state-financed portion of employee pension plans they managed on behalf of the government.