Wheel Manufacturing in the UK
It would be something of an understatement to say that high raw material costs, the weak dollar and unprecedented competition from the Far East is affecting UK alloy wheel manufacturing. But, in the cases of the selection of companies that Tyres & Accessories spoke to, it is more a question of ingenuity triumphing over adversity. So, in the face of such pressing circumstances, how are UK manufacturers holding firm? Work smarter, not necessarily harder, they say.
Ask a UK alloy wheel manufacturer to sum up the current state of the industry and the chances are it won’t be long before they use either the words “under pressure” or “China.” According to Image Wheels’ managing director, Alan Gardner, the UK wheel industry is “under onslaught” from the People’s Republic. “While we have workers who expect to be paid £9 or £10 an hour, in China they will work for £100 per month.” In addition, cost increases have been felt across the board. In recent times fuel costs have gone up, raw material prices have spiralled, with some companies noting that even the gas bill has gone up 16 per cent!
Component Automotive 73’s (manufacturers of Compomotive wheels) Barry Dixon agrees: “The market is under a lot of pressure from cheap Chinese imports.” Some of these are said to be so cheap that a finished wheel doesn’t cost a lot more than a UK manufacturer might pay for the raw materials. On top of the longer-term market slowdown, companies also felt the effects of a seasonal downturn, according to Rimstock’s Matt Neal. “Post Christmas the market was very tough, that goes for the whole of the retail sector,” he commented adding: “But it started to pick up again in Febraury/March.”
According to Mr Dixon, it all changed virtually overnight in 1999/2000, when prices suddenly fell through the floor. Other commentators remark that Britain is rapidly evolving from a “manufacturing nation” into a “service nation.” This only leaves one option – if you can’t beat “the supermarket mentality” then leave it. And that’s why UK manufacturers are largely turning their backs on what Mr Dixon describes as “blinging sets of alloys” in favour of using their technological strengths to their advantage. By focusing on motorsport, classic and custom products, companies are able to charge realistic prices for the quality products they produce. “I can produce four wheels just for you and just for your car and then, if you want, break the mould. Or I can make it a limited edition,” offers Mr Dixon. Summing up his company’s “it doesn’t come in a box” philosophy.
Another way of working smarter is to invest in high specification technology. Rimstock Plc recently invested a significant amount into upgrading its plant. This process saw the company purchase the latest industry standard tools including Catia 5r14, Wildfire 2.0 and WinCaste design systems, while the company continues to use the widely respected AutoCad design software.
According to Rimstock, these systems allow the company to conduct computer stress/impact fatigue tests on products, while also generating photo realistic images of the finished product. The main benefit of this ‘virtual’ testing technology is that it can save as much as a week in terms of time, not to mention the associated cost savings. On top of this, Rimstock also invested heavily in inventory and now holds somewhere in the region of 60,000 wheels, compared to the 30 – 40,000 the company held last year.
The OE price auction
Out of all the wheels Component Automotive 73 produces, the ratio between those that stay in the UK and those that are exported is roughly 50:50. According to Barry Dixon, these are fairly evenly spread with no single greater destination. Instead sales are distributed in 63 countries around the globe. “We are one of the only [wheel] problem solvers left in the world,” Mr Dixon explains. The company also has little intention of taking part in OE business, describing this business as a “price auction.” Instead the company believes that it is more flexible without the restrictions that OE business can often bring. For Compomotive, one particular growth area is the production of motorsport wheels for road cars. In Barry Dixon’s words, “the world is full of people who want something special.”
Currently, 30 per cent of the products Image Wheels produces are exported. Of these, there is a straight 50:50 split between replacement and OE destinations. The company continues to sell wheels around Europe and in Scandinavia and remarks that, generally, exporting across the continent is better now, due to the consistent exchange rate that has come along with the adoption in the euro in mainland Europe. Some exports continue to go to the US, but this is an area in which sales are not growing. Here “the dollar is fighting against us,” Mr Gardner explains. Even so, the company has continued to spend out on US liability cover, a significant investment in itself, in the hope that the situation will improve soon.
The remaining 70 per cent is divided between small-scale OE manufacturers (40 per cent), trade purposes (20 per cent), and public purchases (20 per cent). Mr Gardner would not be drawn on exactly what his company supplies to each customer, but he did explain that, in terms of OE, Image supplies racing teams, small OE manufacturers that require “weird and wonderful” offsets and other specialist customers.
According to Matt Neal, Rimstock has tried to avoid the perils of being caught in a “price auction” by delivering innovative products and offering benefits “you simply cannot get in the far east.” From an OE perspective these benefits include speed of design, delivery and development – a process that the company claims to have got “down to four weeks now.” 70 per cent of wheels are sold for OE purposes, while 30 per cent, including lightweight motorsport wheels, are produced for the aftermarket.
As far as exports are concerned, this is an area that has changed significantly in recent years. Ten years ago 80 per cent of the wheels produced at Rimstock would have been exported. Now the figure is nearer 30 per cent. In spite of this, the company’s turnover remains in the region of £24 million and the company supplies 34 countries worldwide, with one distributor per country. “We also have our own distributors in Germany, UK, US and France,” added Mr Neal.
The next big thing
Manufacturers agree that 17 inches is the most important size at the moment, with 15 inch rims following as the second most important. This is a situation that has changed in the last three years. Back then 15 inch sizes were the order of the day. Now they have swapped places, one manufacturer remarked. This is of course a lot to do with bulk sales. While tyres in these sizes remain popular, and therefore less expensive, wheels will continue to follow suit. The irony is that for this exact reason, these products can often be better value for consumers than 16 inch rims. 18 inches is another size that is said to be creeping up in terms of popularity. In the meantime 17 inch sizes are on top and will “no doubt will be for the some time to come.”
In terms of products, the companies are making every effort to target niches occupied by maximum value specialist consumers. According to Image Wheels’ managing director, Alan Gardner, feedback from European customers shows that the influence for new designs is coming predominantly from the US. Whereas traditionally European customers have been interested in three and five spoke designs, now they are after all kinds of “curly wurly” direction patterns, as they have seen in the states. Germany customers in particular are reported to have been requesting these “way-out” designs.
The popularity of chrome designs has tended to come and go, add’s Rimstock’s Matt Neal. “The splatter chrome especially appears to have gone for now,” he explains. Although a lot of these were bought by German customers, people often found that they encountered problems with the finish, in terms of longevity. These products were good for the tuning market, but not so good in terms of sales volume, says the manufacturer. “We’re developing some fantastic things for the future,” adds Mr Neal. One example is the 17.5/20 inch for hot hatches. “The trouble is, there are not that many tyres around that have the technology to sustain this kind of load on such small sidewalls. Some of our US wheels have these amazing Gold and Black chrome finishes, but by this stage you can be paying more to chrome the wheel than it costs to produce it.”
The company is also planning to release the RimFire, a 20 -22 inch SUV product, very shortly. This will be aimed at the up market marques like BMW X5 and Range Rover.
These may provide a taste of what comes out of the UK at the moment, but what about the future? US spinner wheels were big a few years ago, but who knows now, Barry Dixon observes. Instead, for the next big thing, “you might as well look on china.com!” Mr Dixon advises.