Now at a first glance you might think my headline suggests this editorial will be something to do with the fact that Michelin North America (MNA) and Continental Tire North America (CTNA) have thrown their weight behind the tyre-life concept. Car manufacturers Ford and DaimlerChrysler were the first to advise drivers to replace their tyres after six year regardless of tread depth. Bridgestone Firestone North America Tire (BFNAT) followed suit last November. However, that’s all I am going to say on this late-breaking subject here.
Instead I want to talk about another type of maturing. Tyres & Accessories recently came across a report conducted by Plimsoll Publishing that looks at the effect the aging population might have on UK tyre manufacturers and distributors. Apparently 42 per cent of the leaders of the UK’s top 242 tyre companies will be over sixty in the next 5 years and 23 per cent will breach 65 in the same period.
So what’s in store for the so-called baby boomers? Plimsoll’s study looks at the impact these retirement age directors might have on the financial performance and future direction of the companies they run. Collectively the UK top 242 tyre manufacturing and distribution companies are led by only 487 directors, varying in age from 21 to 84 years. Only 13 directors are under 30, while 114 are aged 61 and over.
So is the market as appealing as it was 10 years ago? Now I would like to make it clear that I am not saying there is any kind of negative relationship between the age of directors and performance, but Plimsoll’s analysis reports that 41 per cent of the 242 companies analysed are in clear financial difficulties and 21 per cent of companies failed to make any profit at all last year.
So how many of the 487 directors are ready for the stresses of the next 5 years? Some don’t appear to have a choice. David Pattison, senior analyst maintains: “It’s debatable how many can afford to retire. If they are thinking of selling up then the business needs to command a good price if it’s going to finance the winters in the Caribbean and not all…are ready for this anyway.”
According to Plimsoll this is the main reason why directors are hanging on well into retirement. But the myth that your enthusiasm and motivation fails with age is completely unfounded as 60 companies run by directors over 60 increased both sales and profits in the last year. So can the industry offer the next generation of directors an exciting future?
It seems so. The average directors’ salary last year was £90,003 compared with the UK average of £67,500 per year. Directors’ fees increased by 83 last year and top earners can see this salary rise to over £180,000 per year. However this is because the job typically involves long-term commitment over eight years, compared with the UK average of just over five years.
So, it seems, while the majority of industry leaders are likely to be contemplating retirement, they are also leaving a metaphorical inheritance for the next generation of tyre entrepreneurs. And maybe it doesn’t matter how old the tyres in your warehouse are, after all.