A survey of 8,000 motorists Conducted on behalf of Continental in eight major international markets indicates that electric and hybrid drive vehicles are currently the subject of “remarkable” interest amongst motorists. At the start of 2008 the market research company TNS/Infratest surveyed approximately 1,000 motorists each in China, Germany, France, UK, Japan, Austria, Switzerland and the USA, asking a series of questions focused upon their current knowledge and opinions of hybrid drive systems, driving styles and battery powered cars. The feedback received showed that 36.0 per cent of those surveyed were willing to buy a hybrid drive car and a surprising 45.8 per cent expressed an interest in purchasing an electric car. “This trend holds great potential for us as an automotive supplier and provider of environmentally-friendly drive technologies,” said Dr. Karl-Thomas Neumann, Conti Executive Board member and chief technology officer, at a press conference in Austria.
Amtel-Vredestein has reached an agreement with Sibur Holding that will see it acquire Sibur Russian Tyres in exchange for 159.3 million new Amtel-Vredestein shares. Amtel-Vredestein will also carry out a $150 million share placement, and Sibur Holding has already agreed to acquire $50 million worth of these shares. As a result, Sibur Holding will own 70 per cent of the new expanded tyre operation. This deal, which values Sibur Russian Tyres at approximately US$318.6 million, promises to create “one of the leading diversified tyre producers in Europe and one of the top 10 tyre producers worldwide,” states Amtel-Vredestein.
The acquisition will give Amtel-Vredestein access to a $40 million line of funding from Sibur Russian Tyres. Media reports earlier in the year suggest Amtel needs roughly $20 million a month to keep raw materials flowing into the production process during the transition. As a result, the deal is expected to be completed in the second half of 2008.
Following the initial acquisition of Sibur Russian Tyres, the terms of the agreement call for Amtel-Vredestein to conduct a $150 million private share placement at a subscription price of not less than $1.89 per share. Sibur Holding has already agreed to purchase shares to the value of $50 million. Following a successful completion of this share issue, Sibur Holding will own 70 per cent of the new, larger tyre company and no less than 60.5 per cent of Amtel-Vredestein’s enlarged share capital as a result of the acquisition and placement. Sibur Russian Tyres chief executive Vadim Gurinov will head Amtel-Vredestein following the transaction.
Furthermore, Sibur Russian Tyres has agreed to provide Amtel-Vredestein with an interim funding facility of $40 million, subject to the agreement of the second company’s shareholders. The interim funding will be provided in two tranches; $20 million will be immediately available to Amtel-Vredestein upon signing a definitive agreement, and the balance available upon Amtel-Vredestein’s shareholders passing the required resolutions at the EGM. The amount raised through the interim funding is intended to enable Amtel-Vredestein to meet its liquidity requirements until completion of the acquisition and placement.
Amtel-Vredestein notes soberly that, in light of its difficult financial position, the transactions with Sibur Holding are “considered essential to the continued viability of Amtel-Vredestein as a going concern and, without the transactions, Amtel-Vredestein’s debt restructuring cannot succeed.”
“This is a significant achievement for Amtel-Vredestein and Sibur Russian Tyres and for their shareholders as well as all stakeholders,” commented Petr Zolotarev, CEO and chairman of the Amtel-Vredestein Executive Board. “The combination of the two businesses as well as the placement will provide the enlarged group with a stronger balance sheet and essential funding to continue operating as one of the leading global tyre manufacturers, creating at the same time one of the leading companies in the Russian market. Going forward, the enlarged group will benefit from greater economies of scale, enabling it to compete more efficiently. ”
Alexander Dyukov, chairman of the Boards of Sibur Holding and Sibur Russian Tyres, commented that “The transaction will create one of the top 10 tyre producers worldwide, and is in line with Sibur Holding’s strategy to increase the value of its tyre business.” Sibur Russian Tyres CEO Vadim Gurinov added “the Russian tyre market has a very high growth rate and the enlarged group will be very well positioned to benefit from the growth, finding itself in a win-win situation. In addition to leading positions in the truck and off-the-road tyre segments, the group gains the same positions in the passenger and light trucks tyre segments and becomes an undisputable market leader in Russia and the largest tyre manufacturer in Eastern Europe. Moreover, by this combination, we are able to reach additional synergies through acquiring an up-to-date research base, high-quality tyre brands and a wide European distribution network. From my point of view, this business combination provides us with great prospects and development opportunities.”
Russia’s economy is growing strongly, comments Amtel-Vredestein, adding that the enlarged group will be better positioned to benefit from this and compete effectively with foreign competitors. Furthermore, it states, “the parties are confident there is significant scope for realising synergies by combining the operations of the two companies in areas of manufacturing, research and development, administrative cost savings and a rationalisation of the capital investment programme.”
The 6th CITEXPO will be again held at Shanghai Everbright Convention and Exhibition Center September 17-19, with nearly 300 exhibitors showcasing their latest products and technology including radial tyres, bias tyres, wheels/rims, tyre maintenance equipments, retread materials and equipments, tyre production material and equipment and other related products.
According to the organiser of CITEXPO, Reliable International Exhibition Services Co., the two original exhibition halls have already been fully occupied by new and rebooking exhibitors at this early stage. In order to fulfill the overwhelming demand by the exhibitors, a new hall has been opened for accommodating more exhibitors and their products.
Last week, Michelin North America invited select media to Laurens Proving Grounds, its testing facility, in Laurens County, South Carolina, for the launch of its two new tyres, the Pilot Sport All-Season Plus and the Pilot Sport PS2 ZP. The tyres were put to the test in exercises in wet braking, wet handling, dry handling and comfort against competitors’ tyres.
The Pilot Sport A/S Plus, though not visibly different from the original Pilot Sport, contains technology that allows for improvements in all-weather performance, wet grip and tread-life, according to Michelin.
The tyre features three specialized rubber compaounds across the tread, helping to elevate a car’s performance in virtually every type of weather, from wet to dry to winter conditions. Directional tread pattern and wet-weather silica compound combine for extreme wet-weather control. The tapered grooves of symmetrical tread design channel water away from the tyre’s contact patch to provide excellent wet grip in wet conditions, the company said.
Goodway Rubber has been enjoying some good times over the past few years and the message from Group CEO Mr. Tai Boon Wee is that the company’s business grew by 33 per cent in 2007.
Ms Alison Wong has recently been appointed Chief Operating Officer, having overseen what are described as “unprecedented sales” during her last two years as Managing Director. The current high price of oil is impacting negatively on all sectors of industry – notably transportation and logistics, but Alison Wong, quoted in the Goodway corporate magazine Khronicle, suggests that retreading is one way to ease this pressure. She says: “Retreading is cost-efficient as a reusable resource and value for money. We can turn this threat into an opportunity with our established reputation for premium quality retreads that consistently deliver high performance, durability and safety.”
While the Reifen Essen show featured brand new tyres by the truckload, a company more interested in their end of life counterparts was Eldan Recycling. Company product manager Bjørn Larsen, speaking with T&A, said that during the show Eldan had received many visits and enquiries from people involved in the growing recycling industry. “We have received interest from Eastern European countries, such as Russia, Romania and Latvia. The market is going east. Queries have also come from customers in Turkey, and representation from Asia, from potential customers seeking turnkey systems.”
Eldan can supply tyre industry recyclers with everything from individual pieces of equipment, such as choppers, raspers, separators and granulators through to complete turnkey outfits. All equipment is built by the company in its home country of Denmark. Individual items are modular in design to facilitate a painless addition of more units further down the track should the need arise. The popularity of Eldan products is evident from the number of large outfits it counts as customers, such as German automotive parts giant ATU, who operates six tyre recycling plants with a total annual capacity of 120,000 tonnes.
Notification of the planned closure of a US Firestone factory producing automotive and industrial air springs was given to union representatives in June 27. The Firestone Industrial Products Company (FSIP) delivered a “Notice of Potential Plant Closure” for its Noblesville, Indiana facility to representatives of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW). In the notice, the company stated that the air springs market is increasingly global, making it difficult for FSIP to compete. Although no final decision has been made, the company advised the USW of the possible closure of the facility due to the losses being incurred at the Noblesville plant.
Rising fuel costs have prepared fertile soil for hybrid vehicles to enter the motoring mainstream, and this in turn is creating an unprecedented demand for lithium-ion batteries, the fuel cell of choice for hybrids. To meet this anticipated surge in demand, Robert Bosch GmbH and Samsung SDI Co. Ltd. are establishing a development, manufacturing and sales joint venture. The new South Korea based company is to be named “SB LiMotive Co. Ltd.” and will start operations in September 2008.
Each company will hold a 50 per cent shareholding and be equally represented on the board of management and on the board of directors. The venture’s foundation is, adds Bosch, still subject to approval by antitrust authorities.
Following the construction of a bull wheel measuring 24 feet in height – the largest of its kind in the world – Titan Tire has begun testing its 63-inch tyre. Built in February 2008, the tyre required an equally imposing piece of testing machinery; a prerequisite more than adequately matched by the corporation’s newest piece of bespoke engineering. The bull wheel is used to run the tyres at varying speeds and loads, allowing the performance of the tyre to be measured in controlled conditions.
The tyre, weighing in at 12,500 pounds (easily exceeding five and a half tons) and measuring 13.5 feet – or just over four metres – is the first of its dimensions manufactured at the firm’s Quincy, Illinois plant. In testing the tyre, the gargantuan bull wheel is loaded with weights approaching 500,000 pounds and used at speeds ascending to 45 mph. The company compares the bull wheel to NASA’s device for testing its handling gear for space shuttles, claiming their wheel is much larger.
This month Peter Wayte, Product Support Officer in the Goodyear Dunlop Technical Centre, celebrated training his 150th internal employee on a course called Technical Tyre Training. The course assists Goodyear Dunlop employees in understanding all the elements of a tyre, from how to read a tyre size to the technologies behind car, motorcycle, truck and farm tyres. It aims at improving personal skill level within the Goodyear Dunlop working environment educating employees in product attributes and tyre test wins. This creates a sense of pride in the brands and highlights Goodyear Dunlop’s premium products in the market.
The Technical Centre is designed to deal with all customer and technical enquiries from the public and dealers as well as training internal and external stakeholders in tyre technicalities. Goodyear Dunlop reports that it is dedicated to the training and development of employees and aims at cultivating high performance standards across the wider organisation.
The growing demand for large radial agricultural tyres is behind Titan Tire’s decision to install ten new 130-inch cure presses. Plans are underway to install the equipment by the first quarter of 2009, and the company says that if demand is sufficient, and additional ten presses could be installed in the second quarter of 2009.
Canada-based worldwide wholesale operation, Hercules International, had long considered how to develop its ‘global’ position. Then, at the end of 2007, Corporate Business Development Officer, Joe Recchia announced plans to maintain a presence in all the major tyre trading routes by opening offices in Latin America, South East Asia, the Middle East, China and Europe. Then Hercules was aiming to grow “from international to global player in 2008.” Seven months later, those offices are all either running or near opening. Tyres & Accessories spoke to Joe Recchia and Hercules vice president sales and marketing Josh Simpson and found out how the plans are progressing.
Hercules International took the decision to move from an international to global business in 2007. Throughout the process the company’s intention has always been twofold: to develop the position of its key Hercules brand in the global marketplace; and to support rather than compete with local customers. From Recchia’s point of the view, the driving force behind the global move is to be present in each area with people who know that specific market in order to develop appropriate product lines and therefore better serve customers.
From T&A’s perspective the biggest news is that Hercules’ plans are progressing rapidly in Europe. The wholesaler has already made the necessary arrangements (through a third-party logistic company) to run a warehousing operation in Rotterdam. This move is being described as a relatively temporary action and is therefore expected to last around three years, as the company’s is continuing towards its long-term goal of acquiring a “strategically placed presence in the European market.” Recchia wouldn’t be drawn into giving further details on what that might mean, but the company is definitely considering acquisition options. In addition, the company will be ready to open a new office in Barcelona in the next 60 days.
But its not just about getting people on the ground. It’s also about product development. According to marketing vice president, Josh Simpson, one of the reasons the Hercules team attended May’s Essen Show was in order to identify which particular product offerings are suitable to which markets – with a view to adapting the Hercules range as required. “It is clear to us that the EU sets the standard [in terms of product development and design] and the US follows within a certain period of time,” Simpson commented.
Currently European business only represents around 10 per cent of Hercules’ overall sales, but it clear that executives want to increase this in ways that support its model of offering geographical exclusivity to customers who buy the Hercules brand. Hercules International is also continually reviewing which markets have particularly strong wholesale influence and would therefore make a good European base. Simpson was reluctant to give specific details about exactly what this might mean in terms of acquisitions. He did, however, agree that the Germany and the UK are both examples of wholesale-strong markets.
The first ‘global’ office to get underway was Hercules Latin America earlier in 2007. Founded by virtue of the company’s acquisition of TDI, the Latin America regional office is based in Miami, USA, but seeks to take advantage of its strong geographical position in relation to both the Latin American and Caribbean markets. This warehouse is now fully manned, with an additional seven representatives generating sales on the road.
Next up were offices in the Middle East, South East Asia and Europe. The Singapore office, which covers the Far Eastern markets with the exception of China, is already up and running. More recently Hercules gave Anirudh Rathore responsibility for the new Dubai office. According to Recchia, he has been training in the Ontario, Canada head office for the last months and is now fully prepared for his new assignment. Rathore is due to enter the marketplace in July.
And finally, for now, there is the Qingdao, China office that T&A reported on earlier this year. This operation is poised to expand into the company’s global distribution centre shortly – company representatives out there are already staffing the new warehouse, while they finalise the location.
Hercules International describes itself as a wholesaler to wholesaler business. However, with the amount of tyres the company produces across its various private brand labels and across a number of different factories – you may as well call them a tyre manufacturer. And with the responsibility of producing come the pressures – which are particularly sever at the moment. Everyone has heard about China’s decision to up VAT rates on tyre production and the recent difficulties associated with securing shipping, but were you aware of the effects of the Olympic games on production capacity? When you add in the fact that demand for steel, oil and rubber and fillers is all “far outstripping supply”, you can see that it is not as easy as it once was to get tyres in China.
As a result, Hercules’ plans for to enter China in a bigger way via the OE route are currently said to be on ice. Hercules representatives first mentioned the OE concept at the end of 2007, were the programme was expected to be well underway by the middle of 2008. However, the Olympics, increasing raw material price pressures and the lack of supply on some product fronts mean these plans are well and truly on-hold for the time being.
Hercules dealing with challenges on the home from, as the whole North American market faces relatively a tough time. However, despite these pressures, company represents are confident of Hercules’s ability to ride the storm. “Hercules remains stable with growth… and [we] predict further incremental growth,” vice president for marketing, Josh Simpson commented. Looking forward, the company is on-track for an even more optimistic outcome: “We are looking at programmes that will double the size of the business in the next three to five years,” Joe Recchia commented.
There are no plans to bring in any more additional brands to the Hercules stable, which currently includes brands such as Hercules, Ironman and Merit, so this means the company’s ambitious targets rest heavily on the success of the success Hercules marketing programme and the geographic exclusivity the company offers with it.
Capacity at Apollo Tyres’ South African facilities will rise by one fifth following a £12.9 million investment in its wholly owned Dunlop Tyres International (Pty) Ltd, South Africa (DTIPL) facilities in Ladysmith and Durban. “We are expanding the capacities of both the South African facilities by approximately 20 per cent during this fiscal at an estimated investment of 200 [million] South African Rand,” stated a senior Apollo Tyres official.
At present the combined capacity of the two factories is approximately 180 to 190 tonnes per day – a 30 to 40 tonne per d ay increase on levels two years ago. The majority of production is focused upon truck and bus radial products, with 15 per cent of capacity used to manufacture OTR tyres for the mining sector. These last products are mainly sold in Europe, Australia and South Africa.
Less than three weeks before the Essen show, Brazilian retreading material supplier, Borrachas Vipal demonstrated just how much the company developed its export business. The news was that the company that had long been market leader in Brazil had chosen Mexico as the site for its first non-domestic production plant. At the time Vipal’s International Business Director, Maria Locatelli, explained that Mexico was chosen because it is an “entrance door” to the US. However, during an interview with Tyres & Accessories at the recent Reifen exhibition, Maria Locatelli explained that increased production in Mexico would also benefit European customers, both economically and due to shorter delivery times.
The main strategy behind the investment is to make use of Mexico’s North American Free Trade Agreement (NAFTA) ties. However, the company also intends to capitalise on the production cost benefits available in the petrochemical producing country, with a view to passing a saving onto consumers in export markets like Europe. “This is not the main target, but there will be possibilities to supply [Europe],” said Maria Locatelli.