Marangoni to Restructure “Tyre Retreading” Business Area
“Our company, like other companies that operate in the tyre sector, is not, and has not been, an island in itself.“ With these words, Brenno Benaglia explains the reach of the current economic recession and its consequences, which are shaping up to be structural rather than cyclical. Despite a clear cut in truck and passenger car retread production and sales figures, the sales & marketing director for Marangoni’s Tyre Retreading business area points out that the Italian company is sticking to the growth and expansion strategy it presented two years ago.
Europe-wide, the sales figures for retreaded truck tyres have dropped between ten to 20 per cent, Brenno Benaglia estimates. In Italy, where market leader Marangoni sells about three quarters of the output from its Rovereto factory, sales have, for example, gone down 15 per cent. However, figures can differ considerably depending on the situation in each respective European market, the sales and marketing director adds. And although Mr. Benaglia also thinks that retreading will in the mid-term gain market share over new tyres, the current situation begs to differ.
The anticipated pan-European downturn with regards to new truck tyres is between ten and 15 per cent. “I think that the new truck tyre sector has lost less than the retreaded tyre sector”, he stresses. In part, this situation could be explained by increased competition coming from cheap Chinese imports – in particular during the first half of the year – and through the inferior quality of their retreadable casings, which over longer periods are sometimes driven down to their steelcord. However, Mr. Benaglia detects “decreasing market attention” when it comes to new tyres arriving from China.
“I am certain that this type of crisis will help the retreading sector,” Brenno Benaglia continues, pointing out the acyclical character of the retreading business in general: During a crisis, customers more often contemplate the re-use and recycling of products, including tyres.
The fact that Marangoni has only lost about nine per cent of its turnover in the highly important Italian home market while the overall market has lost about 15 per cent seems to indicate one thing: the “Tyre Retreading” business area has, despite the crisis, a comparatively strong footing. Nevertheless it is important to continue taking appropriate measures.
One of these measures, for example, is the closure of the factory in Feltre where Marangoni produced retreaded passenger car tyres; production will continue at its facility in Rovereto. As Mr. Benaglia notes, the decision was based on concentrating the production at the company’s main factory and thus “maximising synergies and manufacturing efficiencies” by bringing together the production of retreaded passenger car, light commercial, truck and OTR tyres under one roof.
Further “necessary structural actions” in order to assure the competitiveness of the business area and the whole Marangoni Group, which generates up to 65 per cent of its corporate turnover through its retreading business (retreading and material production), will include a “reduction of the workforce” once other methods of lowering output to match demand have been exhausted. As pointed out, negotiations with trade unions on the shape and form of any such lay-offs are currently under way. In addition, the relocation of industrial tyre production from Italy to Sri Lanka will be accelerated. By March 2009 the ramp up of the first phase at the new Sri Lanka site will be completed. Altogether, these interventions will impact the business area’s workforce by approximately 150 people.
Two years ago, Marangoni Tyre Retreading announced a growth and expansion strategy aimed at rooting the business area more securely in other European markets following the perceived saturation of the Italian market. Marangoni will stick to this strategy, Brenno Benaglia points out. While Marangoni is presently already the leading European OTR retreader and is well represented in almost every single European market (except perhaps in the Iberian peninsula), the company wants to redirect more of the retreaded truck tyres produced in Rovereto (the plant’s annual production capacity is stated at 200,000 units while utilised capacity is said to be 70 per cent) to other strategic European markets such as France, Great Britain or Hungary. “Germany is not in our immediate plans”, Mr. Benaglia adds.
The territorial expansion will be supported by the development of new products that build upon “the experience acquired over more than half a century of operations in the tyre retreading sector” as well as “a significant commitment to research”. The Marangoni Group Research Centre is currently starting the production of a series of new compounds for mould cure retreading (which accounts for about 87 per cent of the production at Rovereto) that will reduce rolling resistance and consequently lower fuel consumption. This range includes, for example, product lines such as “Ecoenergy” and “Ecomaster”.