Laurent Reifen – “we’ve never sold so many tyres”
Following a crisis related dip in business in 2009, last year Laurent Reifen GmbH was able to once again set its sights on growth. While financial statements for the crisis year show the retreader still managed to sell more than 80,000 retreaded truck tyres and by doing so reduced its stock levels, last year turnover increased by a “clear double figure amount; we’ve never sold so many tyres,” as sales manager Dirk Schierhorn told Tyres & Accessories. Amongst other things, the Michelin Group owned retreader used last year’s business recovery to fine-tune the company for further shifts in the market.
Like many firms active in the retreading sector, Oranienburg, Germany based Laurent Reifen spent last year getting itself in optimal shape to tackle an ever changing competitive landscape. A particular industry trend is that of bead to bead retreading, a process bestowing a well made retreaded tyre not only with performance parameters closely approaching that of a new tyre, but also an appearance to match. Laurent Reifen, whose mould cure retreading accounts for 80 per cent of its total in-house retreading, also previously employed sidewall veneers if – reports Schierhorn – “the mould for this proved suitable.” While half sidewall veneering was previously the exception to the rule, last year the Michelin group retreader invested a six-figure sum in semi-automated sidewall veneer application equipment; the veneer now stretches from the bead to the tyre’s shoulder.
Above all, this provides Laurent Reifen with a key advantage: The name of the casing’s original manufacturer is not constantly on view and in the customer’s line of sight. Instead, the industrial retreader can present its own brand name on the “visually perfect” sidewall. “Thus, the customer is purchasing Pneu Laurent tyres,” notes Schierhorn. At this point it should be mentioned that Laurent Reifen almost exclusively retreads casings not originally produced by the French parent company.
Laurent Reifen holds a high opinion of bead to bead retreading. Production manager Bernhard Huppert notes it is clearly the trend. In the years to come 100 per cent of the company’s mould cure retreads will bear the “Pneu Laurent” logo upon a brand new veneer. These will not bear the well-known serif font; instead, an upper case font not dissimilar to that found on the Michelin sidewall will be used.
Although a decision to pursue full form retreading has been taken this innovation can’t be introduced across the whole range at a single stroke due to the costs associated with new tread and sidewall mould components. According to Dirk Schierhorn, all newly introduced patterns will be updated to incorporate the full form process. A retroactive introduction for products already established in the market is not planned, the sales manager adds. The changeover should take place “as quickly as possible,” says Schierhorn, who believes a complete market introduction will take at least five years. Incidentally, patterns available both in a bead to bead and a traditional retreaded version are already available – depending on casing size. Laurent Reifen offers both products for the same price.
Close customer contact sits at the centre of the company’s marketing and casing acquisition strategy. At present Laurent Reifen operates ten truck tractor units with 20 trailers within a 700 kilometre radius of its factory. Dirk Schierhorn shares that in the near future a further two trucks and two additional drivers will join this fleet in the delivery of retreaded (customer) casings and, perhaps more importantly, the acquisition of high-value, retreadable casings. The availability of such casings has developed into a veritable competitive factor during the past couple of years.
Current availability of casings and used truck tyres is strongly influenced by the dramatic downturn in new truck registrations during the global financial and business crisis of 2008 and, to a greater extent, 2009. As this occurred in tandem with a marked reduction in demand for Chinese tyres and a corresponding growing desire for retreadable, European produced tyres, the scarcity of casings available on the market has only slightly eased. As a result, says Schierhorn, companies like Laurent Reifen must invest to ensure a problem-free supply of high-value casings. Proximity to customers is thus increasingly significant, as the proportion of customer casings used in Laurent’s retreading will continue to rise; every second retread is already performed upon a customer owned casing that is then returned to the customer.
As already mentioned, Laurent Reifen focuses upon retreading casings from sources other than Michelin. The strategy employed by the French market leader, which together with its subsidiaries serves around a third of the European retreading market, faithfully follows the “Four Lives” concept in which the first retreading of a Michelin casing is marketed by the French manufacturer as a Remix mould cure retread; a second retreading upon the casing can be performed by Laurent Reifen or its sister operation based in Avallon, France, Pneu Laurent. As such, the retreading carried out by the ‘Laurent’ Michelin subsidiaries in Germany and France do not form part of the company’s Four Lives concept; the retreaders are effectively responsible for the life following the fourth Michelin life. Casings from Michelin’s competitors are however welcome at Laurent Reifen even when the time arrives for their first retreading, Dirk Schierhorn adds.
Investments made in processes, staff and the environment
Another area where Laurent Reifen strengthened its business last year is staffing. As personnel manager Nadine Knauer reports, the number of employees in 2010 grew from 150 to 182 by the end of the year, and this number is expected to further rise in the course of this year. This head count not only includes the two abovementioned drivers, but also new production employees. During 2011 Laurent Reifen also intends to appoint separate sales managers for the northern and southern regions of Germany. Furthermore, the company established its own field representative in the important Polish tyre market last year and will appoint further sales staff there as soon as possible.
In recent times Laurent Reifen has not just invested in further moulds and presses, casing management and staff. The industrial retreader, located north of Berlin, also passed its EN ISO 14001 environmental management certification last December and received official confirmation of this at the end of February. Laurent Reifen has also held DIN ISO 9001 quality management certification since 2005. This latest certification ensures “that the plant in Oranienburg produces retreaded truck tyres in an environmentally sound manner.” Particular importance has been placed upon avoiding the use of environmentally harmful solvents during the retreading process. This reduction has been in part achieved through the installation of the semi-automated sidewall veneer applicator, thus showing its benefit to be greater than simply that of process optimisation. At the same time, Laurent Reifen has fitted its entire warehouse with low energy lighting. The retreader didn’t need to fundamentally modify any of its production processes in order to satisfy the requirements of certification; instead it has made adjustments to specific details. “The audit has prompted us to become more aware of these issues,” Schierhorn stresses.
While last year was a “Record production sales year for Laurent Reifen GmbH,” which had a positive effect upon the company’s degree of utilisation and thus production costs, the company has nevertheless needed to implement price increases. As sales manager Dirk Schierhorn explains, prices in 2010 rose just once, a three per cent increase that took effect in May. This adjustment was necessary as the growth in production utilisation at the time could not entirely cover the effect of rising raw material costs, Schierhorn adds; operating margins came under pressure. This needed to be made up for in the current year. The first price adjustment took place on January 1 and saw prices increase by an average of 3.75 per cent. A second price increase for 2011 is already planned, says Schierhorn; it is necessary to respond to ongoing high raw costs.
On April 1, prices at Laurent Reifen will rise a further five to six per cent; an adjustment in line with the increase announced by the parent company for new tyres, the sales manager points out. These three price adjustments equate to a total price increase of more than 13 per cent within a year. And nobody in Oranienburg can currently say whether the increase announced for April will end up being the last for the current financial year.