Tyres & Accessories sister publication Neue ReifenZeitung recently published reports that Continental has been considering moving its truck tyre production East and linking it with certain Russian tyre makers in the wake of the announced closure of its high tech Hannover-Stoecken truck tyre production plant. For a number of years the Russian tyre manufacturer Nizhnekamskshina has worked together with Continental within the framework of a technical agreement, having previously been involved in a technical partnership with Pirelli. The possibility of forming a 50:50 joint venture has been talked about since 2007, however to date the entire result of this joint effort is that the Russians are building a truck tyre factory and Continental is “only” contributing know-how and organising production processes, as well as delivering all the required equipment. The target is said to be for production capacity to exceed one million all-steel tyres per annum.
Australia’s JAXQuickfit Tyres Celebrating 60th Anniversary in 2009
Australian tyre retailer JAXQuickfit Tyres is marks its 60th anniversary in 2009, and in this diamond jubilee year the company is also celebrating its third consecutive year of double-digit growth. From humble beginnings in 1949, Jax Tyre, as it was then known, has developed into AUD$100 million a year business with a network of 72 outlets throughout Australia. And having covered much of its home market, JAXQuickfit says it is now looking at expansion overseas.
Porsche has increased its stake in Volkswagen ordinary shares to 50.8 per cent. Analysts Morgan Stanley say that, while the timing of such a move was impossible to predict, this is absolutely in line with Porsches stated strategy of ultimately moving to 75 per cent of Volkswagen and seeking a domination agreement.
With this move, Porsche also acquires indirect control over Scania through VWs 68.6 per cent voting stake in the Swedish truck maker. Porsche has made it clear that is has no strategic interest whatsoever in Scania or any interest in buying Scania shares. However, Swedish law requires Porsche to make a mandatory bid for Scania.
The announcement had a phenomenal response at the stock market where, following publication of Schaeffler’s statement on EU approval, tendered shares in Continental grew by as much as 50 per cent before levelling off at around 36 per cent up, in response. Why? Because up to this point investors had become decidedly nervous about Schaeffler’s ability to complete the deal and the EU announcement was seen as a sign that the deal as a whole is on track. Due to the well-documented contraction in credit markets bankers had been scratching their heads about where the necessary financing would come from and whether the supporting banks would be able to come up with cash.
Stapleton’s (Tyre Services) Limited has agreed to buy 56 Central Tyre stores from Pirelli UK Limited. The deal, with a price-tag to be determined when the transfer of Central’s properties is completed, sees the tyre retailer and distributor expand its retail operation from 45 stores to a new total of 101 throughout the UK. The proposed transaction includes both retail and commercial tyre fitting outlets and the existing Central Tyre workforce is expected to transfer across to Stapleton’s upon completion of the sale. Initially Stapleton’s plans to concentrate on integrating the new stores into its network, meaning the company will be responsible for STS Tyre Pros, STS Tyre & Exhaust and now Central Tyre-branded outlets. It is not clear if and how this might change in the future.
Sinochem International Corporation subsidiary Sinochem International (Overseas) Pte Ltd. has Bought a 51 per cent stake in Singapore-based natural rubber producer GMG Global Ltd. for SG$ 267.98 million (£106.4 million). GMG operates natural rubber business in Africa and elsewhere with plantations in Cameroon and Ivory Coast and processing facilities in Indonesia. Amongst other things Sinochem International expects the deal to help position it for growth in the global rubber market. China contributes to over 20 per cent of the worlds natural rubber consumption but only produces 7 per cent of the production.
GiTi Tire is looking to increase its market presence in the truck tyre segment by implementing a TBR service network. The company has since 2006 built up a comprehensive truck and bus tyre product portfolio incorporating two premium quality brands – GT Radial and Primewell – both of which have been QS9000, ISO9001 and TS16949 accredited and are specifically designed and manufactured to meet the ever-changing demands of today’s European commercial vehicle operators. The entire TBR range is carefully selected to ensure the correct pattern is available for each application: regional, long haul, mixed service or municipal. In fact, such is the growth of the company’s sales presence in both TBR and PCR that two strategic business units have been formed to cope with the demand.
Veyance Technologies Inc., exclusive manufacturer of Goodyear Engineered Products, has appointed Joseph Gingo, chairman and CEO of A. Schulman Inc., to its governing board. The election of Mr. Gingo increases the size of Veyance’s board to seven.
“Joe’s broad experience includes leading our business ten years ago when we were a division of The Goodyear Tire & Rubber Co.,” said Veyance president and CEO Tim Toppen in a statement. “He fully understands our customer-focused, market-back business philosophy and the importance of innovative products and services.”
July saw all the leading tyre manufacturers report lower than expected earnings as a knock-on effect of high raw material prices and lower new vehicle demand. Everyone saw this coming. The 11.3 billion euro “sneaking” bid ball bearing maker Schaeffler Group pitched to buy Continental AG was distinctly less predictable. In the days that followed Continental’s management went on the defensive and cried foul to financial regulator Bafin, making what had up till then been the largest takeover bid in Europe into the largest hostile takeover the continent has seen this year.
As an increasing number of voices speak out in favour of the proposed Conti/Schaeffler merger, Continental AG executives have called in a number of high profile investment banks to advise it on how best to defend its position. The most recent addition to this team is Deutsche Bank, which joins Goldman Sachs and JPMorgan as advisors.
The strategy behind the defensive manoeuvre appears to have two key objectives: to wrest complete control out of the clutches of the rapidly advancing Schaeffler; and to raise the suitor’s bid. Germany’s Handelsblatt reported that Conti chief executive, Manfred Wennemer told board members 89.74 euros per share (roughly 30% higher than the Schaeffler’s current 70.12 euros per share bid) is a ‘fair market price,’ for the tyre and automotive supplier. Other sources quote board members as saying 90 to 100 euros a share would be better. Could this be the target level the defence team will be seeking to achieve? And if so, how can Conti defend its position?
Approximately £90 million is said to be earmarked for Qingdao Yellow Sea Rubber to assist it move production to a new facility. This money is to come from controlling company China National Chemical Corporation (ChemChina), and the move of production from its headquarters to an industrial park will allow an increase of all-steel radial capacity to 1.8 million units per annum in 2008, and when its semi-steel radial production moves later the overall annual capacity in the facility will be 3 million units. Additional all steel and semi-steel capacity will be added, with all construction expected to be completed by the end of next year.
HiQ has unveiled plans to accelerate the companys franchise offer by transferring 109 existing company-owned stores into 15 regional zones for regional as well as national investment. The news came in parallel with the launch of HiQs sponsorship of this years British Touring Car Championship. Company representatives told Tyres & Accessories that this seven figure motorsport investment represents the single largest marketing investment Goodyear Dunlop has committed to the HiQ brand.
In a further twist, HiQ managing director Neil Burrows announced that he and three members of the management group are interested in investing into a significant part of the network themselves, demonstrating they really are willing to put their money where their mouths are regarding the franchises development. Therefore, in the interests of transparency, Neil Burrows and the other three as yet unnamed managers will be assigned to special projects (such as managing the BTCC sponsorship deal) within the Goodyear Dunlop group.
The news that Goodyear Dunlop is effectively franchising-off 109 of its retail outlets also goes some way to further explaining the recent decision to transfer former Goodyear Dunlop Commercial Director, Robin Sharpe, to “special projects.” With Burrows team’s decision to bid for HiQ in mind, it now appears that Sharpe will manage the HiQ team until the final announcement regarding the franchising of the HiQ equity branches has been announced.
Goodyear Dunlop representatives told T&A that the jobs of all those involved are secure and, in the event that their bid is not successful, they will be free to return to their former positions. The company will be unveiling details of its nationwide franchising programme on 31 March, with the definitive structure following in the summer.
At the time of the announcement Goodyear Dunlop Managing Director Mark Brickhill stated: “The fact that Neil and his team wish to invest in HiQ is a signal of the confidence that management have in the future success of HiQ. However, it is vital that we have complete independence and transparency during the franchise application period, which is why we have appointed Robin to lead the HiQ team during the next few weeks.”
“There are huge opportunities in the vehicle servicing market due to the lifting of restrictions on who can carry out servicing work on vehicles without affecting warranties. This, coupled with aggressive new product development plans from Goodyear and Dunlop, means that HiQ is in a strong position to grow significantly over the coming years.”
The total number of HiQ outlets nationwide as of February 2008 stands at approximately 120. The three-year plan unveiled last year is to more than double this number by 2010. The target now is for 60 more retail franchisees to have joined the network by the end of 2008.
Neil Burrows has previously stated that the company is initially interested in attracting franchisees in the North West and within the M25. While this is still true, the strategy for 2008 is also to fill gaps in the market. For example, at the time of going to press, there wasn’t a single HiQ outlet in Norfolk. “Longer term we are not limiting ourselves to 250 outlets,” Burrows commented, explaining that in the future retail outlets would be run by a combination of single centre owners and multi-store franchisees. The example of one franchisee in Cumbria exemplifies the way a multi-store franchise might operate. This franchisee is exclusively responsible for HiQ sales in the Lake District and as such he has the opportunity to enter into dialogue with the company regarding development of further HiQs in the area.
Over a year since HiQ relaunched itself as a car and van only tyre specialist, plans to upgrade the look and feel of the network continue to progress. 30 outlets are already refurbished in what are still the early stages of three to five year upgrade plan. HiQ’s novel use of the Internet as a sales tool is also said to be expanding following the system’s soft launch last August. While sales generated through the online system still represents “less than 5 per cent” of overall sales, this is expected to increase significantly as the company adds additional tyre brands and servicing options to the system.
Seven-figure sponsorship investment
While the launch of HiQ’s maiden year as title sponsor of the British Touring Car Championship (BTCC) may have been upstaged to some extent by the news of the radical changes within HiQ’s ownership structure, it would be a mistake to underestimate the significance of this deal.
“The HiQ business is a core part of Goodyear Dunlop’s plan for profitable growth and [the] HiQ MSA British Touring Car Championship launch is evidence that we are continuing to invest to build HiQ as a vital channel to market for us. The HiQ network growth will be through franchising. Our existing franchises have been tremendously successful and there is significant interest from existing and potential new franchisees in joining us to invest in HiQ,”
During the BTCC/HiQ launch press conference Neil Burrows explained that he first entered talks with the BTCC series director and administrator on the subject of a sponsorship deal roughly a year ago. According to Burrows, the arrangement works at every level and the partnership “really has legs” for future development.
One example of this is the running of race evenings in outlets near race meetings, featuring racing stars and experts. The first of these will take place at the HiQ in Grays, Essex, and is expected to present a strong PR and promotion opportunity for the brand. Apparently the only problem with this kind of event is there isn’t enough races in the season to cover all 120 HiQs.
Another example is the discount promotion HiQ is currently running, with HiQ offering discounts of up to 20 per cent on “race track inspired” Dunlop tyres at stores across the country as a way of celebrating the tyre retail chain’s first year as sponsor of the British Touring Car Championship.
“We are delighted to be sponsoring the MSA British Touring Car Championships. It is a huge development for HiQ and we want to share our delight with customers. We have agreed to knock 20 per cent off a range of brands,” HiQ managing director Neil Burrows commented, adding: “The BTCC has proved that it can deliver high value of advertising worth, with live ITV coverage, the biggest UK motor sport attendance figures and broad media exposure. It gives HiQ a perfect opportunity to promote our unique offering as we re-launch and grow our network across the UK.”
Former Goodyear Division Forms China Joint Venture
Veyance Technologies Inc., formerly Goodyear Tire & Rubber’s Engineered Products division, has entered into a joint venture with Ruiyuan Rubber and Plastics Co. Ltd. to make conveyor belts in Yanzhou, China. Veyance said the new entity, Shandong Aneng Conveyor Belt & Rubber Co. Ltd., is the largest manufacturer of conveyor belts in China, with 20 production lines producing more than 12 million square metres of conveyor belts each year.
Vredestein (UK) Ltd managing director, Bert Stellinga, left the company on Friday 7 September. According to company officials, there are no plans to appoint an acting managing director and are no immediate candidates for the newly vacated position. Tyre & Accessories understands sales and administrative roles will be headed up from within the existing team while a suitable replacement is found.
Nokian Tyres has officially confirmed the rumours that it is negotiating a factory project in Kazakhstan. The company reports that negotiations are ongoing, and as of August 24 no agreements have been made. Nokian aims to finalise the negotiation project before the end of the year.
According to previous information supplied to Tyres & Accessories, Nokian tyres may be manufactured at the US$200 million factory being built in the national capital by Kazakhstan’s Ordabasy Corporation. This new plant will have an annual capacity of 4 million tyres when in full production.