On 3 November Michelin announced a series of pan-European tyre manufacturing restructuring plans designed to address the dual pressures from the on-going negative effects of the 2008 global financial crisis and the sharp increase of low-cost imports – especially in the truck and bus tyre segment. In short this means the closure of its Ballymena truck tyre plant, alongside investment in its Dundee and Stoke facilities; as well as the closure of its Pneu Laurent retreading operation in Germany; not to mention further significant investments and some closures in Michelin’s Italian tyre production plants.
VW, emissions and the implications for tyre testing
In mid-September the emissions hit the fan for VW. What began with an admission that half a million Golfs and Beetles were not showing the right emissions values in lab tests, quickly became a global scandal involving 11 million vehicles, disastrously affecting the group’s share price, resulting in the ‘restructuring’ of the firm’s global leadership and worst of all affecting confidence in both VW and the wider automotive and automotive testing industries.
While ChemChina’s deal with Camfin to take over Pirelli officially got under way this month, not everyone connected to the economy in the People’s Republic was looking so positive. The stock market has been in freefall and industrial production looks to have taken a big hit. The Chinese state’s answer? To devalue the national currency (the yuan renminbi or RMB) three times in a week and make already cheap Chinese exports even cheaper.
Game theory: talk of a Grexit teaches us to expect the unexpected
The Greek people just voted “no” in their recent referendum on whether to accept bail-out terms that would have meant tougher austerity measures for the domestic economy. At the time of going to press, the consensus is that this move will be interpreted as a no to the euro and it has prompted much speculation that Greece will be forced to leave the eurozone, return to the drachma, create a new currency and/or some combination of the above. Of course, any economic change of this scale is bound to have an impact on the way business is done across European boundaries. But as well as the direct practical implications, a number of key features of the saga provoke wider comparisons.
A couple of months ago we discussed the “restructuring” of relatively large and modern Chinese manufacturer Deruibao Tire. Back then, Qingdao Doublestar was top of the list of firms connected with an acquisition/cooperation/merger rescue orchestrated by the local government. A month later government-owned ChemChina announced that it was buying Pirelli. This latter point has been covered in some depth in the pages of Tyres & Accessories, especially in our April edition. The Pirelli/ChemChina story will no-doubt garner more attention as the very complex outworkings of the deal are walked out, but what remains of interest is the way in which both the local Chinese market and the global industry are engaged in a period of both parallel and inter-connected consolidation.
This month I went back to school. Tyre 2015 – the fourth International Tyre Colloquium, hosted by University of Surrey to be precise. While much of the science was beyond those of us that don’t work in R&D, the concepts behind the really technical stuff are fascinating. And what’s more, they offer a unique insight into what is on the horizon in terms of tyre development, vehicle dynamics and indeed original equipment (OE) trends.
In case you haven’t heard, as much as 65 per cent of Pirelli is in the process of being sold to ChemChina. It’s a complex plan and there’s a long road ahead, but the deal has been done and so takeover wheels are in motion (see page 28 for complete coverage of this part of the story). So what’s next? The deal can’t fail to have an impact at Pirelli, but what about the other top five tyre manufacturers and beyond? We hinted at market consolidation in this column last month, with reference to restructuring proceedings at Shandong Deruibao Tire Co., Ltd and possible contagion in China; and Pirelli CEO Marco Tronchetti Provera made the market aware of that he was planning to sell his stake within two years in January 2014. But few would have named this particular bidder and this particular timing. Now we are faced with the possibility, even the likelihood that the Pirelli/ChemChina deal is going to precipitate further micro and macro consolidation within the tyre market - even a re-shuffle of the tyre industrys top 10.
No sooner had Shandong Deruibao Tire Co., Ltd. entered into apparent “restructuring” proceedings on 7 February then we at Tyres & Accessories started hearing about it on the grapevine (see page 40 for full coverage of this story). Of course, companies face difficulties in any business from time to time, but this case has particular resonance with many because it is emblematic of what is going in China. There are two things the market is interested in - what’s behind the pressures Deruibao are facing and what the knock-on effects will be.
Global markets and tyre markets interact with each other. With economics and indeed the tyre market being more “global” than ever, events in one market are bound to have a greater impact on other markets than ever. And with Europe having experienced its share of political and especially economic instability in the last decade, while […]
As the evenings draw in and the temperatures drop, people not only make preparations for Christmas, but also consider the pros and cons of the last 12 months as well as look forward to next year. When it comes to the tyre business it is no different, I am sure we are all looking forward to our Christmas break – but this is also the season for stock-taking, both metaphorical and literal.
Transport is changing, which means the tyre business will too
Towards the start of October I had a chance encounter with a University of Oxford academic, researching the economics of Transport. Generally people understand that there is a certain cache associated with such a role. And people may have an idea of what life is like for academics that are part of elite institutions. But at the same time those in industry often question how close to the market and how practical the suggestions made by such academics really are. Talking to Dr David Bonilla (Senior Research Fellow in Transport, Energy Economics at St. Anne’s College, Oxford) between speeches at Goodyear’s recent fleet symposium really brought this home (See our complete Fleet Business feature in November’s Tyres & Accessories for more on the subject).
Faster than ever – online business is an increasing feature of the tyre sector
Super-fast broadband is now commonplace across the UK. According to the telecoms regulator Ofcom, the average speed in the UK is now 18.7mbps. Even in rural areas they are generally getting speeds of 13.6mbps. To put this in perspective, the UK average five years ago was 4.1mbps and at that time many places were not getting speeds as high. But what’s all this got to do with tyres? The specific answer is that this month we are covering the “Online Tyre Business” in some detail. But the more general answer is because it is increasingly prominent part of our culture and therefore tyre-buying consumer behaviour. But first another statistic.
Is Hankook the current UK truck tyre market leader?
It seems we have a new UK commercial vehicle tyre market leader - Hankook. As well as featuring “Industrial and Speciality tyres” from pages 58 to 69 of this September’s edition, this month we have also taken a detailed look at the development of UK truck tyre market. This meant speaking to high level contacts at various manufacturers, wholesalers and third-party analysts in order to produce an original analysis of the status quo. Our analysis was compared to a similar exercise Tyres & Accessories undertook in 2009 in order to give the overview some longer-term perspective. The results are published on pages 24 to 43 for your reading pleasure and engagement.
In this month’s magazine (July 2014), as well as our the conclusion of our comprehensive review of the Essen Show (see page 40 onwards) plus features on manufacturing (from page 24) and batteries (page 8+), we report on the potential “Return of US tyre import tariffs” (on page 30). Reading this article, you could be forgiven for thinking you had stepped into a time warp to 2009 where proceedings followed a very similar course. This time round, the potential implementation of a second round of import US import tariffs aimed squarely at China have fermented rumours about whether anything similar is likely to happen in Europe. So will it?