Apollo Looking For Acquisitions
Armed with a US$35 million loan from Industrial Finance Corporation of India (IFCI), in Washington, Apollo Tyres India is on the lookout for acquisitions. The companys Chairman-cum-Managing Director, Kanwar Singh, said the company was open for acquiring tyre companies in the country and was in talks with a number of them. There is no time frame for going for acquisition, but we are open to the idea, he said.Apollo Tyres is aiming to bring down its borrowing cost by 50 per cent from current levels and is confident to reach a turnover of US$415 million during the current financial year. Commenting on reducing borrowing cost, Kanwar Singh said, Not only we are expecting a steep fall in borrowing cost, but measures like a cost cutting drive will also bring in much better control.
Continue Reading“Michelin – The BMW Of The Tyre Industry”
Business newspapers in France and England are commenting on a paper from the french analysts Gaetan Toulemonde and Alexis Boyer both from DB Global Equities are recommending Michelin shares as a clear buy. The share price - at about 31 Euros at present - has, according to the analysts, the potential to rise to 50 Euros within 12 months. Michelin is seen by them as the BMW in the tyre industry with strong brands and an excellent brand strategy. It is expected that Michelin will announce in a press conference at the end of February a turnover for 2002 of about 15.7 bn Euro and an operating profit of 1.1 bn Euro. For this year the company is aiming for a turnover of more than 17 bn Euro and an operating profit of more than 1.2 bn Euro. The stock capitalisation at present is 4.6 bn Euro.Michelins strategy has been focused for years on a significantly improved product mix. 5 years ago 60% of all tyres produced were bread and butter tyres, but this proportion has been improved. Today, standard tyres account for about 45% and shortly this will come down to 40%. Under the leadership of Edouard Michelin, in recent years the Group has drafted its profit and loss expectations very precisely and has been able to achieve its goals. It is the declared target of the management to increase the operating profit from the current 7 to 7.5% to 10% from 2005. This is easier said than done and market conditions can change overnight; for example, a possible war with Iraq could lead to much higher oil prices and higher costs for all other raw materials. On the other hand the automotive suppliers are facing in North America extremely fierce competition and the automobile companies General Motors, Ford, and especially Chrysler, are trying to get their suppliers to subsidise them again by forcing them to reduce prices. In this climate it will become very difficult to increase prices, or even to ensure that recent price increases will stick.
Continue ReadingPrivate Brands
The number of tyre brands available continues to grow, due in some part to an increase in private brands. We look at whats available and the benefits - or otherwise - to the manufacturers, the distributors, the retailers and not forgetting the consumer. Will the numbers continue to grow and if so, are we on the way to emulating the United States, where private brands make up half the market?
Continue ReadingContinental To Be Official Partner Of 2006 FIFA World Cup
On January 21st Continental AG set the seal on its participation as an official partner of the 2006 FIFA World Cup. The agreement was signed by Joseph S. Blatter, President of FIFA, and Manfred Wennemer, Chairman of the Executive Board of Continental AG - in the presence of Franz Beckenbauer, the President of the Organising Committee of the 2006 FIFA World Cup™ and other guests from sports, business and politics - at the Technology Center in Hanover-Stöcken.Wennemer emphasised that this agreement documented Continentals ongoing involvement in a sport that links and thrills millions of people. Football is the game that attracts more attention than any other sport in Europe and - as demonstrated during last years world championship in Japan and South Korea - also worldwide. He was sure that the world championship in 2006 would be the outstanding sporting event of this decade in Germany. Its commitment as an official partner of FIFA would provide Continental with an unparalleled marketing platform in all international markets.Continental is one of 15 partners involved in global sponsorship. Additionally, there are six national sponsorships for the 2006 World Cup. And the sponsorship is not only targeted at consumers but also internally, as Continental says the move will motivate its own associates.
Continue ReadingIndustrial Strength
The industrial tyre sector consists of some very specialised products to suit very specialised vehicles and applications. But it is not all about just supplying products, as the fitting and servicing of industrial tyres is a job for experts, involving considerable investment and commitment. Understandably, the user of industrial equipment wants service immediately - idle machines are losing money - which puts even more pressure on the service provider.
Continue ReadingWhat’s New?
This time of year traditionally sees the launches of many new tyres. With product life cycles becoming ever shorter, the number of new tyres coming on to the market is growing. We examine the latest offerings.
Continue ReadingDisappointment at Government’s initial response to producer responsibility question
In January, the Tyre Industry Council held one of its regular briefings for the press and associate companies. After welcome from Secretary Peter Taylor, Chris Wakley, who handles public relations for the TIC, gave a brief summary of last years activities. While stressing that the support from police forces was as strong as ever, he said that fewer tyre checks than planned had been carried out. One reason for this was the need for cars to accompany the Green Goddesses during the firefighters strike, but another major reason was the perennial problem of lack of fitters to attend roadside checks. The reasons for this have been frequently aired in this magazine, but the fact is, said Wakley, that fitters are essential for the exercise, as police are sometimes reluctant to interpret tyre law at the roadside and rely on the trades specialist knowledge. The end result is that the number of cars checked was around half of that in 2001.Despite this, the figures concerning illegal tyres are remarkably consistent, with 11.6% of cars checked having at least one tyre with a tread depth below 1.6 mm. The figure for 2001 was 11.7%. However, when we look at what the TIC describes as badly worn tyres (ie with a tread depth above the legal minimum but below 2mm), there has been a worrying increase, from 11.7% to 14.9%. Although common sense dictates that worn tyres increase the chances of an accident, this is not accepted by Government, who say that statistics show that tyres contribute to a very small number of accidents. The TICs answer to this is that the police rarely record tyre tread depths in accident situations, so the figures are artificially low.
Continue ReadingInsurance: Soaring Costs Or No Cover
Insurance premiums are becoming an increasing topic for concern for many businesses. T&A looks at the problem and tries to uncover the reasons why premiums are rising and some companies are having problems finding cover. Insurance is one of those business costs which we all hate but equally almost all agree are a necessity. No reasonable businessman would argue that he didnt need insurance. Firstly there is Public Liability, which, contrary to common wisdom, is not a legal liability, nor is Product Liability for anyone making or repairing a product. Then there is Employers Liability Insurance, which is a legal requirement, and we havent even started on premises, stock, vehicles or more targeted niche policies. The big problem for everyone is that insurance premiums are climbing. There have been warnings of 100 per cent this year, and as much as 400 per cent increase over the next two years.A UK truck tyre retreader who called T&A in a complete state of shock was having to completely reconsider his business strategy and advised us of several competitors who were taking the only option open to them and shutting up shop. His premium for Premises and Business Income Insurance in December 2000 stood at £9,000, by the following year it had doubled to £18,000. This was bad enough, but December 2002 saw the premium rise to an incredible £60,000 with a £50,000 excess. At the same time his Employers Liability Insurance climbed from £9,000, through £20,000 to £42,000. He reckoned that his insurance premiums had risen by 700 per cent in two years. Worse still, this business had never made a single claim ...
Continue ReadingSherbrook Wheels: Turkish Delight In Lichfield
Lichfield-based Sherbrook International Ltd is entering the alloy wheel market and aims to hit the big time. It may be a new name in the wheel sector but the company has a long-standing heritage in the automotive industry and, for a newcomer to the wheels market, has an excellent record for getting things right. This could be just another player trying to make a few extra pennies from selling wheels while the market lasts but nothing could be further from the truth.The company has grown to a staff of 25, sourced from the automotive industry, each an expert in his or her field, carrying out negotiations between both ends of the supply chain. The company offers a 24/7/365 office service to the trade with constant monitoring of schedule performance and awareness of in-transit goods. This is built on effective customer communication and enables stock to be ordered from across the continent, or around the globe to meet Just In Time production processes. Rapid reaction to customer demands and a local technical support team result in quick problem solving which, with an agreed stock buffering system, eliminates supply chain down time from the manufacturing process.Now the company has a turnover in excess of 30 million Pounds and the financial backing of a large Turkish commercial organisation. Koç, this Turkish conglomerate, took over Sherbrook in 1998 giving the company a secure financial future and access to an even wider market and production base. Koç operates in Turkey on many levels, and its company logo of a Rams head in red outline is visible everywhere, especially in the Izmir area. In 2000 the Koç group had 9.2 billion Dollars of consolidated sales from 92 group companies employing 35,500 people. Core businesses cross many sectors, including automotive, banking, construction, household appliances, IT, and food and tourism. In the automotive sector the company has strong links with Land Rover, Ford, Iveco, Fiat and in components covers almost all areas. However, it is the Döktas foundry business which has led the company into wheel distribution in the UK.
Continue ReadingPK Commercial Tyres Diversifies
Ashford-based PK Commercial Tyres is a well-established Bandag franchisee, supplying quality truck retreads for a number of years. Managing director Paul Kuske has experienced both good times and bad, changes in the market and changes in user attitudes and the company has weathered it all, adapting to these changes.Recent changes in the retread market prompted Paul to re-think where the future lay for his company. The main problem is the increasing demand by customers for management information and a total tyre management service, rather than just product. We found that we were having to sell the tyre over again - once to the end user and then to the tyre distributor or service provider said Paul. There were other dangers too - if you use outside companies to provide the services that you are unable to offer, there is always the chance that they might compete for your contracts. We lost two fleet contracts to a former service provider partner he remembers.It was time for a re-appraisal of the companys objectives. PK Commercial took over a retail tyre depot in Aylesford, near Maidstone, offering fast-fit services and MOTs for car drivers. The location and the diversification into car tyre retailing proved successful.
Continue ReadingThe UK Motorcycle Tyre Market: Who Does Wins
For many in the UK tyre trade the motorcycle sector is a bit of an enigma. Bikers need tyres, but they also need specialist attention. The car buyer generally will fit whatever the dealer has to offer, surprisingly often without question. The Motorcyclist though is another fish altogether. Not only does the motorcyclist generally talk a great deal more about tyres, he, or she, will know more about them and will be more brand aware than the car driver. That creates some difficulty for the fast fit outlet used to pushing the tyres they want to sell. The case is compounded by the fact that, unlike the auto sector where tyres may be specifically tuned for OE supply, and the aftermarket offered a best option as a replacement tyre across the complete size range; the motorcycle sector retains those finely tuned OE specifications for aftermarket fit (by and large). It is therefore important, for example, that the Honda and the Yamaha, which both use the same size and range of Bridgestone tyre as OE, say, 120/70ZR17 BT 020, are offered the correct suffix code tyre to suit their bike. There are ten variations of this tyre from Bridgestone alone in this particular size. It is important that the sales staff are aware of the effect of fitting the wrong 120/70ZR17 BT 020 tyre to a bike - especially higher performance road bikes. Harmonics can induce shimmy in the steering, or vibration in the frame, or just make the bike noisy and uncomfortable to ride. At Dunlop Steve Male takes the explanation a stage further. Manufacturers specify the bike and tell us what they expect from the tyre. Together we specify a tyre and tune it exactly for the bike as an OE fit. That OE fit is a global option and represents what the manufacturer of the bike believes is the correct global tyre for that bike. We will supply that OE tyre to the manufacturer. However, our own R&D team will design further options, refining the OE specification for different markets. There will possibly still be an exact OE spec. available for the bike, but there may also be a European spec., an Asian spec., and a North American spec., each tuned to the bike and the prevailing conditions.
Continue ReadingWhat Is The Future For Goodyear?
Four years ago: In an interview at the Geneva Autoshow, Goodyear CEO Sam Gibara put forward his views. Goodyear had, according to him, the best people, the best distribution, the most cost-effective plants, the best products and - with its innovative EMT tyres - a three-year lead over its competitors. Within three years, he predicted, 75% of Goodyear tyres produced would be EMT tyres (in 2002, the actual figure was one million tyres). The IMPACT production process (Integrated Manufacturing Precision Assembled Cellular Technology) was held up as a revolutionary advance, guaranteeing predominance over the competition and an example of Goodyears technical leadership.The reality is that there have been no significant profits for years and Goodyear is still in third place. It made a loss of $203 million in 2001 and might not have been able to avoid another loss last year. Goodyear needs a turnaround in its loss-making home market, costs are too high, selling prices are too low and the once-proud corporation is fighting for nothing less than its survival, however unpalatable this might sound to company managers.In the first two years under Gibaras leadership, Goodyear enjoyed very good results, but these have since declined to todays levels and the Mission into the 21st century has been a flop. The group is overloaded with a mountain of debt, has big problems with its underfunded pension fund and the credit rating was reduced to junk bond status.All this means no picnic for Gibaras successor Keegan, who knows that his assignment is a difficult one but who believes that the problems are manageable. What he does not know for sure is whether he will have time enough to make the turnaround happen.
Continue ReadingGoodyear Fires 700 In Akron
Although reductions in staff had been expected, the news item still fell like a bombshell: Goodyear, the tyre manufacturer, is sending more than 700 salaried staff home, 350 of these from the company headquarters in Akron, Ohio, alone. The press releases on the subject refer to a restructuring, holding that the move was necessary to strengthen attempts to accelerate Goodyears turnaround. With this measure, it is said, Goodyear can remain competitive, and CEO Keegan even demands something like a winners attitude from the remaining associates. This may go down well in America, yet to the ears of staff hit by the cuts, who have not been charged with having done anything wrong, it must sound almost cynical. Meanwhile, Thursday January 16th , Akron witnessed moving scenes among staff. For one thing, no one expected such serious staff cuts; and for another, it looked as if someone had simply gone through the ranks with a rake, plucking out staff members who never even dreamed of being dismissed. The entire proceeding bears a certain handwriting and leads one to suspect that top and higher-echelon management made the decisions more or less on their own, and that middle management, presumably was not involved in the matter and now lives in fear of a loss of functionality. In the end, the work to be done has neither gone away nor even lessened. Instead, it must be carried out by the employees still holding their positions.
Continue ReadingHayes Lemmerz Reorganisation Plan
Hayes Lemmerz, the wheel manufacturer who filed for bankruptcy protection under Chapter 11 of the US bankruptcy code in December 2001, has reached agreement in principle with the Official Committee of Unsecured Creditors over a plan for reorganisation. The company hopes that the agreement will enable it to make progress and emerge from Chapter 11 within a few months.
Continue ReadingStrong Results From Stomil
Polish tyre maker Stomil Olsztyn, a member of the Michelin group, reported a fourfold increase in net profits for 2002. Shares in the company rose by 3.8 per cent to reach their highest level since 1997. This was in contrast to the overall stock market performance, which fell 1.3 per cent. Stomils performance also boosted the share price of Goodyear-owned Debica, which closed up 3.2 per cent at a four-year high.
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