Denmark: Quality is King

Denmark: Quality Is King Denmark, that link between Scandanavia and Europe - provides an interesting glimpse into how the retread market might develop internationally in the future. The state of Denmark consists of two main islands, plus several smaller islands and the peninsula of Jutland, attached to the European mainland. Denmark also has dependencies in the Faroe Islands and Greenland - though there is not much call for retreading in the latter.

With a population of around 5.5 million Denmark is one of Europe's small nations but one which has a strong agricultural and maritime history, and one which has also in recent times benefitted from North Sea oil and gas.

Denmark has a good road network with arterial motorways (900km) connecting the country's extremities backed up by good quality national highways connecting all the larger towns and villages. EU statistics tell us that some 209,384,000 tonnes of goods were transported by road in Denmark in 2002, that is around 92% of the nations freight, which was moved by road. So, Denmark is highly reliant on its truck fleets to move goods around the country and for its exports to mainland Europe.

Denmark is without doubt a modern country with high standards and those are reflected in the state of its retreading sector. In the past 20 years the number of retreaders in Denmark has dropped to just four, possibly five but the latter is now only involved in low scale production of niche market products such as 4x4 tyres and is believed to produce not more than 5,000 pieces per annum, often for export to Norway and Sweden - Denmark does not appear to have the same demand for winter tyres or 4x4 tyres, though this past winter may have created a "blip" in demand.

Reduced to four retread operations plus imports from Pneus Laurent (Michelin), and some German retreads being sold by independent dealers; the market is perhaps a microcosm of what we might expect in the years to come, in most developed markets.

The development of the whole life tyre management and mileage contracts as a sales tool for the new tyre manufacturers has driven the new tyre manufacturers into the retread market. Michelin, in France and the surrounding markets has long dominated with Pneus Laurent; Bridgestone had its Qualitread operation, but now has Bandag (Represented officially by Tobol and NOGI in Denmark), whilst Continental has sub contracted its retread manufacture and sales to Marangoni/ Ellerbrock. There is also a close link between Pirelli and Marangoni - the Italian retread specialist being excellently represented by Ringtreader, Vulkan Daek in Randers in the north of Denmark. The third player currently is Nordisk Daek Import (NDI), who represent Kraiburg and as importers are distributors of Hankook tyres, Located on a small industrial estate on the northern outskirts of Randers, in the north of Jutland, is Vulkan Daek, a Marangoni Ringtread operator. Vulkan Daek was established in 1963 as a family business. Henrik Nielsen, who started with his father at the age of 15 has been in the business for 30 years and has see the nature of the business change. In 1994 Vulkan Daek stopped retreading car tyres, and four years later the original tyre retailing business was sold allowing Vulkan Daek to concentrate on retreading as its core business. Henrik told retreading Business, "We have been a Ringtreader since around 1975, at least 35 years using the Marangoni Ringtread system. Back then we also used to retread passenger car tyres too. "Initially we had a hot cure facility but no-one in Denmark uses hot cure any longer." The Vulkan Daek operation is compact but efficient, the eight production staff, using exclusively Marangoni equipment producing between 14 and 15,000 retreads per annum. The operation is supported by one member of office staff and a single driver/ salesman/ collection representative, and of course Henrik Nielsen himself. Denmark's four retreaders are all based in Jutland, two in the north around Randers and Aarhus, and two centrally located around Brørup and Føvling. Asked if trade was restricted geographically to the north of Jutland, Henrik replied, "No we cover the whole of Denmark by supplying wholesalers and retailers across the country. Some 90 per cent of our sales are done in this way, we only retain a few direct fleet clients for historical reasons. If I amongst many other brands, so many Hankook truck tyres get a second or even third life at NDI.

Quality is King in Denmark - well, if we can ignore the ubiquitous predilection for fast food and the abysmal motorway services - and that in some way might explain why the only retreads produced in Denmark are at modern high tech plants with a focus on perfection, be it at Vulkan Daek, or at Bridgestone's Tobol plant. Hence the focus is on only the best materials for retreading in Denmark.

There are other issues, a pay rate just above the minimum wage places labour at a premium of 20 Euro per hour. Not only is time money, so too is labour. Casings, which in many countries would be retreaded are rejected by the retreaders because it costs time to repair and to skive and fill. So the level of product produced starts off with a demonstrably higher base level than it might in some markets.

Some of the retreaders had experimented with lower cost precure products but invariably their clients came back and asked for the original products from Marangoni, Kraiburg or Bandag. There is, it seems, little room in Denmark for budget precure tread.

Tyre management is still a developing tool but one which may struggle to find widespread use unless the truck fleets see considerably more consolidation. Fleet sizes are by and large less than 200 strong, according to Torben Skovegaard from DSL the Danish Tyre Traders Association, the average size will be around 40-50 trucks but with many Mom and Pop operations with just a handful of vehicles. The larger fleets include Arla, the dairy company, and DSV a national haulier. Though Bridgestone's Niels Nielsen says that there are increasingly larger fleets appearing in the market, which of course will bring about greater economies through using tyre management systems in future. The smaller players though will always struggle to find the time and resources to manage their fleet's tyre stock properly ensuring that there will always be potential in the market for a quality lower volume retreader.

Issue 2010/2