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INTERVIEW
Marangoni: Interview – Giuseppe Ferrari
Ing. Giuseppe Ferrari is Managing Director of Marangoni’s Retreading Systems Division, and during a recent visit to the Group’s headquarters in Rovereto, we were able to discuss with him the Group’s plans and strategies for the retreading market. On the table for discussion were the introduction of the Ringtread Blackline range on the European market, competitiveness in the pre-cure sector, and priorities for the Group’s development in global markets.
Retreading Business
It is now nearly two years since the Ringtread Blackline range was introduced into the European market. Could you please re-iterate the thinking behind the introduction of this range and explain how it has been accepted into the market place?
Giuseppe Ferrari
We believe there is a big future in producing premium quality retreads for the top segment of the market, and Ringtread Blackline is the product we have launched to allow retreaders to do this. Our idea is to aim for 20-30 per cent of the pre- cured activity of our retreaders to be on Blackline. We have been through the process of meeting with retreaders to explain the process, and it is true that some were apprehensive of the fact that Ringtread Blackline is more expensive than our standard range. However, the focus is now increasingly on the “Total Cost of Ownership” of tyres, and fleets are demanding more in terms of performance. We are therefore developing our products according to these demands and are helping
to explain the TCO concept to those retreaders for whom TCO is a new thing.
At the beginning we were using our existing ring moulds for the preparation of Blackline treads with new compounds, but we are now focusing on using special new moulds with more complex tread designs for this line. We are not looking to save a few pennies just for the sake of it. Our focus here is on producing a real advantage on the “total cost” sustained by fleets and this can only be obtained by working in parallel on all the relevant tyre performances.
RB
But retreaders are coming under increasing price pressure from budget new tyres. How do you reconcile your approach with the need to compete with the Chinese?
GF
A retreaded tyre has a structural advantage toward a new tyre due to the huge difference in the consumption of rubber. Our
industr y has to leverage on this advantage to provide to end users the same performances of a qualified new truck tyre for a much lower cost. We are now concentrating on helping retreaders be more competitive by providing more efficient equipment to further reduce the production costs and by helping retreaders to achieve more efficient casing collection and selection procedures. Local retreaders must finally be able to manage with the highest efficiency every phase of the value chain. But we are also engaged about helping retreaders to reduce the costs of their fleet customers with better quality products and dedicated fleet management services. Fuel consumption is becoming increasingly important in medium/long range applications and is becoming easier to measure. Driver training is also becoming more important. Fleet management services are well developed in markets such as the UK, but now this is developing in the rest of Europe.
RB
How does the Ringnet network fit in with this thinking?
GF
We realise that there is a major change of approach in the retreading industr y which will produce a substantial innovation of the traditional business model, and for this reason we have initially been quite selective in introducing the Ringtread Blackline program in our Ringnet network. The Ringtread is already by itself a premium and unique product which in many markets and applications is more than competitive. At the moment 50 retreaders in our network, which is made up of more than 140, are using the Ringtread Blackline, and it is not our plan to push the network to switch totally to the Blackline program.
RB
In recent years a number of overseas brands of tread rubber have gained strong positions in the European market. How do you propose to counteract this threat?
GF
The penetration of imported brands peaked in 2007-8 when they achieved 20% of market. This eventually fell back partly due to exchange rates but has recently
gone back up to 18 per cent or so. In general, though, this phenomenon has stabilised. The share these brands took came in part from small European precure material producers who have disappeared from the market, but it is also true that the leading premium brands lost a portion of the market to them during this period. We now have a programme in place to counter this threat. The problem has mainly been a product range issue in that we did not give enough attention in the past to the development of basic lines such as Unitread. We are now doing this much better. We have introduced new, lighter designs aimed at reducing the costs for retreaders.
We are targeting a 10-15 per cent share of the low-cost market and are now starting to cultivate the retreaders in this sector more actively. We need a good share in this sector, but it is also true that we are not trying to get a 25% share of this part of the market.
RB
What are your priorities in terms of the geographical development of your business?
GF
We need to evaluate better the opportunities that are available and match them with our competencies, focusing more and more on growth outside Europe. We have a good presence in North and South America and the challenge is to develop and consolidate our presence in these two areas, but also to better organise ourselves in other countries which we are serving mostly with export from Europe. There are lots of growing markets in Asia and Africa where the radialisation process and the need for a qualified presence of truck tyre retreading are in that stage where our approach can fit well, which have been already targeted and where sooner or later we will establish a direct industrial
presence too.
RB
OK, so let’s talk about your activities in the Americas.
GF
Overall 50 per cent of our global activity is outside Europe. We have gained 5 per cent of the North American market and 10 per cent in South America – primarily Brazil + Argentina, so we are now entering the second stage of penetration in those regions. For now we are happy with single digit growth rates in these area – perhaps 5-7 per cent per year.
In North America we are close to capacity. Whereas we previously averaged 50 per cent of the business of our retreader customers, we are now closer to 75 per cent, with the remaining 25 per cent being made up of rubber from budget suppliers. We are investing heavily in our existing network of customers, which now consists of more than
50 retreaders, and we foresee growth being achieved primarily through retreaders who are looking to improve and step up to using the Ringtread. The US is a market, which is changing a lot, and the future focus will be more on trying to lead innovation. There is an opportunity with the Smartway programme, and we have been at the forefront of this. We believe the future in this market will be in single tyres, and not just on trailers. With this in mind, we are developing Ringtread for super-wide singles and have just installed a second press for superwide rings.
In South America our key challenge is to improve profitability in Brazil. After that, the next challenge is to develop other Latin markets. We have a limited presence in Ecuador, Colombia and Chile, which is a good start but we aim to penetrate further. Last year we also transferred our Argentina factor y to a new location, adding capacity.
Giuseppe Ferrari
38 Retreading Business