We always strive to cover as much of the global retreading industry as possible, but some markets do prove to be more elusive and underreported than others due to resources, language barriers and time. However, after taking a short vacation to South Korea, Richard Wilson organised a short trip to Gwangju in the south of the country to visit Daeho Industry Co. Ltd, a large tyre retreader and pre-cured tread manufacturer, where he was welcomed by Johnny Kim from Daeho’s International Sales Team.
Eyes on Quality and Aircraft Tyre Entry to Beat the Odds
Daeho Industry Co., Ltd will probably be well-known to industry insiders through their activities in North America and other markets selling pre-cured tread rubber, but for those unfamiliar with Daeho, here is a quick crash course.
The company was founded in 1993 and today has 120 employees. As a retreader, they produce both mould-cure and pre-cured retreads using a mixture of Korean, Japanese and Marangoni machinery, exporting their retreads to markets far and wide, including Puerto Rico, Honduras, Australia, Canada, Japan, the USA and New Zealand, to name a few. Currently, Daeho does not export its retreads to the European Union as it needs to acquire E-Mark registration. More on that later.
In the USA’s case, Daeho has also been exporting its pre-cured tread rubber to the country since 1999 after it acquired its DOT mark registration in 1997. The pre-cured tread rubber is also manufactured with Daeho’s own compound in a compounding facility located next door to the retread plant in the Gwangju Hanam Industrial Complex. From this facility, they also manufacture NBR rubber for a diverse range of applications such as: wires and cable coverings, hoses, safety and sports shoes, moulded automotive parts and rubber rollers for the textile industry. The organisation also previously participated in OTR retreading and even extended its factory in 2007, but has since closed down the operation and sold the machinery. In 2012, the retreader also signed a contract with Michelin to produce its retreads, with the French manufacturer providing casings and tread rubber for the process.
As for its current retreading operation, Daeho has a capacity of 240,000 retreads per year. This capacity primarily serves truck and bus retreads in the 275/70R and 275/80R sizes. These products serve a broad spectrum of vehicles operating in construction, logistics, public transport and garbage operations. They also retread a limited amount of tyres for the light truck and forklift segments, which Kim admits is “restricted by the availability of casings”.
Diving further into the production details, Kim explained that Daeho produce on average 700 pieces per day with the production line operating 24 hours a day with two shifts. Previously, Daeho were producing 800 pieces per day, but the production has shrunk due to a drop in demand. As for casings, Daeho collect both its customers’ casings and buys casings in Korea to cover its domestic market and all of the Korean territory.
Complicated Picture Facing Korean Retreading Market
We quizzed Kim on the situation in the Korean retreading market and the use of retreads in the country, and the story was one which has been repeated the world over, from the centre of Europe to Latin America to Asia, with cheap imports from South-East Asia and weak market provisions undermining the tyre retreading market in the country. Moreover, as in other countries, there was a retreading association in the country defending the interests of the industry, but it was disbanded, which Kim admits was a “shame”. We’ve seen this movie before.
Besides Daeho, there are six further retreaders in Korea, but they are all small, independent companies doing a mix of mould cure and pre-cure. This, according to Kim, is the principal reason why they also don’t distribute their pre-cure tread rubber to Korean retreaders.
Kim brought us up to speed on the recent past of the Korean retreading industry, “In the past, Michelin, Bridgestone and the larger manufacturers had a big influence on retreading in South Korea. However, nowadays, new tyre manufacturers have given up selling retreads. In our case, this is our main business, which is why we have focused on quality.”
Kim underlined that Daeho mostly produce mould cure TBR retreads for the Korean market, explaining that most bus companies prefer to use new tyres in the country. He continues, “we are in constant communication with the bus companies and are in the process of trying to convince them to retread. One of the changes going on right now is the move to electric buses, which are heavier, meaning that the life cycle of a Chinese new tyre becomes even shorter. As a result of this, we are in the process of developing retreads for electric buses, which we hope to potentially complete and launch this year.”
Education and reluctance to use retreads is not a new phenomenon and is one which the association, retreaders and suppliers have had to battle with the world over, but hopefully the opportunity posed by the implementation of electric buses will make this process easier for retreaders such as Daeho. Kim added, “We need more cooperation with the government and assistance from them to help bus companies take up retreads. In Seoul and in other provinces, they use the Chinese new tyre over retreads despite the fact that these companies have used retreads in the past, but unfortunately, the unit price continues to win out with the Chinese new tyre.
The main issue we face is the price comparison against Chinese tyres. It isn’t really an issue of confidence regarding quality. This is why maintaining our quality through the casing, compound, materials, and the construction process is at the core of our business. Quality is a big weapon to beat Chinese new tyres, which is why we are always checking with our customers to make sure they are properly maintaining their tyres to guarantee superior performance.”
Quality isn’t the only weapon in Daeho’s armoury, though, as Kim explained that the company is always looking at developing new patterns and sizes for the market to ensure that their customers are suitably catered for.
Daeho Sustaining Export Retread Sales
As we touched on earlier, Daeho exports both mould cure and pre-cure retreads on a global scale with particularly strong sales in Latin American countries such as Honduras, Guatemala and El Salvador to be used on trailers for sugar cane trucks. They send a mixture of retreads to Japan, which Kim admits is mostly their mould-cure product.
Kim expands, “We are exporting all over Latin America besides Ecuador, Brazil, Chile and Argentina, where there are regulations to stop the import of retreads. We would like to resume our sales in Mexico, as well as to expand our sales in Australia and New Zealand. This all does depend on Chinese new tyres though.”
Daeho Searching for Experienced Partner to Develop Aircraft Retreads
The big opportunity and area of focus for Daeho is aircraft retreading, given that, according to Kim, there are “no aircraft tyre manufacturers in South Korea”. Generally, 80-90% of aircraft tyres are retreaded at least once in their life, further underlining the opportunity identified by Kim.
As part of the company’s initial steps into aircraft tyre retreading, the company partnered up with the government in a pilot project to produce an aircraft tyre and compound, which was a success. However, Daeho are ready for the next step to produce aircraft retreads and are keeping all options on the table.
Kim elaborated, “We are in the process of looking for a partner overseas to help us develop this project. We need a partner with experience in manufacturing aircraft tyres, consulting and crucially getting certification from the US to produce these products. If a company wants to produce the tyres in their country, we can cooperate with that too.
The next step is slow, though. We need to produce a mould for the tyres here in Korea and produce a prototype. It’s a lengthy project.”
Tread Rubber Business Performing Well in the US
We turned to focus on Daeho’s tread rubber business, which is primarily exported to the USA before being shipped to other countries in Central America, such as El Salvador, Honduras, Costa Rica and Ecuador, amongst other nations. The company offers applications for waste haul and mixed service, drive wheel, highway, trailer and special service applications.
Kim clarified that although it was a slow business, the company’s sales performance is stronger in the US, but that the uncertain outlook from the ongoing tariff drama propagated by the US administration was creating a harder business environment. He continued, “Despite it being a competitive market, we are selling well in the US. We have some business in Bolivia and are continuously analysing countries like Honduras and Guatemala. We would like to expand all over Latin America.
Our US market team survey the market and regularly feeds back to us every year, according to demand, which patterns we need to be developing.”
This product development pipeline doesn’t just encompass the US and Latin America for its tread rubber but also for Europe, with Kim admitting that the company is developing wider treads for the continent.
“We are developing wider treads for the EU, and we could sell there, but it will take some time. The most important point is that we have a good product that we could sell there.”
Resource Recycling Business on Standby
Aside from its tread rubber and retreading business, Daeho Industry Co., Ltd announced in 2022 that it was partnering with SK Energy and SK Networks to establish a low-carbon circular system that would make use of waste tyres. We asked Kim for an update on the project.
Kim revealed that, for the moment, the project was on hold because the market conditions dictated that it didn’t make sense at this time and that it needed to be investigated further.
