It is these companies in particular that are able to hold their own against growing competition from cheap imported new tyres from the Far East, their position is at least better than that of well-established European tread and material suppliers.
Their competitive advantage is lower prices combined with a high level of quality. One of these companies trying to benefit from the changing European market situation is Goodway Integrated Industries Bhd from Malaysia – retreader and manufacturer of retreading materials.
As explains Paolo Borgianni, managing director of Goodway Europe, the European retreading market will continue its process of consolidation to the detriment of well-established companies and to the benefit of companies such as Goodway Europe, a company established as recently as 2005.
Malaysia based Goodway is not only a manufacturer and supplier of pre-cured treads and rubber compounds for mould-cure retreading and other technical applications. It is a retreader itself and operates – since their takeover – the two Malaysian retreaders Big Wheel (truck and OTR tyres) and Kilotrac Industries, both of whom of course use Goodway’s “Supercool” treads and other materials supplied by Goodway. The retreader Big Wheel is the Malaysian domestic market leader with a market share of about 75%.
But Goodway not only produces pre-cured treads and compounds for mould-cured retreading and uses these in its own retreading facilities. Goodway also operates as a total system supplier in its home market and in recent times also in the growing Chinese retreading market.
Under its “Simplex” brand Goodway offers a “unique total retreading business system” in these countries and it also plans to establish customers using the Simplex system in Thailand, the Philippines and in Pakistan. The first part of the Simplex retreading business system is the Simplex machinery designed by Goodway’s very own technical team, the second is retreading know-how technical training Goodway provides for its customers, and the third part is its tailored customer and marketing support. Every system provided to a new retreader is “customised to meet each individual need.” Everything’s provided, writes the company on its Web site, to the extent that an investor could start a retreading facility even if it had “zero knowledge in retreading.”
Globally, the Goodway group today has an annual turnover of 157 million Ringgit (2006: 34 million euros). During this year it is expected that Goodway will increase its turnover by about 40%.
In September 2005 the Malaysian company founded yet another subsidiary, the distribution organisation Goodway Europe (Sweden) AB. Goodway’s European subsidiary is based in Molnlycke, close to the Swedish city of Gothenburg, and is run by Paolo Borgianni as managing director. The native of Italy is married to a Swedish wife who in turn acts as a representative in Sweden for a number of Italian companies from the retreading industry.
Consequently, Sweden seemed to be the most suitable location to start Goodway’s European business, particularly as corporate taxes are below the European average. Since the European distribution arm was founded two years ago, Goodway Europe has hired sales representatives in Sweden, Germany and Italy.
In an interview with Tyres & Accessories, Paolo Borgianni explains that his young company today focuses on the distribution of its own “Goodway Supercool” brand pre-cured treads, which is placed in the “quality segment” of the European retreading market. It goes without saying that these products are sold together with cushion gums and sidewall veneers. The company is also considering commencing the distribution of rubber compounds for mould-cured retreading in Europe. These compounds are sold elsewhere under the brand name “Supertrac-Orbistrip,” or in short “Orbi”.
“We shall promote it very soon,” replies Borgianni when asked about the time schedule of bringing these products onto the European market. The managing director is convinced that the pre-cured tread business in Europe offers reasonably good business opportunities for companies from outside Europe, even though the overall market share of retreads in Europe is decreasing while the truck tyre market in total is showing slightly stronger growth than the retread market.
“The market in Europe is consolidating,” says Borgianni, and increasingly more outside brands are coming into the market and shrinking the market share held by all the well-established European brands. Because companies like Goodway Europe can offer quality at competitive prices, it can gain market share there where well-established retreading brands are competing against cheap imported new tyres from the Far East and losing. “With our premium products we give the European retreader the chance to fight against the cheap and unsafe new tyres invading the market.” Sales representatives from Goodway Europe in particular use two main arguments while selling pre-cured treads produced in Malaysia: “Our prices are very competitive and value-for-money. But Goodway has a high quality product that matches the top few European manufacturers.”
For some years the European retread market has been a mature market with well-established structures and market players. In such an economic market environment it was difficult for Goodway to introduce itself as a system supplier or even to establish itself as a supplier of such. Many observers also believe that the time for system suppliers is over and that these long-term relations with system suppliers are being replaced by an increasingly cutthroat competition that’s leading to more and more volatile relations, particularly now that the technology for pre-cured retreading has been implemented in many markets and machinery is available everywhere.
Goodway’s decision not to establish its own “Simplex” system in Europe, at least for the time being, seems to stem from this situation. “We are focusing on Asia,” explains Borgianni, and he then talks about Goodway’s subsidiaries in Malaysia and China. Both companies supply the Simplex retreading system in their respective markets. Apart from Malaysia and China the Simplex system will be implemented on the Philippines, in Thailand and in Pakistan in the near future.
“No. I do not believe that Europe needs a system supplier,” says the managing director from Goodway Europe. “It is too late now.” The American retreading corporation Bandag and their owners had the right idea at the right time and thus have “had a great success.” Consequently, at Goodway there are currently no plans to bring its Simplex “total retreading business solution” to Europe.
In its domestic market, Goodway Rubber is not only known for its treads, retreading materials and its own Simplex retreading system, but also for their own retreads. Subsidiaries such as Big Wheel and Bigwheel OTR – who were, according to the company, the first retreader in South-East Asia to retread OTR tyres up to 57 inches in a pre-cured process – and also Kilotrac are supplying retreads to the domestic and regional markets.
Are there any similar plans to also begin operating its own European market production facility like Marangoni has done successfully for so many years? “Well, we never know. If a good opportunity comes up, especially in the OTR tyre segment, we may take this into consideration,” says Borgianni. However, there are no imminent plans in this respect. The direction in which Goodway Europe will develop in the near future remains to be seen. Currently the managing director is pleased with the growth rates his company is achieving. “My goal is to obtain 10 per cent of the European retreading market for Goodway, which I truly believe is not an unrealistic figure. A customer base of more than 50 has already been established and I am now looking to strengthen this further by the appointment of additional agents in a number of countries,” the managing director says.
