Crain philosophy ● Publisher’s editorial profile <strong>Euro</strong>pean <strong>Rubber</strong> <strong>Journal</strong> leads the field in information sources dedicated to the rubber industry. There is no other publication anywhere in the world – or in cyberspace – which can match <strong>ERJ</strong> for the range of topics covered and the insight into the rubber industry we offer. <strong>ERJ</strong> journalists spend all day, every day, monitoring the news on the rubber industry, researching new stories and even checking for mistakes made by others. All so you do not have to spend time searching for that vital information — and more importantly, making sure that the stories are accurate. We cover all the stories and we make them available to you within hours. If you need current, up-to-the-minute news, then you can use our website for the hottest tips about breaking stories in the rubber industry. If you need a regular digest of information, analysis and opinion, the monthly magazine is the ideal source, presenting a concentrated compilation of the top stories from the last few weeks, together with insightful analysis and industry-based feature material. Increasingly, we are bringing these formats together to provide integrated coverage of the industry, with the magazine as a brief summary of what is happening, and more in-depth analysis on the website. If you need to research a given topic, or developments at a certain company, then you can search our ten-year archives for relevant stories. If it is happening in the world of rubber, then we write about it. And we have done for well over a century. <strong>ERJ</strong> offers executives in the rubber industry a comprehensive news and information service, designed to deliver news when it is needed and in the format preferred by the readers. We cover everything from personnel moves to mergers and acquisitions. We add value to the news by providing a comprehensive archive of all news stories published on the web and in the magazine to help your research department stay ahead of the competition. The rubber industry is changing fast. Tyre companies are being encouraged to innovate, and they, in turn, are working with suppliers to develop new ideas and creative solutions. In the industrial rubber sector, innovation and technological leadership are vital to continued survival in this competitive industry. As the pace of business increases, more and more senior executives in the rubber industry are choosing to let <strong>ERJ</strong> do their news searches. Our efforts help them perform better. This multi-channel reader traffic means more people are seeing <strong>ERJ</strong> stories than ever before. Use that traffic to help your business. ● Putting readers first The publishing policy of Crain Communications is simple: we put our readers first.We have found, through long experience in many different markets and regions, that if we are faithful to our readers, all the other numbers take care of themselves. On the editorial side, our job is to deliver the best, most timely and most relevant news and information to our readers. Since we regularly attract the cream of the readers, then advertising and business success will surely follow. This is our charter: and the success of our publication depends on it. Our editors, reporters and correspondents are guided by one test, formulated more than 50 years ago by G D Crain Jr., founder of Crain Communications: “First, ‘Is it news’ and second, ‘Are the facts given accurately and fairly’” This editorial philosophy has survived the most difficult test of all, time; and it continues to serve us well. 2 Reach the de INTERNATIONAL NEWSFRONT 4-19 A comprehensive report of a l the latest news about every aspect of the rubber industry from around the world. TYRE TECHNOLOGY MOVES ON 20 Second generation TPMS systems come to the market. David Shaw returns from the Geneva Motor Show and the TTE event in Cologne with a fresh perspective on tyre pressure monitoring systems. 22 Tyre companies step up the branding: branding is becoming more important in the tyre industry as tyre makers seek to persuade consumers to pay a premium for their top-line brands. But do the dealers have too much influence MACHINERY REPORT 24 Machinery companies expect to see a slow-down in 2007. After three exce lent years, driven by the tyre industry’s expansions into Asia and beyond, David Shaw outlines the prospects for 2007 in <strong>ERJ</strong>’s annual review of the machinery sector. In this report we list the top companies, rank them according to size and break down the industry according to region. We also monitor business confidence in the sector. 26 Wyko goes to China, relies on flexibility and quality. David Shaw interviews Bill Jones. 27 MHI aims to broaden scope. The Japanese machinery makers are under pressure, but MHI aims to diversify into other equipment. 28 Farrel, under new ownership, says it makes money in China. Alberto Shaio, CEO says the future is bright. 30 A list of suppliers of machinery to the rubber processing sector. We show who makes what, where they are based and their annual sales. REGULARS 37 Data page 40 Postscript David Shaw thinks the rubber industry is not so hard to understand, but making profits is tough. And it’s even tougher in the rubber machinery business COVER Are the days of the spare tyre numbered Once TPMS is in place on most cars, there are many alternatives to the spare wheel. (see story p20). JULY/AUGUST 2007 E U R O P E A N R U B B E R J O U R N A L C O N T E N T S www.europeanrubberjournal.com ●w indicates that an extended version is available on-line 1 Akzo Nobel NV 15 Anse l Ltd 7, 8 Avon Automotive Inc 8 Avon <strong>Rubber</strong> PLC 8 Berstorff 29 BRC <strong>Rubber</strong> & Plastics, Inc. 4 Bridgestone 22 BRISA 10 Celanese Corp. 14 CF Gomma Poland Sp.zoo 4 CF Gomma SpA 4 Chemtura Corp. 4 China <strong>Rubber</strong> Industry Assn 1 Continental AG 20, 21, 22 ContiTech AG 6 Cooper Tires 19 Degussa 16 Delft University of Technology12 DowChemical 14 Dunlop 22 Firma Chemiczna Dwory SA 15 Eliokem 15 Eni 14 EPDM Roofing Association 7 Excel Polymers 14 Farrel Corp. 28 Federal-Mogul Corp 8 Fegomat SA 4 Fenner Dunlop Americas Inc 8 Firestone Industrial Products 7 Flexsys 15 Goodyear 10, 22 Gummiteknik GTM 6 Hankook Tire 9 Harburg-Freudenberger 24, 29 Hytex Mouldings Ltd 7 JD Power 1 Just-Auto 11 Kaucuk 15 Ke ler and Heckman LLP 7 Kobe Steel Ltd 24 Kraton 14 Krauss-Ma fei 29 Lion Copolymer LLC 14 MPM Group 29 Marangoni Meccanica 29 Michelin 9, 10, 11, 20, 21, 22 Mitsubishi Heavy Industries 24, 25, 27 Montagu Private Equity Ltd 6 MPC Partners LLP 6 Nakata 26 Nokian Tyres PLC 10 Notch Consulting 1 Notch Consulting Group 16 Pire li 1, 18, 20, 21, 22 Pomini 29 PPG 16 Prodrive 20, 21 Rapra Technology 7 REACH 7 Red Diamond Capital 8 Research & Markets 1 Research In China 1 Rhodia Silcea 16 RSI Magazine 7 Sacred SA 4 Schrader Electronics 20, 21 Semperit AG 6 Shell Chemicals 14 Siemens-VDO 20, 21 Silverpoint 4 Solutia Inc 15 Sonneborn Refined Products 14 South Pacific Tyres 7 LWB Steinl 29 Taniq 12 Techint Pomini 29 Thermopol International Ltd 6 Trade-Stomil Sp z o.o 14 Tre leborg AB 6, 7 Tre leborg Wheel Systems 9 Trico Products 6 Unimil SA 8 Unipetrol AS 14 US Government 8 VMI Epe Holland BV 24 Our 125th year ISSN 0266-151 Published bi-monthly by Crain Communications Ltd, a division of Crain Communications Inc. 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No part of this publication may be reproduced, stored in a retrieval system or transmi ted in any form or by any means, electronic or mechan ical, photocopying, recording or otherwise withou the permission of the publisher. A l rights reserved. EUROPEAN Who’s where Arthur de Bok, p22 Marangoni Meccanica, p32 Pire li sensor, p32 P Zero tyre, p18 Siebe Nooij, p12 “This major investment is another clear indication of Goodyear’s confidence in Debica’s ability to deliver the highest quality products at a competitive cost,” said Jarro Kaplan, president of Goodyear’s Eastern <strong>Euro</strong>pe, Africa and Middle Eas tyre business. “This investment wi l put us in an exce lent position to capitalise on the growing market for high performance tyres throughout Eastern and Western <strong>Euro</strong>pe.” He added that “Debica is the larges tyre factory in <strong>Euro</strong>pe.” The plant currently makes around 26000 tyres per day, which works out to over 15 mi lion units/year. Kaplan added, “with the increased demand for UHP tyres in both central and western <strong>Euro</strong>pe, we need to add production and we need to add more truck tyre capacity.” In UHP, Kaplan said the market in central <strong>Euro</strong>pe is growing fast. “Six years ago, the percentage of S, T-rated tyres was between 65 percent and 67 percent. Today it is down to below 50.” He said the growth is mainly in high and ultrahigh performance tyres. He said the increasing number of car makers in the region is accelerating the trend to higherperformance tyres in central <strong>Euro</strong>pe. Kaplan said the market is moving faster to high performance tyres in central <strong>Euro</strong>pe than in the West. He said the market in Eastern Germany changed over a five to seven year period, and he expected the markets in Poland, Czech Republic and other countries to move rapidly toward the typical standard in Western <strong>Euro</strong>pe over eigh to ten years. Possible investment in Russia Kaplan said Russia is 10 years behind Poland in terms of market development. He added tha the market in Russia is now around 26 mi lion units/year and Goodyear wi l generate up to $200 mi lion in sales there in 2007. Asked about manufacturing there, Kaplan replied, “inevitably you need a manufacturing presence in Russia.” He added, however, “I canno te l you today when that wi l happen.” Kaplan said Goodyear has watched other tyre companies in Goodyear to invest $100 million in Debica for UHP tyres ● Debica is now the biggest tyre factory in <strong>Euro</strong>pe ● Investment will meet new demand for UHP tyres in central <strong>Euro</strong>pe. ● Goodyear is studying options in Russia. Goodyear’s success in central <strong>Euro</strong>pe and the EMEA region is down to a team effort. Cultural flexibility is a must in a unit where executives might visit Russia, then Saudi Arabia, then Israel. Jarro Kaplan ‘ ’ JULY/AUGUST 2007 E U R O P E A N R U B B E R J O U R N A L By David Shaw, <strong>ERJ</strong> Sta f, dshaw@crain.co.uk T Y R E N E W S www.europeanrubberjournal.com ●w indicates that an extended version is available on-line 7 BRISA sacks 2 on ‘spy’ charge Fo lowing a visit to the BRISA tyre factory in Turkey, by an international group of dealers and journalists just before Christmas, two senior sta f have been dismissed on grounds of “technological espionage.” Ertugrul Yilmaz, BRISA technology manager and Haldun Kuran, chief of technology, were dismissed after a picture of a recently-developed piece of equipment appeared in French magazine, Le Pneumatique. The equipment is currently used to make only Bridgestone brand tyres; bu the picture caption implied it is used to make Lassa brand tyres. This added to the damage caused by the incident. As a result, BRISA management has banned mobile telephones from the factory. Employees now have to leave them in a box a the gate. BRISA management declined to comment on the story. The equipment is currently used to make only Bridgestone brand tyres; bu the picture caption implied it is used to make Lassa brand tyres. This added to the damage caused by the incident. As a result, BRISA management has banned mobile telephones from the factory. Employees now have to leave them in a box at the gate. ■ the region and come to the conclusion tha the most likely route to success is to build a new plant, rather than attempt a joint venture with an existing company. He added, however, that Goodyear would not do that until it had an e fective sales network in the region. He said, “Today we have 75 outlets. We wi l be 100 this year out to Irkutsk. Today we are working on the distribution base so that, once we decide about any kind of presence there, we wi l be able to se l the production loca ly.” ■ Michelin expects to cut €1500 mi lion in costs CLERMONT-FERRAND, FRANCE — Michelin anticipates cu ting €1500 mi lion to €1650 mi lion in costs through fiscal 2010 to reach its goal of exceeding a 10-percent operating margin and growing more 3.5 percent annua ly. Michelin said it is targeting savings of €500 mi lion to €535 mi lion in raw materials purchasing, €700 mi lion to €750 mi lion in industrial costs, and €300 mi lion to €350 mi lion in logistics, R&D and sales/administration costs. Other goals of the company´s plan are: reducing inventory below 16 percent of net sales; increasing return on capital employed to more than 10 percent; and generating significant positive free cash flow. Underscoring its drive for growth, Michelin said it is budgeting €500 mi lion in capital expenditures a year through 2010 in the emerging markets in eastern <strong>Euro</strong>pe, Asia and South America. Nokian to expand Russian plant NOKIA, FINLAND — Nokian Tyres PLC said it wi l more than double the annual capacity of its Russian tyre factory to 10 mi lion units by 2011 at a cost of €190 mi lion. Nokian´s directors recently approved going ahead with Phase I of the industrial plan at its Vzevolozhsk, Russia, factory, which opened in 2005 with a start-up capacity of 4 mi lion Nokian-brand passenger car tyres a year. The second phase wi l require an additional 32 500 square metres o factory space to accommodate the increased production, Nokian said. Fire stops production at Goodyear Thailand PATHUM THANI, THAILAND — A fire in a mixing room in Goodyear’s tyre factory in Thailand has led to a temporary loss of production a the plant. No-one was injured in the blaze, which reportedly required 50 fire trucks to bring under control. Report predicts growth for runflats Amherst, Massachuse ts — A new report predicts healthy growth for run-fla tyres, with volumes rising to 30 mi lion by 2015 from around 7.4 mi lion units in 2006. The report, Prospects for Run-Flat Tires, published by Notch Consulting, predicts demand wi l grow at 17 percent per year. The report notes that average prices for run-fla tyres fe l by 3.2 percent from 2000 through 2006, reflecting a broader product mix and economies of scale as production was scaled up. The 122-page report includes 32 tables and 57 charts. it is available for either $4000 or $6000, depending on delivery options. Global auto tyre study published DUBLIN, IRELAND — Research & Markets is promoting a repor titled, Global Market Review of Automotive Tyres Forecasts to 2013 on its website. The report, compiled for the fourth consecutive year is produced by Just-Auto. The 120-page report comprises four chapters, covering the executive summary, market breakdown technical review and brief profiles of the main manufacturers in the world. It is available from the R&M site for € 863 (single copy) or €2508 (enterprise licence) Michelin tops JD Power survey in SA JOHANNESBURG, SOUTH AFRICA — The latest JD Power survey of tyre customer satisfaction in South Africa reveals the highest ever overa l scores since its inception in 2004. Among the brands surveyed, Michelin came top with an overa l score of 839/1000, fo lowed by Pire li. On the <strong>ERJ</strong> web site . Goodyear worker dies fo lowing accident at plant . Bridgestone profits fa l on higher sales . Smartire wi l close UK plant by Match <strong>2008</strong>, cutting R&D efforts . Thanks to local government support, Marangoni SpA is getting a new technical centre at a bargain basement price. The company is spending up to €16 mi lion to build a new technical centre adjacent to its headquarters in Rovereto, in the Trentino region of Italy. The local government is putting in 70 percent of the total cost in an attemp to develop technological expertise and possibly create jobs in the region, leaving Marangoni with an net investment of under €5 mi lion. For this, Marangoni wi l get a new building, the services of a number of trained technicians and the centrepiece of the investment, a MTM flexible tyre building machine from VMI Epe. The MTM unit is designed to produce tyres in short batches and se ls for a nominal €4 mi lion. However, according to a company spokesman, the new research centre is aimed primarily a the fledgling machinery sector, rather than as a development centre for new tyres. Strong growth since 2005 Marangoni reported total turnover in 2005 of €310 mi lion. This was split between four sectors, as shown in the table, according to a Marangoni corporate presentation. While the machinery division has been growing strongly since 2005, it generated a turnover of just €9 mi lion in the most recent year, according to data supplied to <strong>ERJ</strong> by Marangoni. An investment of €16 mi lion would be unthinkable for such a sma l business, bu the local government support brings the investment down to around six months’ worth of turnover. Sti l substantial, but not completely out of the ba lpark. The Marangoni spokesman said the new unit would be used in a number of broad application areas. It is, he said, primarily a research facility, and there is no expectation tha the MTM machine, or the technical centre wi l be used for tyre production on a routine basis. The key areas of application, he said, are for researching stripwinding technology. However, the centre may be used to develop new racing tyres as the company raises its profile in the motor sport sector. Also, there may be a need to produce the occasional short batch of specialised tyres, he said. “We are relative newcomers to the world of new tyres. From the ‘90s we have been in Anagni. We are proud of the progress [we have made]. We have some very we l-qualified people that have joined. Now we feel ready to develop technology.” No need for splices He added that strip winding has proved successful in trial applications, delivering consistent, we l-balanced tyres, with no need for splices or other discontinuities within the tyre. The spokesman said Marangoni has been working with one of the best known names in <strong>Euro</strong>pean tyre makers to perfec the system and has recently sold strip-winding equipmen to the company. “After three years of trials they are introducing for the firs time the machinery into standard production, the result is very good from a quality standpoint.” Massimo De A lessandri managing director of the holding company later said the customer was Continental. The spokesman reported that engineers at this customer, said the strip-winding technology is not for flexible production – the volume of tyres is too big for that, but for quality. He said one area Marangon is studying is to make a green tyre in which the outer layer of rubber – the tread compound – has a geometry that reflects the final geometry of the cured tyre. Current green tyres are smooth on the outside. When they go into the mould, the steel mould pushes into the rubber, making it flow and distort, and introducing stresses and inaccuracies. These inaccuracies can be reduced by making a tyre in which the tread ribs are pre-formed at strip-winding stage. “More important is that where you have a tread with a deep groove, then you can only apply green rubber where the rubber is needed, just by modifying the software. The green tyre wi l fit more precisely in the mould, so the flow of rubber inside the mould is easier. “ He said Marangoni is using a five-axis robot to apply the strip to the semi-finished green tyre. Speaking to an invited audience, Mario Marangoni, president of the company referred to the MTM system as an island manufacturing solution. He said, “hopefu ly the machine wi l be reliable enough that it can run in an unlit workshop.” ■ By David Shaw, <strong>ERJ</strong> Sta f, dshaw@crain.co.uk P R O F I L E – M A R A N G O N I www.europeanrubberjournal.com ●w indicates that an extended version is available on-line E U R O P E A N R U B B E R J O U R N A L JULY/AUGUST 2007 30 Fo low thi story on-line with more in-depth analysis and comment www.europeanrubberjournal.com ●w MARANGONI TURNOVER SPLIT Tyre Products – Services 38% Retreading Systems 36% Commercial and Industrial tyres 24% Technologies 2% New o fices for Marangoni Meccanica Hopefu ly the machine wi l be reliable enough that it can run in an unlit workshop Mario Marangoni, President ’ ‘ Marangoni hopes that its strip winding technology can bring it sales and profits in years to come. A shot in the dark The <strong>Euro</strong>pean compounding business is dividing into three sub-sectors. The most interesting sector is sma l in volume, but high in value — and interesting from a profitability standpoint. That sector is dominated by relatively small companies who specialise in making sma l quantities of high-value compound for delivery within days to anywhere in the world. In the middle is the more traditional compounding area: making mid-range compounds for use in the automotive and general rubber goods area. While this segment is currently booming, with rapid growth and increasing demand, it is not an easy way to make profits. The customers demand good technical service, fas turnaround and increasingly, wide geographical spread. The expense involved in logistics and setting up new facilities, combined with di ficult raw materials situation has made 2005 and 2006 di ficult years, though 2007 looks as though it wi l be easier for many of the participants. Fierce price competition A the low end of the business are the compounders who specialise in tyre and retread markets. This market has been dominated by fierce price competition for many years and remains that way. One of the key differences between the three di ferent sectors is the amount of nominal capacity the compounder has available compared with the actual throughput. A the top end, companies might have three or four times as much mixing capacity as they appear to need for the throughput. In the middle, mixers are being used at 50 to 90 percent capacity, while at the retread end, the mixers are being used at close to 100 percent capacity. Excess capacity delivers flexibility. At Polycomp, in the Netherlands, for example, the company already has four sma l mixers which together bring total capacity to around four times actual throughput, bu the technical director, Kees Scherer is already thinking about adding a fifth line, to ensure that his ability to fulfil an urgent order is never compromised by lack of mixing capacity. Like others in this premium end of the business, orders are always delivered within a week, but rush jobs can be delivered in a day or two. A little way down the added-value scale, By David Shaw, <strong>ERJ</strong> Sta f, dshaw@crain.co.uk R E P O R T – C O M P O U N D I N G E U R O P E A N R U B B E R J O U R N A L JULY/AUGUST 2007 16 A broad survey of <strong>Euro</strong>pean compounders reveals the emergence of a profitable niche: smal lots of high-tech compound delivered on shor time scales. Mixing it with rubber Hexagon, PTE and others are fo lowing their customers to Mexico, China and other parts of the world, setting up mixing units there. The expectation is tha these units will quickly fi l up to 80 or 90 percent of nominal capacity. These companies use their skill in scheduling to ensure the mixer is kept operating for most of the time, but one consequence of that is that in the mid-range, the norma lead time for a batch of compound is a week or two. Despite some di ficulties, no-one in the compounding business was complaining. Most of the compounders <strong>ERJ</strong> spoke to were seeing increased demand for their products and have seen the raw materials market return to some semblance of stability after the chaotic time of 2005 and 2006, when prices were going up seemingly out of control. Polycomp, based in the Netherlands is another company focussing on highspecification, low volume business. Kees Scherer, technical director at Polycomp said the company is doing we l and is thinking of adding a new mixer to cope with demand. He said, “we are ge ting more customers who are looking for flexible, fast, high- added value compounds and the knowledge we can give.” Scherer said the strategy outlined three to four years ago is continuing, and the company now processes more FKM materials than a l other polymers combined. The percentage of FKM, he said, is up to around 70 percent now, compared with 50 percent a couple of years ago. He said the company’s compounds go into a l kinds of applications from fuel hose to jewe lery and specialist O-rings. This la ter application, he said is very interesting. He said there are maintenance companies who serve the oil extraction business and they have their own moulding facilities and moulds. They are ca led in when a pump or seal in an oil we l or other insta lation fails. Often, said Scherer, they need a high grade seal at very short notice, bu the key is tha they are ca led in when a seal has failed, so the maintenance company wants to upgrade the material used in the seal. “There is a breakdown because of a specific aggressive chemical, but they need an upgraded seal and they sti l want it in a day or two.” Scherer said that in this kind of application, money is less of a constraint than ge ting the system working again with the minimum loss of production. So there is very high added value for a company that can develop a compound for a specific application, then mix the compound and deliver it to a location in the Middle East, or elsewhere within a day or two. Scherer said he origina ly got into the business fo lowing recommendations from his material suppliers, specifica ly DuPont Performance Elastomers, but once the maintenance companies learned the level of service Polycomp can o fer, they now come to him direct when they need material urgently. Scherer said there is sti l plenty of room for companies who have the expertise and are able to deliver the right level of service to customers who are quite demanding about compound and batch size. Scherer said he is able to deliver this level of service because he is not constrained by capacity on his mixers. “The factory we have can process four times as much as we do at present, but we are using this spare capacity as a flexibility resource, and we want to be able to keep on doing that.” He said. Even though there i so much spare capacity, flexibility is more important, so he is adding a fifth mixer — also 25 litres — which wi l be on stream later this year. Polycomp adds fifth mixer for FKM Clwyd is one of the top-flight compounders aiming to serve demanding customers with sma l quantities of high-value product on a very short turn-around. Martin Lee, sales, director, said business is good and expects 2007 to be a good year. Clwyd is based in the UK, and while the UK rubber industry has su fered heavily in recent years, Lee said the companies who remain have weathered the storm and they are mostly strong and successful. He said that most of his customers are ahead of last year and up with their respective forecasts. He said most of his customers now are, “not run by rubber people; they are run by engineers and by people with tooling experience and production experience. “ In most cases, he said, Clwyd provides the fu l service of compound development, working to specifications from the customer. He said some of these companies use only 75 kg of compound each year, taking the material in batches of 5kg or 10 kg. Clwyd’s ski l, he said, is being able to supply such sma l quantities on a fast turnaround. According to Lee, “there are not too many people o fering the service in the UK — high performance, speciality, sma l lots, short lead time, fu l tech service. That is Clwyd‘s strength. That is what di ferentiates us. “ One area that has grown recently is perfluoroelastomers (FFKM). Lee said he mixed around 50 kg of FFKM materials in 2006. The company has set up a specialist unit with its own mixer to do these extremely highvalue compounds. He said he can receive an order, mix it and send it by overnight courier anywhere in the world. “You can ship that by DHL next day and it is not going to a fec the price in the slightest,” he said. Lee commented that he is ge ting enquiries for perfluoroelastomer compounds form Korea, Taiwan, China as we l as geographica ly closer locations. He said that as some of the larger companies in the UK have taken out mixers, and he has picked up some or a l of their business. Thus, Clwyd’s mix of recipes are split about 50:50 between Clwyd’s own formulations and the recipes supplied by clients. Lee said that in 2001 and 2002 Clwyd was only mixing 20 percen to customer formulations. Clwyd specialises in fluoroelastomers, working closely with a l the main suppliers of these high-value materials. He said that prices have leve led out in recent years. Historica ly, he said Italy has often been a region where prices were lower than in the rest of <strong>Euro</strong>pe, however, he is now starting to win back business that he previously lost to Italian suppliers who were able to deliver at a be ter price than Clwyd. Clwyd Compounders for FKM Information We present here a series of charts and tables which are meant to give a snapshot of how the rubber industry is performing. The price of rubber on the Singapore commodity exchange is possibly the most important price in the industry, while the oil price also has an impact on the price of synthetic rubber and of other chemicals. Also, since most rubber ends up in the automotive sector, the main table lists recent registrations on a country-bycountry basis. Underneath, four charts track the monthly movement of truck registrations in <strong>Euro</strong>pe. On the far right is a series of charts showing the share price performance of various companies who are predominantly involved in the rubber business. Each share price (in a dark colour) is compared with the US-based S&P-500 index (in brighter red). The prices are tracked over the las three months. The companies listed are (from top to bottom): Amtel-Vredestein Avon <strong>Rubber</strong> (UK) Bridgestone Corp. Continental AG Cooper Tire & <strong>Rubber</strong>. Goodyear Tire & <strong>Rubber</strong> Groupe Michelin Phoenix AG Tre leborg AB Stocks data supplied by FT.Com Input prices stabilising after a year of turbulent activity JULY/AUGUST 2007 E U R O P E A N R U B B E R J O U R N A L I N D U S T R Y D A T A www.europeanrubberjournal.com ●w indicates that an extended version is available on-line 33 <strong>Euro</strong>pean truck registrations Jan 06 - Jan 07 Amtel-Vredestein Avon <strong>Rubber</strong> (UK) Bridgestone Corp. Continental AG Cooper Tire & <strong>Rubber</strong> Goodyear Tire & <strong>Rubber</strong> Groupe Michelin Phoenix AG Tre leborg AB SHARE CHARTS © BIGCHARTS.COM Price trend (red) of Brent Crude spot over the last 12 months WTRG ECONOMICS SICOM, THE SINGAPORE COMMODITY EXCHANGE Price trend (red) of RSS1 over the last 24 months ACEA, THE A SOCIATION OF EUROPEAN CAR MANUFACTURERS Provisional new passenger ca registrations: <strong>Euro</strong>pe (EU + EFTA) 16/01/07 LCVs up to 3.5t Buses & Coaches over 3.5t CVs over 3.5t Heavy Trucks over 16t involving many di ferent components. There are issues of adhesion, chemical bonding agents and the cha lenge of e fectively modelling visco-elastic behaviour. Combine that with a range of poorly understood mixing and curing processes and the opportunities for loss of quality are very great. This is why, in the technical component fields, thermoplastic elastomers are winning share against the thermoset elastomers: The curing process leads to imperfections and lack of quality. This, in turn leads to higher costs. Even though the per-kilo costs of TPEs are higher, the cost of the finished, delivered, fitted component is often lower than the equivalent thermoset rubber component. Although the technology is di ficult and complex, this is no the most cha lenging aspect of making money in the rubber industry. That honour belongs to the commercial realities. The largest companies in the tyre and rubber industry are generating a turnover of around €10 000 mi lion. Their primary customers are car makers with sales volume ten or 100 times that. Their suppliers are the chemical companies who are both large and driven by the price of oil. The rubber product business seems easy This presents a squeeze, rather like an Greek boat captain navigating between Scy la and Charybdis. To me, the key ski l in this sector is managing the relationships between raw material and process costs on the one hand and se ling prices on the other. However, the rubber product business seems easy when compared to the rubber machinery industry. First of a l, the biggest rubber machinery makers are a hundred times sma ler than the biggest rubber processing companies. Second, the machinery business is still highly fragmented, so there are many companies competing for the same business. Third, large machines depend on bearings, motors and suchlike, bu these components are in short supply. Fourth, with the advent of low-cost suppliers from China, Western suppliers have to rely on their technological edge to win orders. Fifth, service is now a global operation and many customers expect next-day or same-day service. A lot of them do not expec to pay for that service, but wi l scream and ye l when a machine goes wrong. Sixth, as the centre of mass of the rubber industry moves from <strong>Euro</strong>pe and North America to Asia, South America and Russia, traditional suppliers are having to come to terms with di ferent cultures, di ferent expectations and the expense of long-distance travel and accommodation. Finally, it is quite easy to show that the initial capital cost of a machine bears little relation to the overa l cost of ownership of that machine, but the two budgets seem to be separate in most companies, so that the purchaser looks primarily at the initial capital expenditure, with little concern for the ongoing costs of the machine once it is insta led. ■ And you thought the rubber industry was tough... E U R O P E A N R U B B E R J O U R N A L JULY/AUGUST 2007 By David Shaw, <strong>ERJ</strong> Sta f, dshaw@crain.co.uk www.europeanrubberjournal.com ●w indicates that an extended version is available on-line 40 P O S T S C R I P T When I first came into this industry, people told me tha the rubber industry was a strange one. Now, after nearly 20 years, I am inclined to disagree. I think this business is fairly similar to other industries. There is profit and loss, technology and service and an increasing trend to globalisation. Things rea ly are not so di ferent. However, I must put a huge caveat in there. I do not envy those who have profit & loss responsibility for businesses in this sector. While the business is not so difficul to understand, it is a fiendishly di ficult one in which to make money. The devil, as always, is in the details. <strong>Rubber</strong> products are, on the whole, both capital-intensive and labour-intensive. That means factories have to be run pretty much at 100 percent capacity, if they are to have any chance of making money. Factory economics aside, the products are usua ly complex assemblies or composites, <strong>ERJ</strong> welcomes feedback and encourages the exchange of ideas and opinions, however controversial. If there is an issue you feel strongly about and would like to present it in Postscript please contact us on tel: +44 20 7457 1408, fax: +44 20 7457 1440, or email dshaw@crain.com <strong>Rubber</strong> products are, on the whole, both capitalintensive and labourintensive. That means factories have to be run pretty much at 100 percent capacity, if they are to have any chance of making money ‘ ’ T H E I N T E R N A T I O N A L P U B L I C A T I O N W R I T T E N F O R T H E
W O R L W I D E R U B B E R I N D U S T R Y cision makers Editorial resources ‘ If it’s happening in the world of rubber, then we write about it ’ www.europeanrubberjournal.com ● HEAD OFFICE Crain Communications Ltd 3rd Floor 21 St Thomas Street London SE1 9RY England Tel: +44 (0)20 7457 1400 Fax: +44 (0)20 7457 1440 <strong>ERJ</strong>@crain.co.uk www.europeanrubberjournal.com RuBBer<strong>Journal</strong> EUROPEAN JULY/AUGUST 2007 www.europeanrubberjournal.com Managing Director Paul Mitchell Tel: +44 (0)20 7457 1431 PMitchell@crain.com Editor David Shaw Tel: +44 (0)20 7457 1408 DShaw@crain.com Staff Reporter Simona Stankovska Tel: +44 (0)20 7457 1409 SStankovska@crain.com News Tel: +44 (0)20 7457 1409 News@crain.co.uk Production Editor / WebMaster Nick Gorman Ads@crain.co.uk ● CORRESPONDENTS US Bureau Ed Noga Tel: +1 330 836 9180 Fax: +1 330 836 1005 ENoga@crain.com A PUBLICATION . REPORTING ON THE GLOBAL RUBBER INDUSTRY SINCE 1882 3
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