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June 07, 1999 02:00 AM

RETREAD TESTING PROPOSED IN EUROPE: RETREADERS FEAR FINANCIAL BURDEN

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    LONDON—Retreaders throughout Europe are concerned about the latest proposed European standards for retreading, which contain a provision calling for retreaders to submit their products for testing. The new requirement, which calls for each retreading plant to submit five tires for testing initially and then a further two per year, would impose both a financial burden and a logistical dilemma, according to an assessment by Bandag Inc.'s European office. Retreaders are concerned because there is not enough independent testing capacity in place to handle the load.

    While Bandag supports the idea of legislation that will improve quality and enhance the reputation of the retread business—as this is intended to achieve—the firm is concerned that precise implementation of the new regulations does not take into account the needs of independent businesses, Bandag executive Lennart Lindstrom said.

    Larger retreading companies tend to be linked with large tire makers and have access to their own testing facilities, he said. This means that the implementation of the regulations as European Union law would benefit the larger companies initially, at the expense of smaller ones.

    Mr. Lindstrom, speaking at a recent meeting of the international tire traders group Bipaver, said there is a strong desire in some countries—notably France—to implement this as law with little debate of the implications.

    The total retread sector in Europe processes more than 100,000 metric tons of rubber per year, with 825 companies providing employment for 20,000 workers, Mr. Lindstrom said. Roughly half of all replacement truck tires are retreads. But they have a lower value than new replacement tires making the retread business in Europe worth around $1.1 billion out of a total replacement market for truck tires of $3.2 billion.

    Of these retreading companies, a dozen or so are very large, accounting for 25 percent of the value of the retread sector. The remaining 800 or more are small and medium-sized enterprises, which would suffer if the requirement for testing were brought in immediately.

    These retreading businesses would need testing capacity for about 4,000 to 5,000 tires in the first year. Unfortunately, Europe has only four independent test facilities—two in Great Britain, one in Germany and one in Sweden—with combined capacity of only 1,700 units per year, Mr. Lindstrom said.

    Additionally, the facilities in Britain and Sweden have speed restrictions of 62 mph and 55 mph, respectively, while the German unit can go up to 81 mph.

    Typically, drive tires require testing to 81 mph, while trailer tires need testing only up to 55 mph, Mr. Lindstrom said.

    Although no country has yet put these recommendations onto their statute books, which means they have no legal authority, the idea is to harmonize retread business regulations across Europe.

    Since March 1998, however, there is an official requirement on all European Union states to implement this legislation.

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