HOUSTON (April 24, 2000)—It doesn´t take a Mexican chef to realize the U.S. is one hot tamale of a market for tread rubber.
Since establishing a U.S. base of operations in Houston four years ago with its Bandamatic Systems USA Inc. subsidiary, Mexico City retreader and tread rubber producer Hules Banda S.A. de C.V. methodically has attempted to crack into a few select north-of-the-border markets, including Texas and California.
Now, with its tread rubber shipments to the U.S. and Canada growing at an ever-increasing rate, the company has assembled a sales, marketing, service and training staff to make a run at the entire continent.
Fronting the Tex-Mex effort out of Bandamatic´s Houston distribution center is 76-year-old Joseph J. Kilcoyne, who´s no stranger to retreading. The retired Oliver Tire & Rubber Co. executive and retired former director of member services for the International Tire and Rubber Association admits he just can´t stay retired for very long.
He seems to have a lot more treadlife in him and the energy level of someone perhaps half his age.
In May 1999, he was hired by Hules Banda as Bandamatic´s vice president, sales and marketing, with the goal of expanding its distribution in Canada and in the U.S.—which he called "a tough market, but we´ve done pretty well and have some good customers."
Plans are under way for a warehouse in California, where Bandamatic has been "working that market pretty heavily," Mr. Kilcoyne said. "We´re now selling in New Jersey, New York, Alabama, Florida, North Carolina—there are very few places where we´re not knocking on doors."
The entire history of the company is punctuated by growth.
In 1952, Heriberto Romero and his father-in-law, Caesar Garcia, formed a partnership—called Llantera Garrom, a combination of their names—then began operating a small retread plant in Mexico City. By the 1960s, they were retreading more than 25,000 passenger and 1,000 truck tires per month.
The firm entered the tread rubber business through necessity.
Firestone Tire & Rubber Co. had a then-new tire plant in Mexico City and used its excess capacity to make tread rubber for Garrom and others—until new-tire production increased and the factory no longer could supply Mexican retreaders.
So in 1975, Garrom built its own rubber manufacturing plant, in part to insure a continuing supply of high-quality material, and became Hules Banda—``Band of Rubber" in English.
Today, Hules Banda´s three Banbury mixers produce 26 million pounds of tread rubber annually. With the recent addition of two more Banburys, it expects to boost capacity by at least another 12 million to 14 million pounds per year.
The firm also operates three commercial and 16 retail outlets in Mexico. Mr. Kilcoyne said it is considered the biggest Firestone- and Bridgestone-brand new-tire dealer in Mexico and Central America.
Times have changed, however, for Hules Banda´s retreading business. Mirroring the U.S., passenger tire retreading has slipped drastically in Mexico, which is converting rapidly to radial retread production from bias. The company has scaled back to about 2,500 car-tire retreads monthly, while its output of medium- and heavy-truck tires has increased to 8,000 per month.
Hules´ tread rubber unit produces die-sized, strip and precured rubber and cushion gum, Mr. Kilcoyne said, and manufactures belts for the mining industry and rubber carpet backing for the automotive industry. It markets, but does not make, tire repair materials, and also took over the inner tube line from Bridgestone/Firestone Inc. in Mexico.
Taking into account Bandamatic´s growing revenue in the U.S., Mr. Kilcoyne forecasts stateside tread rubber sales this year will be 10 times greater than when the subsidiary began four years ago on the heels of the North American Free Trade Agreement (NAFTA). Before that pact eased tariffs, he said it simply wasn´t feasible to be price-competitive with imported tread rubber.
Bandamatic´s Houston distribution center handles North America and the Caribbean.
Because of Hules´ market penetration—Mr. Kilcoyne called it one of the biggest retreaders in South America—and its demand for quality tread rubber, the company is "intimately knowledgeable of the retreading industry´s needs because they do it every day."
Like in the U.S., an ongoing problem in Mexico is a shortage of good-quality radial casings, he added. While Hules sells no retreads in this country, it has been forced to obtain usable casings from the U.S. for its 80,000-sq.-ft. Mexico City retreading plant.
Mr. Romero, a former president of the Mexican Tire Dealers Association, continues to head his family-run business along with sons Heriberto Jr., Jorge, Garro and Enrico, and two sons-in-law.
Banking on rubber compounds that offer "less cost per mile," Hules said it produces more than 180 tread designs molded in its 36-foot-long Pathex presses that cure treads under pressures of 3,500 pounds per square foot to increase wear resistance.
Hules shares the Mexican tread rubber market with its biggest competitor, Galgo S.A. de C.V., which also began selling precured treads directly to U.S. customers several years ago. Galgo, however, has no retreading facilities.
Mr. Kilcoyne, on the other hand, may want to consider buying interest in a shoe leather factory. He and Bandamatic´s operations manager, Alfonso Guiterrez, comprise the unit´s U.S./Canada sales staff.
Yet, as he racks up frequent-flyer miles, he hasn´t really thought about retiring.
"I kind of enjoy what I´m doing," he confessed. "I´ve got all my faculties and can still think. Why should I retire?
"I´d rather be active then just sit around. I enjoy meeting people, being part of the action. If I felt I was compromising anything, I wouldn´t do it."