After dipping its toe into the North American retreading pool two years ago, Continental Tire the Americas L.L.C. (CTA) is plunging headlong into the segment, forming a dedicated business unit to develop a line of proprietary ContiTread precured retreads and setting up a network of licensed retreaders.
The new business unit, called Conti LifeCycle, expects to start naming its first retread partners in the coming weeks, according to Paul Williams, executive vice president for commercial vehicle tires.
The expanded retread strategy is in addition to Conti's existing license agreement for Conti-branded precured ringtreads with Marangoni Tread North America Inc. That agreement lasts through year-end 2013, Mr. Williams said. ContiTread ringtreads are being produced by all of Marangoni's 27 licensed retreaders in North America.
The move puts CTA, which has boosted its new truck tire market share measurably in the past few years, into direct competition with the major competitors, Bridgestone Bandag Tire Solutions, Michelin Retread Technologies (MRT) and Goodyear fleetHQ. Conti's commercial tire business generated $570 million in sales in North America last year.
Conti will supply its licensed retreaders with tread rubber from a plant in Morelia, Mexico, it acquired late last year and re-engineered to its specifications, Mr. Williams said. The plant is capable of turning out 500,000 treads annually now, but Conti expects that to double by the middle of next year.
The Fort Mill-based tire maker did not disclose the size of its investment in the plant or the LifeCycle initiative overall.
Mr. Williams, in charge of truck tires for CTA since 2008, called the response from dealers to the LifeCycle concept “staggering.”
“Even before we made any official announcement of our intent to offer the LifeCycle concept in the U.S., we were fielding calls from all over the U.S. and Canada,” he said during a conference call with the trucking and tire trade media.
Mr. Williams declined to identify any of the truck tire dealers who've expressed interest in becoming licensed Conti LifeCycle retreaders.
“We're looking at established retreaders and at dealers who don't retread,” he said, adding: “We have to pick key dealers who can serve the customers effectively.”
Several dealers who sell Conti- and/or General-brand truck tires and/or are Marangoni RTS licensees contacted by Tire Business declined to comment on the LifeCycle initiative or the possibility of their joining the network.
Mr. Williams stressed that Conti is starting with a clean sheet and therefore can establish a network of licensed dealers with geographical integrity.
He said the goal is to create a “seamless” network of dealers who can sell and service a premium product. Having a premium retread product to offer alongside the new tire line should help open doors for dealers to fleet accounts that demand a full portfolio.
Competitors Bridgestone Bandag, MRT and Goodyear declined to comment on Conti's plan, as did Marangoni Tread North America, which branched into the traditional, flat precured tread rubber segment last year with a $3.3 million investment at its tread-pressing plant in Madison, Tenn.
Product-wise, Conti is promising that retreads produced using the LifeCycle products and technologies will deliver the same performance as new Conti truck tires.
“Continental's portfolio of retreading is exclusively built around the technologies and tread designs of our new tires,” Mr. Williams said, “and we will be the first major manufacturer to build from the ground up without having any unlinked products that are separated between the design of the new tire and that of the retread.”
Conti has started building a network of independent, licensed retreaders in Mexico, with six plants already operating and six more scheduled to open this year, Conti said.
CTA named John Barnes, the commercial vehicle tire unit's former business development manager, head of LifeCycle activities for the Americas. Mr. Barnes has been active the past year overseeing the sourcing, construction and management of the ContiTread-licensed retread plants in Mexico.
Conti is taking the retread initiative to all of the Americas, as well, opening a company-operated retread plant in Ecuador to serve the Andean market, and taking steps to launch the ContiTread line in Argentina, Brazil, Chile and Colombia.
In Ecuador, the company has built a plant in Guayaquil that will open in April and serve customers in southern Ecuador and the country's coastal regions, Conti said. It is the firm's second retread plant in the country, along with a 17-year-old facility in Quito that the tire maker took over in its acquisition in 2009 of Ecuadorian Rubber Co. (ERCO), which since has been renamed Continental Tire Andina S.A.
Together the two plants will be capable of producing 80,000 ContiTread retreads annually, Conti said, which will be sold principally through the firm's ContiTruck Centers controlled distribution network throughout the Andean region.
Conti claims an 18-percent market share for retreading in the region—which consumes about 16,000 truck retreads a month—under the Renovallanta brand name and is experiencing “significant” growth so far this year.
“You will definitely see our footprint grow throughout the Americas as we continue to support and expand the Conti LifeCycle this year. Retreading represents the future of Continental and what we can offer our customers,” Mr. Williams said.