Hules Banda, Vipal execs see slight signs of rebound

PANAMA CITY, Panama (Aug. 1, 2016) — The growing prevalence of lower-priced medium truck tires, predominantly from China, is impacting retreaders in many parts of the world, but in Latin America there are signs retreading may be on the upswing again.

Both Heriberto Romero, director general of Mexican tread rubber suppler Hules Banda S.A. de C.V., and Jean Alexander Barros, coordinator of commercial products in Mexico and Central America for Brazilian tread rubber supplier Borrachas Vipal A.S.,  told attendees of the recent Latin American & Caribbean Tyre Expo in Panama City their companies are seeing signs of rebounding business throughout Latin America.

It's not all wine and roses, however.

“We've reached rock bottom,” Mr. Romero said. “We're seeing a slight uptick in retreading in 2016…. We're seeing volume trending upwards.”

Despite the potential rebound, Mr. Romero cautioned that it's not likely to be business as usual going forward, and he urged independent retreaders and tire dealers to rethink their modus operandi and “turn crisis into opportunity.”

“You have to adjust,” he said, “or someone else will take care of it for you.”

Among his suggestions? Go after business that's previously been ignored. Diversify.

Mr. Romero noted, for instance, that 80 percent of the trucks running in Latin America are operated by independent truckers, many of whom don't run on retreads.

Gaining such business won't be automatic, however, he continued, considering the low prices of some new tires on the market. Retreaders will have to invest time and resources to educate these independent operators on the economic benefits of using retreads.

Retreaders also should consider looking beyond tires for more revenue, he said, noting that lubricants, maintenance services, shocks, batteries and/or alignments offer complementary sales opportunities.

Many dealers will find they can diversify without having to expand their staffing levels, although retraining will be necessary.

Mr. Barros also said he believes retreading will defend its position in the marketplace, but the new tire/retread relationship has shifted dramatically toward new tires the past few years in light of the flood of lower-priced imports.

From 2012 to 2015, he said, the number of new truck and bus tires sold each month in Mexico grew to 583,000 from 333,000, while at the same time the number of retreads sold fell to 100,000 a month from 142,500.

Mr. Barros then presented a series of figures showing the false economy of low-priced, inferior-quality new tires, which rarely, if ever, get retreaded.

In Mexico, Vipal calculates such tires cost roughly $2.40 per 1,000 kilometers (620 miles) of life.

By contrast a more expensive, but higher quality, new tire that can be retreaded will cost the user as little as $1.15 per 1,000 kilometers with one retread and 92 cents with two retreads.

“Cheap turns out expensive,” is how he summed up the exercise.

Messrs. Romero and Barros were part of a business conference held during the second day of the expo. Other speakers included David Stevens of the Tire Retread and Repair Information Bureau (TRIB); Milton Lopez of Maxam Tire Latam L.L.C.; Cesar Mendieta of Hankook Tire Centroamerica; and Dewey Grantham Jr. of Liberty Tire Recycling.

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