BEIJING—China's tire sector is at a critical juncture. In 2015 major tire makers in the country had a 14-percent drop in revenue, a 23-percent drop in profits and a 16-percent drop in export delivery value—a level of decline unseen over the past three decades.
The worldwide economic slowdown, China's shrinking demographic dividend and the ongoing U.S. anti-dumping investigation are adding to the dire situation.
In response, the China Rubber Industry Association (CRIA) is urging a transformation towards “Industry 4.0,” as part of the “China Rubber Industry 2025” initiative.
Fan Rende, chairman emeritus of the CRIA, wants to see the adoption of continuous automation in major processes such as mixing, extrusion, tire building and curing, the introduction of conveyer belts and rail guided vehicles, and the development of comprehensive smart manufacturing systems.
“Our aim is to raise revenue per capita by 150 percent, double the profit margin-rate and raise the 'informatization' rate to 90 percent,” Mr. Fan said. “Employee headcount will be reduced by a third, although a larger base of executives is expected for better management.”
Qingdao Sentury Tire Co. Ltd., a bellwether in such transformation, already has two smart plants in operation. One, at its Qingdao site, started production in 2014 and claims to be China's first Industry 4.0 tire plant. It has annual capacity of 5 million passenger tires and received a nearly $100 million investment.
The company also has pumped $400 million into its high-performance passenger car tire plant in Rayong, Thailand. It's rated at 12 million units per year with a factory area of 2.3 million square feet.
With manufacturing and monitoring equipment from the world's leading suppliers, such as Finland's Cimcorp Oy and Germany's Thyssen Krupp Industries A.G., the two plants have realized fully automatic manufacturing for processes from mixing to curing, and are able to raise single-machine production by 50 percent with a 99.8-percent product acceptance rate. The workforce is reduced by 75 percent and construction area cut down by 50 percent compared with the company's standard facilities.
The Thai plant produced its first tire last August and was expected to reach its 30,000 tires/day capacity in June. With optimized design, the distance between raw materials and end products at the Thailand plant is only half of that in traditional plants, saving costs in construction and logistics.
An automated storage and retrieval system (ASRS) is claimed to be the most advanced such system among China's tire makers, with 50-percent more storage capability than traditional storehouses of the same area.
The 130-ft.-tall ASRS covers less than 200,000 square feet and can handle 36,000 tires a day.
About 50 employees work at the warehouse and about 480 are employed on site at the plant—saving $12 million annually in labor costs.
“Cost saving is not the only advantage of trimmed workforce—it also reduces management problems,” said Lin Yilong, general manager of Qingdao Sentury Tire.
“There are cultural differences between China and Thailand or other southeast Asian countries, where employees often come in later or leave early and dislike overtime,” Mr. Lin added. “Although labor costs are lower in those countries, automated production is still a necessity.”
The most advanced automation equipment doesn't equal smart manufacturing, Mr. Lin noted. With the help of Sentury's “smart management system,” a curing press can finish an average of 660 tires during a shift, compared with 500 to 550 tires with the same machinery at other tire makers' plants.
Sentury's smart management system covers a wide range of systems such as product lifecycle management (PLM), enterprise resource planning (ERP) and manufacturing executive systems (MES). The company has developed a mobile app that allows executives to track the real time operational status of each machine, including capacity utilization rate and product acceptance rate. The app also notifies maintenance personnel when a machine is malfunctioning.
Qingdao Doublestar Tire Co. Ltd. is another trailblazer for smart manufacturing. In May 2015, the company signed an agreement with Siemens A.G. to jointly set up an Industry 4.0 innovation center at Doublestar's new tire manufacturing site in Qingdao for the development of “template” smart manufacturing solutions replicable for the tire sector.
“In our future factories, most of the equipment—or the essential equipment—will be manufactured on our own,” said Chai Yongsen, chairman and president of Doublestar Group. “And we'll integrate those we can't make into the system.”
Mr. Chai describes standardized product modules as the foundation of smart manufacturing—the only approach to guarantee timely delivery of products with consistent high quality.
One is for truck and bus tires, using machinery jointly developed with Germany's HF Group or Siemens, such as a hydraulic truck-tire curing press, and built completely to a German design. The other is a relocation and upgrading project for older facilities from Doublestar's existing plant.
The two plants' annual capacity will reach 5 million truck and bus tires, 10 million passenger car tires and 100,000 OTR tires when in full operation.
The first new facility will be able to quadruple productivity; the upgraded plant to double it. “We plan to lower the cost of our new plants to the level of Industry 3.0 or 2.0 plants in three years' time through the reduction of workforce,” Mr. Chai said.
Doublestar also hopes to realize automatic system optimization to replace inspection and monitoring by manpower.
At a separate conference earlier this year, a top executive with China's Mesnac Co. Ltd. said the tire factory of the future needs to incorporate “smart manufacturing” techniques.
“Smart manufacturing means a high degree of coordination,” said Jiao Qingguo, general manager of Mesnac's information logistics system division. “Before you set up a factory, you want to make sure your facilities won't be outdated in a couple of years and can be integrated into future systems.”
Mr. Jiao said Mesnac's vision for future tire factories covers concepts ranging from plant design and automatic storage and retrieval systems (AS/RS) to machine networking and RFID.
For instance, he said, not all internal mixers have built-in network ports, and adding such ports afterwards can cost $1,500 or more for each machine.
Mr. Jiao told conference delegates AS/RS could quadruple the volume of normal one-story warehouses. Mesnac, he said, has built an AS/RS that stands 97-feet high and can handle 70,000 tires a day.
Another technology trend is the rise of RFID technology.
“Tire barcodes only show a tire's parameters before it leaves the factory,” Mr. Jiao said, “but RFID codes can track real time information, such as its mileage. Barcodes will be completely replaced by RFID codes within the next decade.”
In terms of information technology, Mr. Jiao pointed out that an energy management system, though rarely used by Chinese companies today, will become indispensable.
“It can keep count of power consumption in the production of a particular part, allowing factories to make high power consumption parts during time slots with low electricity prices, saving up to $15,000 a year,” he said.
MESNAC is a Qingdao, China-based supplier of rubber and tire processing equipment, with six equipment assembly and/or R&D centers in China, plus facilities in Dubnica, Slovak Republic; Dudley, England; Greenback, Tenn.; and Akron.
This report appeared in European Rubber Journal, a United Kingdom-based sister publication of Tire Business.