The United States is just one of 90 countries in which Borraches Vipal S/A operates. But it is an important market for the Brazil-based supplier of tread rubber, retreading equipment and other items.
The company’s subsidiary, Vipal Rubber Corp., which is based in Miami, Fla., supplies tread rubber to more than 30 retreaders throughout the U.S., and several more in Canada and Puerto Rico.
In this interview, Leandro Rigon, Vipal’s international business director, discusses Vipal’s plans – which he says are “big” and “ambitious” – for the North American tire market.
MTD: What’s your take on the current state of the retread market in North America as we prepare to enter the second quarter of the year?
Rigon: It has been a great start of the year for us. Winter is always slow. However, in comparation with the first quarter of 2019, it has been really good. The rest of the year looks really promising.
MTD: What trends did you observe during the first quarter of 2020 and how did they impact Vipal ’s business?
Rigon: We observed several macro trends, as gross domestic product, employment level, fed actions, commodities price, and many others – and in general, the economy – are performing well, and this is very important. However, a trend that affects, in a more direct way, our industry is the volume and prices of low-cost tires imported from China. We have observed a much lower volume of this product and we are confident that this potentially will lead to an increase in the demand of retreads. It is worth mentioning that this drop of the imported tires from China is due to the current countervailing and antidumping tariffs. And finally, another trend that it is not measured in numbers and has an important effect on our business is the optimism among our dealers. We can say they feel, in general, optimistic about the future of our industry, and this affects directly their investment plans, especially in new retreading equipment. This is very important for us, as we are launching this year in the U.S. our new state-of-the-art machinery portfolio.
MTD: In 2018, it was announced that Vipal and Marangoni were joining forces and that North and South America would be an early focus of the partnership. Can you update us on what has been achieved thus far?
Rigon: Both corporations agreed on a deal, where Vipal has bought a major share of Marangoni’s American operations. (Editor’s note: In early 2019, Vipal acquired 51% of Marangoni Tread North America Inc.) We have a great team together and looking to the future, we see a brilliant opportunity for the market.
MTD: What are Vipal’s continued plans for the North American (U.S. and Canada) markets? Does Vipal plan to sign any independent retreaders in the U.S. or Canada? If so, are you targeting certain kinds of retreaders or specific geographies? Do you have a numeric target in mind, and if so, what is it?
Rigon: Vipal has, without doubt, big and ambitious plans for the U.S. and Canada markets. This market is the biggest retread market in the world, and we are committed to strengthening our presence and market share, through delivering an outstanding product and service at a very competitive price. Our expansion plans involves geographies. We opened a few years ago a warehouse in Los Angeles, our third in the U.S., and assigned resources to provide products and services to the west coast. Now we are suppling with Vipal treads to very important companies, such as Pete’s Road Service, among many important others in this area. We also expect to expand our current dealer network, providing them with the latest in technology applied to retreads and finally throughout new lines of business, such as our new machinery division.
Another strong pillar in our expansion plan is our compound division. We are currently supplying high performance rubber compounds to the U.S.’s largest OTR tire retreader, Purcell Tires & Rubber Co., which has been a very important component in our very successful 2019.
MTD: What impact – if any – are tariffs and ongoing trade tensions with China having on Vipal’s business in the U.S.?
Rigon: As I mentioned before, we are confident that this will affect positively our industry, in general. industry in the process affects directly their investment plans, especially in new retreading equipment. This is very important for us, as we are launching this year in the U.S. our new state-of-the-art machinery portfolio.