Exclusive! Marangoni CEO expects rebound
Marangoni Tread North America (MTNA) enjoyed its best year ever in 2009. In this exclusive interview, MTNA CEO Bill Sweatman discusses the state of MTNA’s franchise network, the company’s manufacturing alliance with Continental Tire the Americas LLC, the viability of “green” retreads, and more.
This interview is the first in a series of in-depth question-and-answer sessions with executives from the country’s four largest retread companies – MTNA, Bridgestone Bandag Tire Solutions, Goodyear Tire & Rubber Co. and Michelin Retread Technologies Inc. – exclusively available on www.moderntiredealer.com. Abbreviated versions of the same interviews can be found in the April 2010 edition of Modern Tire Dealer, which is available now.
MTD: What was 2009 like for MTNA? What were your challenges?
Sweatman: By every measure, the transportation segment suffered with lack of investment, new vehicle sales and total revenues – everything was down. And of course, in that environment, (fleets) did what they had to do. Vehicles were parked, tires were pulled off, and maintenance was deferred. In every segment, too much capacity was chasing too little business. Those fleets that survived did what they had to, and none of it was easy. But they’re probably better positioned now than they were before.
Here in North America, it was our biggest year ever. We’ve had 10 consecutive years of sales and market share increases. We sold more products to more customers than ever before.
MTD: Did you have any new franchisee signings in 2009?
Sweatman: No At the end of 2009, we didn’t have any more than the year before. What we did have was a lot more associate dealers. There wasn’t a need for more capacity in a declining market, but there was a demand for our product in other places. Our dealers were able to expand their business by selling to other servicing dealers in other markets.
MTD: How many RINGtread franchisees do you have in the U.S. and Canada?
Sweatman: Right now we have 26 manufacturing RINGtread dealers. But we also sell some conventional precure treads… to more than 40 dealers. So that aspect of the business is growing, as well.
MTD: Does MTNA have certain volume or size requirements when targeting potential RINGtread franchisees?
Sweatman: Size normally reflects the success that the retreader is having. We’re looking for dealers who are financially strong, strategically aligned with the needs of the commercial market, and are committed to quality and customer satisfaction.
MTD: Last year MTNA began producing Continental’s new ContiTread retread product. Can you bring us up to speed on that program? How many RINGtread dealers are producing ContiTread products right now?
Sweatman: More than half of our dealers are participating in manufacturing ContiTread. It’s part of a worldwide agreement we have with Continental. For MTNA, we’re working with them on two major fronts. One, in Mexico, we’re helping to establish a countrywide network of ContiTread retread plants. The first one opened in January, and we’re expecting several more to open during the remainder of the year.
The second initiative is that we have introduced (treads for) the Continental HTL Eco Plus and the Continental HDL Eco Plus trailer tires. They’re designed with advanced compounding for long mileage and fuel economy, and they complement our product line. We’re seeing a steady increase in fleets buying for fuel efficiency.
MTD: At what capacity is your tread rubber plant in Madison, Tenn., plant operating?
Sweatman: Very high. We’ve expanded our production by more than 20% and have increased our manufacturing employees by 20%. We are producing a higher percentage of our needs for North America right here. Part of that has to do with currency (values), but part of what dealers want to do is reduce their inventories. Everybody wants to operate more efficiently, so by bringing more molds from Europe here, we can shorten the supply chain. A very high percentage of our product is available within 36 to 48 hours to our dealers.
MTD: Is MTNA planning any capital improvements for the plant?
Sweatman: We are. We happen to be in a planning cycle right now. We expect to add considerably to our manufacturing capacity later this year so it will be available in early 2011.
MTD: Can you quantify the increase?
Sweatman: 50%. We’re very committed to this market and developing new products. Pretty soon we’re going to have to start preparation for a major capacity expansion.
MTD: The green movement seems to have taken the commercial truck tire market by storm. Do you see a viable market for eco-friendly retreads? Are you developing anything along these lines?
Sweatman: The very nature of our business is as green as you can get. We’re relentless in trying to reduce waste whether in our manufacturing process or our dealers’ process. Our fuel efficient compounds are increasing as a percentage of our overall business. We’re doing things to take processing oil out of the material. It’s a continual process of improving rolling resistance and managing the casing throughout its life.
MTD: Your parent company, Italy-based Marangoni SpA, introduced some new passenger tires in Canada last year. Will we see MTNA branch off into selling passenger tires in the U.S.?
Sweatman: Not for this market. We have some capacity in Italy, but as far as making a commitment to the U.S. market, there is nothing on the horizon.
MTD: What’s your analysis of the U.S. retread market?
Sweatman: The worst is behind us. The transportation industry is a leading indicator of the economy, which is in early recovery mode. We are seeing some promising signs that we are going to see increases in volume. We’re cautiously optimistic. It’s certainly going to take a while, but there is pent-up demand. A lot of maintenance has been deferred and a lot of vehicles have been cannibalized as far as tires and parts. We also have not had a healthy influx of new tires. But as all of those start showing signs of recovery, I think we’re going to see some very good improvements.
Sweatman believes MTNA’s sales will “accelerate as the market improves. We’rre going to be on the front edge of that recovery.”
Stay tuned to www.moderntiredealer.com throughout the month of April for more exclusive retread executive interviews!