'The worst is behind us'

April 21, 2010

There wasn’t a need for more capacity in a declining market” during 2009, says Bill Sweatman, CEO of Marangoni Tread North America (MTNA), “but there was demand for our product in other places.”

The result? MTNA enjoyed its all-time best year in 2009, Sweatman reports. “Our dealers were able to expand their business by selling to other servicing dealers in other markets.”

MTNA has 26 manufacturing RINGtread franchisees in the United States and Canada, but also sells precure treads to more than 40 other dealers. “That aspect of the business is growing.”

In this interview , Sweatman discusses the state of MTNA’s franchise network, its manufacturing alliance with Continental Tire the Americas LLC, whether there is a viable market for “green” retreads, and more.

CTD: Did MTNA sign any new franchisees in North America last year?

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. 2009 was our biggest year ever. We sold more products to more customers than ever before.

CTD: At what capacity is your tread rubber plant in Madison, Tenn., running?

Sweatman: Very high. We’ve expanded our production by more than 20% and have increased our number of manufacturing employees by 20%. We are producing a higher percentage of our needs for North America right here. Part of what dealers want to do is reduce their inventories. By bringing more molds from Europe to here, we can shorten the supply chain.

CTD: Is MTNA planning any capital improvements at the plant?

Sweatman: 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. We’re very committed to this market and to developing new products.

CTD: Last year, MTNA began producing Continental’s new ContiTread product in the U.S. and Mexico. Can you bring us up-to-date on that program? How many RINGtread dealers are making ContiTread products?

Sweatman: More than half of our dealers are participating in manufacturing ContiTread. It’s part of a worldwide agreement we have with Continental.

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’ve introduced (treads for) the Continental HTL Eco Plus and Continental HDL Eco Plus 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.

CTD: 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 green. 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 materials. It’s a continual process of improving rolling resistance.

CTD: What’s your analysis of the North American 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’re seeing some promising signs that we’re going to see increases in volume. We’re cautiously optimistic.

It’s certainly going to take awhile, 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 things start showing signs of recovery, I think we’re going to see some very good improvements.    ■