Innovation is the key

Innovation is the key

By Antony Powath

All the tyre companies in the world are constantly strategising on their competitive advantages. Their investment plans are aimed to build the right R&D team and embrace cutting-edge technologies as they seek to manufacture products of good quality and at the fastest pace while pressing down cost.

During visits to international tyre shows and conferences, I’ve been seeing a trend that distinctly shows the toughening competition to innovate to produce the best. Tyre manufacturers are striving to be good, fast and cheap. In the hyper-competitive world, everyone emphasises these three characteristics of which most can often opt for only two: Good and cheap but won’t be fast; fast and cheap but won’t be good; good and fast but won’t be cheap.
But top-class companies are working on the possibility of having all three. It is not easy to get the right mix even for the most deep-pocketed tyre companies. The dream is to make the best tyre at the lowest possible cost at the best margin possible. It is not an easy task to get such a mix.
Manufacturers are continuing to drive into the market with high investments while trying to offer the best quality as fast as possible at the best price. It is a challenge CEOs are constantly grappling with. Initially, the investment cost would be high, but the optimism is that after a reasonable period the return on investment would turn attractive. The belief is that automation is a key factor.
Firms in China and India have another asset: low-cost skilled labour. They are aware that automation calls for heavy capital investment. It also ensures that production can be run 24×7 without hassles. Modern technology works faster, is more efficient and lowers the pain to handle the workforce.
By leveraging automation technology, American and European tyre makers that have plants in low-wage countries, particularly in Asia, are in a hurry to relocate to their home countries. The attraction of lower labour cost and land prices that once pulled them to Asia is wearing off.
Perhaps such companies may not immediately stop producing tyres in low-cost countries, but they want to be close to research and engineering firms in their home countries in order to produce quality tyres that are cost competitive by infusion of modern technologies.
All the tyre companies in the world are constantly strategising on their competitive advantages. Their investment plans are aimed to build the right R&D team and embrace cutting-edge technologies as they seek to manufacture products of good quality and at the fastest pace while pressing down cost.

Emerging challenges

The race is to become market leaders. Tyre makers in low-cost countries that once went for pre-owned machinery and equipment are working to upgrade their manufacturing processes as part of the strategy to capture a wider market globally. Many such firms have been going for reconditioned machinery which appears to last forever. Perhaps a decade or two ago, pricing was a critical factor for the Indian tyre industry, which is now witnessing the domestic market growing following an upsurge in the economy. Buying reconditioned machines had made good business
sense initially.
Gradually when the bottom lines began to improve, they shifted focus to R&D and quality machines. In the last few years, Indian firms have grown significantly and are crawling to the top list of 20 ranked tyre companies in the world.
Some of them have already set up offices and plants in different parts of the world either as greenfield projects, JVs or through takeovers. CEAT Kelani in Sri Lanka, JK Tyre’s Tornel in Mexico and Apollo Vredestein in Europe are examples of such companies’ ambitions to go global. Recently BKT is looking to set up a facility in North America.
These tyre companies are in the race to be the best in the world. At various conferences and expositions around the world, you will see them showing up in large numbers. They are keen to observe and learn about modern technology trends. Machine suppliers are keen to tap this emerging market. Automation is also catching up quickly in India, a reflection of which is the growing participation at our Asian Tyre and Rubber Conference (ATRC). The latest edition is ATRC 2019 in Chennai (June 20-21).

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