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08/09/2017
Circular Economy: the retreading sector's last chance?

The future of the retreading sector

 

Circular Economy soon to become law thanks to a specific package of rules to be issued by the EU commission. According to AIRC president, Stafano Carloni, this is a not to be missed opportunity if the environmental and economic value of the retreading business is to be promoted and appreciated. Meanwhile the unfair struggle against illigal dumping of low-cost products continues. 

Guido Gambassi

Whoever is familiar enough with the tire business would have increasingly heard talks about circular economy as a new business model that, at least in theory, is recognized as a must in our 21st century. But what is it about? One of the greatest issues facing the global industrial framework is reconciling economic and environmental sustainability: production efficiency cannot ignore the need to limit energy and material consumption, not to mention the social and environmental impact of one’s activities. From a perspective that considers only a few decades of potential use of non-renewable resources, the solution then must point to an industrial production devoted to the complete recycling of a product and its components, as well as the elimination of as much waste as possible. The automotive industry has been regenerating components for some time now, a practice that is becoming increasingly widespread. At a policy level, the subject  finds its primary reference in the European Commission’s  "Circular Economy" packageof laws: six legal frameworks presented in 2015, of which the European Parliament approved a number of draft amendments last March, a procedure that should find its natural conclusion in the coming months. Among its main objectives, the 2015 European Circular Economy  Action Plan foresees that by the year 2030 65% of all waste (75% of which packaging waste) will be reused and recycled, as well as a reduction to a maximum of 10% of waste dumped in landfills, and the introduction of incentives dedicated to environmentally friendly production methods that avoid creating unnecessary waste.

Recalling the principals behind the idea of a circular economy, the entire tire supply chain is continually appealing to the institutions to recognize and promote what must be already considered the perfect application of these virtuous characteristics. We discussed the close relation between the tire industry and the concept of a circular economy with Stefano Carloni, Airp’s president – National Association of Tire Retreaders – which took an active role in the conference “Circular Economy: the virtuous case of the tire supply network”, during the last edition of Autopromotec.

 

President Carloni, what are the links between our sector and the idea of a circular economy?

Probably no other industrial supply chain can claim to perfectly fit the idea of a circular economy as ours does. In fact, quality tires live their first life on the road, then they are recovered,  rebuilt, sometimes even several times, and finally, once collected as ELTs, they are destined to components and secondary raw materials recovery or used in the production of energy, thus starting a second life cycle with many alternative possibilities of use. An exemplary case of circularity.

Nevertheless, as your association has often poited out, such characteristics are still not widely recognized and appreciated.

Unfortunately, not, and this has been causing a lot of tension in the retreading sector for a number of years now: competition from new low-cost and non-retreadable products cause considerable harm to the environment, and in the long run , also to those who, attracted by the lower costs,fail to recognize that a quality tire can be retreaded more than once and guarantees a 500,000 km mileage, lowering the total cost of operation with each retread. We are talking about a sector that in Europe alone represents 32,000 jobs whether directly employed or in satelite activities and generates a turnover of nearly 2 billion Euro per year and 600 million tax revenues. It is a "labor-intensive" activity because, considering the same use, a retreaded tire supports 4.3 times the number of jobs of a new tire. What we need to point out though, especially to the Law Makers, is the enormous economic and environmental damage that comes from the widespread use of disposable low-cost products. It is a loss of value right across the board: manufacturers, retailers, retreaders, users, ELT management firms would only benefit from tire retreading. However, it is a lot easier to sell a low-quality new product at an attractive price rather than promote a virtuous retreading culture.

So, what does the future look like for the retreading business?     

The balance is now very fragile, and is likely to be definitely compromised. Certainly, this trend cannot be reversed without a strong impulse from the market, which, in our opinion, can only come through incentives in favour of retreaded products such as super tax deductions – as is the case in Germany with the “De Minimis” program – enhancing their environmental and economic sustainability. But there is also a bigger problem to be faced, on a global scale: nowadays we are forced to operate in a totally unfair market framework, competing against imported products from Asia that are sold at a lower price than the cost of the raw materials used. Another example relates to labeling: low-cost products are certified according to European standards but in their countries of origin, with no control over the actual correspondence and truthfulness  of their ratings. In fact, there are some PAHs (Polycyclic Aromatic Hydrocarbon) in circulation throughout Europe that should not be there, at the expense of our own health. Furthermore, we should recall that by law, due to their environmental value, the use of retreads are now mandatory on public fleets for at least 20% of the total number of tires used. However, this limit is in fact eluded in a large number of public contracts where service providers supply only and exclusively new tires.

 

So, which instruments should be adopted then?          

Within the framework of the National Strategy for Sustainable Development, still in draft form, one of the National Strategic Objectives is, and I quote,  - "Dematerialising the economy, improving the efficiency of resource management  and promoting business models aimed at susteining a circular economy ", but also to  "promote environmental taxation "and "reduce waste production, eliminate huge landfills and promote a market for secondary raw materials ". All strategies that are perfectly applicable to the complete life-cycle of the tire. Not only. Once the amendments to the Circular Economy Package are approved by the European Commission, these directives will have to be transfered to the different national laws, and many decisions will have to be taken especially in the tire sector. For example, the ELT contributions should be adjusted according to reusability and recyclability. But this brings yet another long-standing and unresolved issue to the fore : there is no official certification for the retreadability of a tire, it is simply a statistic value that will have to be officially recognized sooner or later. Finally, as far as Italy and the European Union as a whole are concerned, dumping practices can be successfully tackled as long as there is a political willingness to do so. 

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