ETRMA SHOWS THE WAY
Fair competition in a free market
After a positive 2014, sales figures related to European manufacturers remain substantially favorable also in 2015. However, warns the Secretary General of ETRMA Fazilet Cinaralp, this partial success must be ascribed primarily to a steady rise of imports. The challenge therefore is to revive European production, focusing on equal conditions and greater market surveillance
Every race starts with a first step, followed by a steady acceleration thereafter. With this in mind, we cannot help looking with optimism to the most recent sales data provided by ETRMA (European Tyre and Rubber Manufacturers' Association), whose members – which make up about 75% and 70% of the entire European car and truck tyre market respectively – have seen their sales figures grow in 2015 much as it had during the previous year, especially regarding OE tyres for automobiles and light transport vehicles (+6%) as well as heavy duty transport vehicles (+10%). "In 2015 the European tyre market grew again, mainly due to a rise in new registrations: +9.3% for cars and light transport vehicles, and a surprising + 12% for trucks and commercial vehicles", stated Fazilet Cinaralp, secretary general of ETRMA. However, it would be unwise to get our hopes too high: in fact, much of this growth must be ascribed to imports. "In recent years, sales figures related to the domestic production of tyres in Europe has declined systematically by a percentage point every year", explains Cinaralp. "For 2016 we do expect a further increase of 1 or 2 percentage points, but we think that most of that will be attributed, once again, to imports".
Mission: to revamp European production
In recent years, ETRMA has repeatedly sounded the alarm: in their own market, European producers are struggling to keep up with foreign competitors. Far too often, partly because of the economic crisis, tyres made in Europe give way to products coming in particularly from the Far East. Import pressure has had significant effects in both the passenger and transport segment, not to mention farming, which scored a dismal -9% in 2015.
The negative trend, particularly noticeable in the overall sales data within the European market, is producing even greater negative effects in the retreading sector, which has, in recent years, suffered a vertical drop. Retreads, in fact, are no longer competitive compared with low cost products coming from Asia, even in segments, such as truck tires, where traditionally good numbers were produced.
Addressing the issue, explains Fazilet Cinaralp, means primarily restoring competitiveness to European products by paying special attention to the need of having the same rules of access and product distribution on the third markets applied in a fair manner to all the players involved, as well as greater market surveillance and immediate action against non-compliance with the rules in Europe, like it is the case in the other major third markets.
More surveillance not rules
In Europe, on the other hand, laws and Community guidelines addressing these issues are certainly not lacking. Our market can count on a complete and commendable regulatory system focused on determining which products can enter the EU market, and, consequently, the lives of European citizens. As far as tyres are concerned, accuracy has to be considered paramount: tyres must possess strict performance and safety requirements, of which consumers must be informed through an effective labeling system. Furthermore, the chemical composition of the tyre, its production process as well as all procedures affecting the proper handling of ELTs, end up under the magnifying glass.
Not to mention the many tests which the product is subjected to prior to receiving the green light on the European market. Producers are committed to investing a lot more, in order to meet the aforementioned requirements. Not everyone, however, is willing to go the extra mile, preferring instead faster and cheaper shortcuts. This type of behavior, as the secretary general of ETRMA points out, keeps European production in check and undermines a system aimed at reassuring and providing benefits to the motorists who, in the final analysis are the damaged party.
The challenge: a fair and well balanced market
Guaranteeing fair competition in a balanced market is certainly the most important challenge, at this time, for the European Tyre Industry. The lack of a level playing field is one of the main topics on the agenda in the current discussion between the European Commission and the Member States. mid-February, a two-year program called MSTyr15 (Market survelliance action Tyres 2015) will be launched. This initiative, which sees the participation of 17 EU Market Surveillance Authorities (MSA), will help the spread of economic and environmental benefits established by the (EC) 1222/2009 regulation relating to tyre labeling, tightening controls on all products, including those imported in all national markets including Turkey.
"We believe that additional or different rules are not needed and would only impose additional costs on manufacturers who want to observe them," explains Fazilet Cinaralp. "Rather, we need a better implementation of the standards, a greater and more widespread awareness of the existing ones monitoring their timely and correct application. Thus a free market, such as the European market can safely operate".
Free market, free exchange?
Elsewhere, some are running for cover and have reintroduced import duties. This is for example the path chosen at the end of last year by the United States to curb imports from China. In other countries, such as India, Indonesia, Brazil, Eurasia Economic Union calls for "anti-dumping" measures against Chinese companies are growing louder. In Europe, something similar has been done regarding the alloy wheel segment, though results are yet to be appreciated. In general, however, the Old Continent seems unwilling to walk on these footsteps.
"Europe, first and foremost has a different cultural tradition from, for example, the United States", continues the secretary general of ETRMA. "Although characterized by a sophisticated legislation, the mission is to have a market that is free and as open as possible". However, in view of this substantial opening and growing imports, European producers are finding it increasingly difficult to set foot on other markets. The removal of barriers to the free movement of European products - explains Cinaralp - is essential if the European Industry is to regain competitiveness: this is therefore a priority which should be placed at the center of international debate.
Back to competiveness: three events not to be missed
The secretary general of ETRMA highlights in three points the main challenges that the European Tire Industry will face in the near future in order to address the macro-changes currently underway, and to regain the competitive edge lost during the recent economic recession with a view to returning, at least in part, to pre-2008 values. First, European producers should focus more on having production plants in Europe.
"Produce in Europe, sell in Europe," sums up Fazilet Cinaralp. "Today only 20-21% of the global production is actually European. Bringing production back to Europe, however, implies having the right conditions for doing so. Government authorities must decide whether or not to wager on the European industry. This means boosting the economy and creating new job opportunities. Once the decision is taken, this issue must be placed high on the list of priorities".
A second major challenge lies in finding a growing balance between environmental awareness and market principles. The tyre is a central element in the "automotive" sector; it is therefore only natural that the whole supply chain keeps looking at ways of setting up satisfactory environmental objectives and targets.
Third and final goal: producing an integrated system, which follows a Corporate Social Responsibility concept, to be transferred to both the production and supply chain, from obtaining raw materials to the distribution of the finished product as well as a correct ELTs management system. Principles of sustainability and industrial production can cooperate in generating real value chains.
"The European Tire Industry can rely on trained engineers, high-level technology, adequate structures and important international partnership", says Fazilet Cinaralp. "There is no reason why European producers should not hope to score 2008 sales figures once again". But every race, though, begins with putting one step after the other in the right direction.