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Presented by:
Mr. Jacob Peled
Executive Chairman
Pelmar Engineering Ltd.
Visions of the Future:
Further Deliberations on F...
Our Agenda for Today
1. Introduction: The Tire Market Today
2
2. Multidiscipline of Tire Production
3. Mergers & Acquisiti...
Introduction
Pelmar Engineering Ltd.
4
The Tire Market Today
I have chosen this photo which I also used in a recent
presentation I gave in Berlin because this ...
5
The Common Denominator-Air
Air pressure is the common denominator. It has been ever since the pneumatic tire has been in...
6
Since the topic of my presentation is “Further Deliberations on Future Tire Production," this is the place to mention th...
Size of Tire Plants
7
Tire plants are becoming considerably smaller due to many reasons:
1. The scarcity and price of land...
Multidiscipline of Tire Production
Pelmar Engineering Ltd.
Multidiscipline of Tire Production
9
In the past most tire companies, probably because of the
"Michelin syndrome" have kep...
Multidiscipline of Tire Production
10
Consequently, many of the new tire companies need the same
infrastructure, equipment...
Multidiscipline of Tire Production-Changes
11
I have in the past made several forecasts, most of them were
not accepted at...
Mergers & Acquisitions
A Major Driver For Change In Production Methods
Pelmar Engineering Ltd.
13
Mergers and Acquisitions among tire companies existed almost from the inception of this industry. There have been sever...
Mergers & Acquisitions
14
I can see several future M&A projects taking place which will have further significant effect on...
Mergers & Acquisitions
15
G. Bridgestone will continue with their acquisition after successfully absorbing Bandag. Perhaps...
Curing
Pelmar Engineering Ltd.
Curing
17
Curing is still the bottleneck of almost every tire plant. The only way to
overcome it is to have sufficient pre...
Compounding
Pelmar Engineering Ltd.
Compounding
19
Mill rooms constitute approx. one third of a new tire facility
(Green Field) in whatever aspect that you lo...
20
Obviously the location of the tire plant, the number of SKUs, and whether the management is visionary determines if a p...
21
I have noticed that in two recent cases as part of a project that our company has
undertaken, that the owners who could...
Materials
Pelmar Engineering Ltd.
23
I foresee future major changes in the use of materials for tire production:
1. Rubber: There are consistent, large scal...
Recycling
Pelmar Engineering Ltd.
25
Sustainability
Sustainability has become the magic word for Recycling. This is definitely a major
consideration. Each t...
"Titan Reclamation
Corp. is on track and is
expected up on April 1,
2016. One of the
reactors has already
been relocated t...
Summary
Pelmar Engineering Ltd.
Summary
28
Despite my statement in the beginning of this presentation that there is only limited
change and evolution in t...
29
THANK YOU FOR YOUR ATTENTION!
The Pelmar Group
PRACTICAL MODERN SOLUTIONS
Celebrating 50 years of continuous service to...
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Jacob Peled - Visions of the Future: Further Deliberations on Future Tire Production

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In the last decade we have been able to see some major changes and developments in concepts, equipment, materials, construction and general production focuses in the tire and rubber industry. This is after more than 100 years of hardly any major changes, perhaps except radial construction and tubeless tires. We are seeing and will observe changes that relate to the entire process of production; a strong tendency towards smaller, dedicated and specialized plants and more significant outsourcing. My presentation will touch on these various aspect and considerations for green or brown field tire production facilities. The issue of mergers and acquisitions will be referred to as well.

Published in: Automotive
  • A fascinating and interesting presentation that I had the privilege to hear first-hand at Tire Tech 2016. Our industry will certainly change greatly over the next few years.
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Jacob Peled - Visions of the Future: Further Deliberations on Future Tire Production

  1. 1. Presented by: Mr. Jacob Peled Executive Chairman Pelmar Engineering Ltd. Visions of the Future: Further Deliberations on Future Tire Production (Vision= A Combination of Wish, Hope and Expectation) Tire Technology Expo February 2016 Hannover, Germany
  2. 2. Our Agenda for Today 1. Introduction: The Tire Market Today 2 2. Multidiscipline of Tire Production 3. Mergers & Acquisitions 4. Curing 5. Compounding 6. Materials 7. Recycling 8. Summary
  3. 3. Introduction Pelmar Engineering Ltd.
  4. 4. 4 The Tire Market Today I have chosen this photo which I also used in a recent presentation I gave in Berlin because this represents the market situation today for industrial tires in particular but almost the same numbers for truck and passenger tires. The overall growth is approximately 3.5% PA It is interesting to note that the most significant changes and developments have happened in the last two decades in Industrial and Agricultural Tires rather than Passenger and Truck or Motorcycle, which together represent the absolute majority of tires produced . The reason is probably the fact that for more than 80 years there has hardly been any changes in these tires, with the exception of radialisation and tubeless. I wish that the growth would be as per the top red line, but it is as per the flat line. Image courtesy of flickr user John Lustig/CC BY-NC-SA 2.0. 3.5% 7% 10.5% 14% 17.5% 21% 24.5% Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016 Future Market Trend Current Market Growth
  5. 5. 5 The Common Denominator-Air Air pressure is the common denominator. It has been ever since the pneumatic tire has been invented by Dunlop in the UK and later perfected by Charles Goodyear in the US. Poor handling, especially air pressure, is the No. 1 cause of tire failure.
  6. 6. 6 Since the topic of my presentation is “Further Deliberations on Future Tire Production," this is the place to mention that other alternatives are now being sought after to avoid the dependence on air pressure. Obviously the production methods are entirely different with the exception of the tread and undertread. Image courtesy of Michelin The Common Denominator Image courtesy of Galileo Wheel Mobility PneuTrac - Mitas Tweel - Michelin
  7. 7. Size of Tire Plants 7 Tire plants are becoming considerably smaller due to many reasons: 1. The scarcity and price of land. 2. The need to be in a strategic location to reduce transportation costs and shipping. 3. The need to specialize in a certain type of tire rather than multi-types and sizes as in the past. 4. The capability of arranging inside logistics which do not require wide passages or handling areas (use of overhead and conveyor tire transportation). 5. The increased use of outsourcing of critical components particularly compounds. There are other reasons, but these are the main ones. I shall separately deliberate on a few of them later on. Images courtesy of Cooper Tire & Rubber Company and Mitas a.s.Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  8. 8. Multidiscipline of Tire Production Pelmar Engineering Ltd.
  9. 9. Multidiscipline of Tire Production 9 In the past most tire companies, probably because of the "Michelin syndrome" have kept their technology very close to their chests. The result was that there were quite distinct differences between production methods of different tire companies. The differences were distinguished by different principles of compounding, component preparation and component application. There are still some significant differences in tire production philosophies, but they have become much scarcer and relate mainly to chemical and physical properties of compounds, different innerliner production and application and in some cases different tread production and application. These differences have shrunk: A. Because experts from one tire company move to another and vice versa. B. Because of standardization of tire building principles. C. Because of standardization and methodologies related to rubber mixing and compound preparation and handling. D. Because equipment manufacturers sharing information with customers E. Because raw material suppliers have acquired a great deal of technological know-how and experience. F. Perhaps the most important factor in recent years is the many mergers and acquisitions within the tire and rubber industry. I will talk about the effect of this a little later on. Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  10. 10. Multidiscipline of Tire Production 10 Consequently, many of the new tire companies need the same infrastructure, equipment and technical knowledge to produce an almost similar product. The differences are mainly in the use of quality raw materials, R&D and test facilities, speed and method of the implementation of changes and development, and the degree of quality control. Companies who do not have a second grade/blemished tires in their production program, like Michelin and others, would obviously supply overall better tires. Future production plants will have fewer blemished tires by definition: 1. It will be the result of very carefully designed maintenance program for the equipment 2. Logistics and handling equipment would be dedicated to maintaining green tire shape and minimum distortion 3. Production will be planned to avoid green tire hysteresis and waiting time 4. Quality control of both pre-assembly components and materials, as well as final product, would be automated and upgraded to the highest degree. Consequently in future tire plants the only departments which will become larger and possibly with additional staff will be R&D, QC and testing labs and tracks. Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  11. 11. Multidiscipline of Tire Production-Changes 11 I have in the past made several forecasts, most of them were not accepted at the time, but many (not all) have happened meanwhile. I am referring to tire companies refraining from multi-sizes and type of tire production, size of production plant (discussed earlier), outsourcing of drums, molds and many other auxiliary equipment. 3. No steel cord calenders and calender trains. This will eliminate steel cord cutters and splicers and steel cord let-off and reels, and of course no air-conditioned creel rooms and spools. The No. 1 cause for ply separation is oxidation. Steel cord will still be used, but mainly with Steelastic type belt and ply production lines and/or moving to Aramid, Twaron and Kevlar materials. 4. No innerliner calenders. They are all being replaced by extrusion roller die and to thermoplastic foils replacing innerliner. 5. No mold cleaning machines. New plants will not replace molds in presses and cleaning will be done as today with dry ice and laser. 6. No bead winders. In the future carbon beads will replace steel beads and/or hard rubber mixed with materials like Aramid will become the contact between the wheel and the tire with a different design of apexing and flipping. 7. No high-pressure, hot water systems for curing and completely different presses and bladders. These are only a few samples of the changes that I foresee and which will alter the existing production methods. Some of the more significant changes that I can see are: 1. Not only no mixers, but complete change in mixing concept, continuous instead of batch (see the plastic industry). 2. No large tread and sidewall extruder lines. These lines including the cooling racks are all being replaced by strip winders.
  12. 12. Mergers & Acquisitions A Major Driver For Change In Production Methods Pelmar Engineering Ltd.
  13. 13. 13 Mergers and Acquisitions among tire companies existed almost from the inception of this industry. There have been several successful mergers and quite a few failures. People may still remember the Dunlop/Pirelli merger or the Pirelli/Continental attempted merger vs. the Conti / General Tire acquisition which was struggling for years. Obviously the most significant is probably the Bridgestone acquisition of Firestone 25 years ago and much earlier the acquisition of Armstrong by Pirelli which practically caused Armstrong to disappear. The same can be said about Michelin and Kleber and later, Uniroyal and Dunlop and Sumitomo. These mergers and acquisitions have contributed a great deal to the standardization and multidiscipline production systems that have emerged in the last 40 years. This multidiscipline has become more pronounced in the last 20 years. The climax is the recent acquisitions of Pirelli by ChemChina and CGS by Trelleborg. Mergers & Acquisitions Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  14. 14. Mergers & Acquisitions 14 I can see several future M&A projects taking place which will have further significant effect on the industry. For example: A. Apollo who failed with the Cooper acquisition and knowing the Kanwars, they are still hungry. B. Cooper Tires, who has been doing extremely well after the Apollo saga under the exemplary leadership of Roy Armes, are looking for opportunities besides the plants in the UK and Serbia. C. OTR plants in China, particularly TUTRIC and Guizhou Tire Company, would be looking for partnerships or licensing or acquisition. D. Triangle under the aggressive leadership of Pierre Cohade and as part of their IPO, will be looking for acquisitions. One of the signals is the nomination of Mr. Manny Cicero, the former president of Alliance Tire Group in the US, as President of Triangle Tire USA. E. Eurotire in Romania and the Ukraine are looking to be acquired or merge with other manufacturers. They are involved in offtake agreement with a major tire manufacturer. F. Formerly Dneproshina or IMDI is looking to be acquired. All Trademarks property of their respective owners Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  15. 15. Mergers & Acquisitions 15 G. Bridgestone will continue with their acquisition after successfully absorbing Bandag. Perhaps Nokian is a target, to enhance their position in Russia. H. Nokian Tires will be looking for acquisition, especially after the decision of their new president, Mr. Ari Lehtoranta, rightfully not to divest the Heavy Tire Division. I. Fate in Argentina will be looking to be acquired or for a merger with another tire company after a divorce from Conti and a futile attempt with Vipal. All Trademarks property of their respective owners There are quite a few other possible M&A candidates. Most of them not yet public knowledge and therefore I shall refrain from mentioning them. I need to stress that the above information are not ongoing projects and I may be wrong in my assumptions. Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  16. 16. Curing Pelmar Engineering Ltd.
  17. 17. Curing 17 Curing is still the bottleneck of almost every tire plant. The only way to overcome it is to have sufficient presses to allow no change of molds or a minimum. Bladder change, cleaning and maintenance reduce production times still very considerably. Work is being done to avoid these: A. Automate and increased speed of loading and unloading B. Developing bladders which can sustain thousands of tire curing cycles rather than hundreds C. Shortening curing time by use of higher temperatures and pressure. To achieve that the materials and tire construction need to change to sustain the pressure and temperatures. Also raw materials and particularly additives need to change. D. The new presses need to be considerably lower in price and smaller in footprint to allow a plant to acquire a large number even if some presses need to be idle at times. There will be no need for pits. E. Development of materials, bladders and tire construction that remove the need for release agents both for bladders and for the molds. Image courtesy of Uzer Makina Ve Kalip Sanayii A.S.
  18. 18. Compounding Pelmar Engineering Ltd.
  19. 19. Compounding 19 Mill rooms constitute approx. one third of a new tire facility (Green Field) in whatever aspect that you look at: 1. CAPEX 2. Space 3. Manpower 4. Services 5. Energy is the one exception as it is normally over 50% of the plant consumption. Image courtesy of ThyssenKrupp Elastomertechnik GmbH I have predicted some 15 years ago that compounding would be outsourced and that both master batch and final batch would become a commodity purchased from dedicated custom compounders. This is now starting to happen and there are quite a few tire companies that we were involved with that do not have compounding facilities and it has proved the right decision. Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  20. 20. 20 Obviously the location of the tire plant, the number of SKUs, and whether the management is visionary determines if a plant will have its own compounding facility or not. This was the same situation where plants were deliberating whether to continue dipping or even producing their own cords, both textile and steel, not to speak of producing their own molds, drums, and even tire building machines. The latter has practically ceased and there are very few tire manufacturers today who produce their own equipment and/or sell it to others, such as Mesnac and Conti Machinery. (Conti in recent years only produces equipment for Conti plants. In my opinion this will stop in the next few years.) Could you envisage a modern tire plant without raw materials purchasing team, without silos, mixers, conveying systems , weighing and charging systems for carbon black and small chemicals, batchoffs, mills, twin screw extruders and other monster equipment that comprises a modern mill room? Compounding Image courtesy of VMI Group Image courtesy of TGL SP Industries Ltd. Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  21. 21. 21 I have noticed that in two recent cases as part of a project that our company has undertaken, that the owners who could not bring themselves to give up compounding altogether have compromised on preparation of final batch only. This obviously requires a lot less space, energy and mixing time, but requires a very clean and sophisticated small chemical weighing and dosing system. In both cases, it was the ColorService system shown in this slide, selected over other existing systems which were far less accurate and consistent. Compounding Image courtesy of ColorService Srl Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  22. 22. Materials Pelmar Engineering Ltd.
  23. 23. 23 I foresee future major changes in the use of materials for tire production: 1. Rubber: There are consistent, large scale trials and success in locating substitutes for both natural and synthetic rubber. Personally, I would like to see a substitute for synthetic rubber rather than natural rubber because of the polluting manner in which it is produced. 2. Carbon Black: it is explosive, polluting, poisonous and is slowly but surely being replaced by silica and other natural ground products that can substitute this material. I believe that eventually it will be used as color and not as filler. 3. Steel cord: Definitely an antidote to rubber. It exists because of companies like Bekaert which is one of the best enterprises I have ever encountered and which has taken a product that by nature does not wish to be amalgamated with elastomer to be the No. 1 tire reinforcement material. It will eventually be replaced by sophisticated materials like Aramid, Twaron and Kevlar. 4. Solvents: This is already a product of the past and used by manufacturers who disregard the law or their workers. 5. Sulfur: is already partially replaced by peroxides and eventually another curing accelerator will be developed. How many tire plants today have textile weaving and dipping, rubber plantations, molds and drums production? In the past there was no manufacturer who didn’t have these. Materials Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  24. 24. Recycling Pelmar Engineering Ltd.
  25. 25. 25 Sustainability Sustainability has become the magic word for Recycling. This is definitely a major consideration. Each tire company in the future and in fact also at present would need to take into account the trend of zero waste. The Goodyear plant in Mexico is a very good example and this attitude should be adopted by everyone who is involved in new production facilities (Sumitomo, Apollo, Hankook, Kumho, Mitas, Trelleborg, Petlas, Triangle and many others). Tires would have to be produced to allow recycling and the recycled product would have to be incorporated in the tire production. Having this in mind, we could see new materials and different compounding facilities to enhance this positive trend. In my opinion retreading will remain the No. 1 tire recycling method, closely followed by pyrolysis and cryogenic grinding. Also chemical conversion, which is now developed by a few companies and may become the No. 1 or No. 2 in the future. This is a subject for a different presentation. We need to tackle the fact that tires are one of the most polluting products in our world throughout its lifecycle. Recycling Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  26. 26. "Titan Reclamation Corp. is on track and is expected up on April 1, 2016. One of the reactors has already been relocated to Titan's site in Fort McMurray Canada. The remaining 5 reactors will arrive within the next two weeks," according to Morry Taylor In OTR recycling, the world has made very little progress. This however is changing now with Titan entering this field in full force like only Morry Taylor knows how to do. I expect major developments in the next few months related to this particular subject. Visions of the Future: Further Deliberations on Future Tire Production- TTE 2016
  27. 27. Summary Pelmar Engineering Ltd.
  28. 28. Summary 28 Despite my statement in the beginning of this presentation that there is only limited change and evolution in the tire and rubber industry, the last 10 years have proven otherwise. There have been more development both technologically (chemistry) and physically (engineering) than in any previous period. I suppose that there are multiple reasons for it, such as the emergence of the Chinese tire industry, the new and advanced safety conditions and, probably the most important, sustainability requirements. All these are of course a subject for another presentation and elaboration. The tire industry is moving in the right direction. There are hardly any longer experts who feel that roads should be paved to meet tire requirements or that tires should be sold according to the production capabilities of the plant. There are many more rules and regulations governing tire performance and there is a great deal more clarity as a result of regulatory labeling. Last but not least, clearly the Western tire industry cannot compete price wise with the Eastern, particularly Chinese, tire production and it is quality, flexibility, and service which will determine the continued success of the European and US manufacturers and not only price. Image courtesy of flickr user Monochrome /CC BY 2.0.
  29. 29. 29 THANK YOU FOR YOUR ATTENTION! The Pelmar Group PRACTICAL MODERN SOLUTIONS Celebrating 50 years of continuous service to its customers in the Tire and Rubber Industry

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