Cheap imports undermine EU retreading industry

Article published in ERJ's July/August issue:

The upward trend of cheap truck tire imports into Europe, mainly from China, has become a critical issue among retreaders and recyclers that are impacted by the influx.

The imports of these low-cost products, which has seen a dramatic growth in the past five years, gathered pace in 2015 as the US introduced its anti-dumping duties on Chinese tires.

This has now led to calls being made for tightening regultions over tire imports in order to protect the industry and save jobs in Europe.

Price pressure

In an strongly-worded 13-June statement, the European retread industry’s trade association, Bipaver, said that the European Commission was failing the segment by not introducing legislations that could provide support.

Chinese tire manufacturers, according to Bipaver, are selling most of their products at prices below the manufacturing costs of retreaded truck tires in Europe.

The argument arises as cheap imports in the EU have increased five-fold, from 1 million to 5 million, over the past five years.

Bipaver figures show that the share of European retreaders in the EU truck tire aftermarket, on the other hand, has fallen to under 22 percent in the first half of 2016, from 30 percent in 2009.

Production has dropped 50 percent from 6 million to around 4 million truck tires over the seven-year period.

As EU retreading companies have economic trading range of just a few hundred kilometres, their market is largely restricted to Europe.

At present, the EU is unable to protect retreaders as European legislation does not differentiate between new and retreaded tires.

The European Commission and Bipaver have been working on the issue since March 2015 but no progress has been achieved.

“The fact that sell-out prices of imported truck tires, Chinese in particular, have fallen below the manufacturing costs of retreaded tires does not interest our trade commissioner to act on our behalf,” Bipaver said.

“Such a situation cannot continue,” Bipaver added, urging trade commissioner Cecilia Malmstrøm “to reassess what the EU can or cannot do… to establish a level playing field and safeguard our industry and its SMEs in particular.”

Circular economy

Another argument put forward by the industry is that retreading is an important part of EU’s circular economy ambitions.

The cheap imports, however, make recycling economically unjustified and the objectives of sustainability harder to reach.

Against this backdrop, strategy advisor at Apollo Tyres and former Pirelli leader Francesco Gori warned against “killing” the retread industry by importing low-cost, low quality tires.

At ERJ’s Future Tire Conference in May, Gori said: “Unless we do something, it [retreading industry] is going to die. This is a pity because it is the very first and most important asset of a circular economy concept in the tire industry.”