ISSUE: Mesnac boss: All change in China

In the March/April issue of ERJ magazine, Mesnac VP talks to Patrick Raleigh about his ambitions for the tire machinery company, which is now reaching a crossroads in the development of its business:

The Chinese tire market is under pressure at the moment, not least due to increased costs and the impact of US tariffs, according to Karol Vanko, vice president of Chinese equipment maker Mesnac.

The tariffs have almost doubled the cost of some tires made in China and sold in the US – the destination for about 50 percent of all Chinese tire exports, noted Vanko, adding that “these pressures have a knock-on effect on machinery sector.”

Against this backdrop, Vanko,who is also general director of Mesnac’s Slovakia-based subsidiary Mesnac European Research and Technical Centre sro., added his support to the growing viewpoint within the industry that the Chinese tire manufacturing sector is ripe for a period of consolidation.

“In future, many small producers in China will be closed or become part of the biggest Chinese players ,” he forecast. “China will copy the international situation, for example in Europe where [smaller] companies such as Matador, Barum, Trayal, Tigar, Avon, are not independent any more.”

Despite the current pressures in the sector, and the increasing cost of establishing and running tire plants in China, the tire market still presents major opportunities for suppliers going forward.

As Vanko commented: “China has over 500 tire companies, including over 300 that can sell both PCR and TBR tires. This means a huge requirement for machines.”

That said, Mesnac has been moving away from its reliance on its home market over recent years, and is targeting a 50:50 split between sales in China and overseas.

Overseas sales

So, whereas virtually all of the company’s sales were in China about five years ago, Vanko said 20 percent of Mesnac’s business was generated outside of China in 2014. He forecast that this figure would ramp up to 30 percent this year and 50 percent in 2016.

“The question is how to attract customers to be able to sell that 50 percent,” said the Mesnac boss, adding that part of this challenge was to counter a perception that Chinese companies “copy everything”.

“Mesnac is completely different,offering many new ideas and solutions for customers that have never been developed before,” the Mesnac VP said.

He cited the company’s development of technology to reduce bad odours from tire plants by 80 percent as an example of how Mesnac was delivering advanced and specialised technologies to the tire industry.

For this technology, Mesnac bioengineers developed special bacteria as the basis of a new-generation of bio-filter for rubber industry mixing areas.

More significant, though, is Mesnac’s work in the field of automation including its ‘smart factory’ concept and progress in developing partnerships around this programme.

A recent example here is the company’s deal with Siemens to jointly explore the development of the digital tire factory towards providing new integrated technical solutions to tire manufacturers.

The partnership would combine Siemens’ expertise in industrial automation and software with Mesnac’s capabilities in R&D and manufacture of rubber machinery and information technology.

The link-up is part of a wider engagement between Mesnac and high-end technology suppliers, according to Vanko: “If we speak about automation, leading companies such as Siemens, Rockwell and Festo want to partner with us.”

“It is not easy to automate some parts of the tire-making process. It has to be done step-by-step,” continued Vanko, adding that Mesnac’s ‘smart operations’ technology is now “maybe at the stage of running 30-40 percent of tire plant operations.”

This includes a new component relating to the mixing process, which has been implemented at a tire company in China, and is to be adopted next by a top 5 tire maker at a plant elsewhere in Asia.

However, perhaps the biggest challenge for Mesnac is to overcome conservatism among major manufacturers, especially when it comes to adopting entire digital plant concepts.

“The big tire makers are very careful,” Vanko concluded. “I don’t expect the first customers will be from the top 20. Adoption of the ‘smart factory’ concept will start in China.”