If there is one man who is a real icon of the tyre industry in South Africa, it’s John Laskarides, the CEO of Bandag. CHARLEEN CLARKE went face to face with him
First up, where does the Bandag name come from?
The global company was formed in 1957, when an American businessman by the name of Roy Carver purchased the rights to a revolutionary precured retreading process from its German inventor, Bernard Anton Novak. The name Bandag comes from his original company, Bernhard Anton Novak Darmstadt AG.
Today, Bandag is a global company with 15 production facilities on five continents. It produces retreading equipment and more than 275 tread designs and sizes. It also provides services to trucking fleets worldwide. The company has over 1 700 dealers in more than 100 countries worldwide, which sell almost nine-million truck and bus tyres each year.
Please tell us about your career and how you came to be involved in Bandag. For how many years have you been involved in the tyre industry?
In 1979, I graduated from the University of the Witwatersrand as a civil engineer and spent my first 14 years in construction and with Total SA as chief engineer, fleet executive and distribution director, including an expatriation to Paris.
I was then head-hunted by Bandag USA to head the Bandag South Africa operation and joined the company in February 1999 as managing director. We undertook dramatic and painful changes as the need to transform the organisation was evident even then, with the advent of threats from both within the industry and external threats imposed by cheap tyres.
How have the tyre and retreading industries changed over the years?
They have evolved dramatically both globally and locally. The new-tyre industry has recognised that retreading is a necessary part of its service offering, although fundamentally its very existence is defined by the ability to sell its next new tyre. The new-tyre manufacturers together own some 65 percent of the retreading industry worldwide.
The advent of cheaper new tyres – somewhat unfairly characterised as “Chinese tyres” – has accelerated the need for new tyre companies to be “seen” to be retreading. Yet they still focus on selling their next new tyre, often to the detriment of the fleet and the transporter. The retreading industry has shrunk over the years for these reasons.
Does this situation apply specifically to South Africa?
In South Africa, a combination of local political factors and the lack of investment on the part of local manufacturers, specifically when it comes to truck tyres, has resulted in a situation where 64 percent of all truck tyres sold in South Africa are imported in some form or another. A significant portion of these tyres are imported and sold by the local new-tyre manufacturers themselves.
Coupled to this is the fact that the transporters themselves face many threats. These include a shrinking economy, which is very close to being awarded junk status; an erratic environment where input costs are regulated and beyond any influence; negative sentiment reflected by consumers, who do not have the disposable income to generate growth in the economy; the consolidation of fleets; and a shrinking transport Industry.
All of this has resulted in transporters arresting costs and reverting back to their core business of transporting goods. Accordingly, many transport operators have appointed providers for support services, such as tyres and maintenance.
It is in this space that Bandag SA operates and I’m happy to say that, despite the nature of the shrinking industry, we continue to grow, and we innovate with our customers’ needs in mind. Practically speaking, we provide transporters with independent advice based on tyre-management data, without a vested interest in any new tyre company.
We currently have the performance and failure information of over 460 000 truck tyres. Transporters are given the best advice on which tyres are best suited to specific applications. In some instances, long-standing clients give us the mandate to fit that tyre entirely at our discretion.
Most importantly, our Bandag network of independent dealers has remained loyal and committed. We continue to innovate and make all those developments available to our manufacturing Bandag franchisees and our Bandag Truck Services (BTS) dealers. Together, we cover the national fleet through Bandag’s National Fleet Programme, whereby the fleet is serviced in the same way nationally. Our network also services the larger private fleets with single depots, adhering to the same standards.
Transport operators appear to be more price sensitive than ever before. How do you persuade them to “shop” with Bandag? Is price often the determining factor, or is there more to it? Can you differentiate via customer service, for instance?
In essence, our selling points are the performance of our products, coupled with our management of all things tyre related within a fleet. The combination of tyre maintenance and tyre performance relates to a cost that the transporter incurs, and it is the management of that cost that determines our relationship with that transporter. It is these savings that the fleet gains as a result of the management and care of those tyres.
You will see that I have not mentioned price at all. The package determines the relationship and not the unit price of either the new tyre or the retread. Unlike some of our competitors, we award all the savings to our fleet customers – the onus is on us to produce those savings and, as long as we continue to do so, customers and suppliers operate optimally in their own and respective core businesses.
Our national fleet business – through which we service blue-chip transporters, and by extension our retreading business – continues to grow. We have had double-digit growth for some nine years. More importantly, our dealers throughout the country are also growing.
As far as pricing goes, our dealers do have the competitive tools and products available to them to enable them to compete locally in their areas. This is a combination of lesser compound products, rebate incentives, tyre-management software developed for the smaller user, asset-management software and a 24-hour breakdown centre at which any truck can be serviced.
We do understand that pricing at these levels is more sensitive, but our dealers have and use those tools to the benefit of smaller, private fleets based in their areas.
Sales of retreads have dropped over the last few years. How has this impacted on your business?
As I mentioned in my response to the previous question, we engineered the company to become a tyre-management solution supplier that also happens to be a retreader. That does not imply that we need to sacrifice quality, and thereby tyre performance, to compete on a transactional “price basis”.
The performance of the tyre is the determinant, and the performance of the retread determines the saving to the transporter while delivering growth to us as a tyre company. Our vision is always non-transactional, and we are superbly placed to avail ourselves of short-term opportunities and long-term relationships.
We remain true to a strategy developed many years ago when we acquired the company, and while we continue to innovate and develop products that deliver value – as opposed to only focusing on price – we believe that we will continue to thrive and grow.
In this context, one hopes that the government can finally proceed with the much-vaunted Economic Recovery Plan, as that will serve the micro-economic indicators so desperately needed by our country.
You have rebranded. Why? Please explain what you’re offering with “Built for Better”. What’s in it for transport operators?
The rebranding has taken place as a result of the awarding of a licence for the next 15 years by our licensor, Bridgestone Bandag. Please allow me to backtrack for a moment chronologically. The management buy-out (MBO) of Bandag South Africa occurred in November 2004, and the acquisition of Bandag International by Bridgestone North America followed in December 2006.
At the time, Bandag South Africa was a bit of an exception – because we already had a licence agreement in place with Bandag, which expires in December this year. Now, we have been awarded another 15-year licence by Bridgestone Bandag, and I dare say this happened against all expectations.
Simultaneously, our licensor was rebranding the international Bandag portion of its business along the same lines as we were doing in South Africa. Accordingly, we decided to launch our new branding together with the announcement of the 15-year licence extension.
In terms of our new “Built for Better” branding, we are offering transport operators access to all the innovations and new products from within the Bridgestone Bandag stable, and these will vest exclusively within Bandag Southern Africa.
Our independent nature is what allows us to deliver on the “Built for Better” promise. While we’re able to leverage global research and development, we have not lost focus of the needs and demands of the local market.
What would you list as your biggest achievements in your time Bandag?
My biggest achievement is not in the management by objectives of 2004, nor in the extension of the licence agreement. It’s also not related to the growth of our company; it is in the creation of a proudly South African company that continues to employ people – our employment numbers have grown annually since 2004. Furthermore, it’s in the fact that we’re wholly invested in, and bullish about, the future of our country, irrespective of whatever challenges that brings.
Finally, you have been Mr Bandag for longer than I can remember! It seems as though that there was never a time that John Laskarides was not synonymous with Bandag and, in fact, the tyre industry in South Africa. Will you always be with Bandag, or do you plan to go fishing one day?
I am particularly proud of the Bandag team that I have created; stakeholders and shareholders alike. Laurent Colrat, Jonathan David, Monal Naik and Brian Clarke have been with me since those heady days in 2004. I have moved into the echelon of CEO while Laurent is now the managing director – he’s running the company.
I am charged with running the externalities of Bandag and identifying further opportunities within the stable and in related ventures. Thus, I have no time for fishing – but I always find time for golf!