One hundred years old last year, Dunlop Aircraft Tyres received a Queen’s Award for Enterprise in July that recognised six years of export growth, now running at nearly 80% of turnover. Ian Edmondson is the man behind the wheel of a British tyre company going places.
Synonymous with tyres and sports goods, Dunlop is an iconic British manufacturing name with a long pedigree. But these days how many people actually know what Dunlop does, where and under whose ownership? Dunlop Pneumatic Tyre Co. Ltd was formed in 1889 in Dublin, to commercialise John Boyd Dunlop’s patent for pneumatic tyres for bicycles.
An aircraft tyre division was formed in 1911. Fast forward nearly a century and the Dunlop Rubber Company (Dunlop) was acquired by British conglomerate BTR plc, and Sumitomo Rubber Industries acquired the car tyre assets of Dunlop, including the rights to use the Dunlop brand. In 1996, the aircraft tyre business was sold by BTR to a 3i-backed private equity group, and Dunlop Aircraft Tyres became an independent company.
Later, the wheels and brake business was sold off to aerospace group Meggitt. Today Dunlop Aircraft Tyres Ltd (DATL) is the last truly independent Dunlop tyre company, the only dedicated aircraft tyre company in the UK and one of only two in Europe.
ACC Capital Partners, part of the private equity group which bought Dunlop Aircraft Tyres, had a three-stage business plan to recoup their investment based on growing the company. When a private equity firm buys a company in a technical field like tyre manufacture, it’s normal to parachute in an experienced engineering manager to take the helm and for Dunlop, Ian Edmondson, who knew one of the financiers, ABN Amro Private Equity, was this man. He was invited to run the newly independent company as chairman, then later as both chair and managing director.
A Chartered Mechanical Engineer with a doctorate in engineering, Mr Edmondson’s career spanned sectors including the chemical and automotive industries, with some exposure to aerospace, but no history in tyres. “The nearest I got to tyres was brakes – I ran [brake product manufacturer] Ferodo for a time, and then Federal Mogul in the UK,” says Mr Edmondson. “I knew about elastomers, and a tyre is a reinforced elastomer. In fact a tyre is a composite structure, but is not often called that,” Edmondson adds, revealing signs of the technical mind behind the business brain.
Three pillar growth strategy “
The business was purchased on the basis of recognising the opportunity of taking this very famous brand in an important sector – aerospace and defence – and growing it vigorously on the global strength of that brand,” says Mr Edmondson.
Dunlop Aircraft Tyres had become quieter under the previous private ownership, while the new model was very much to grow the business through a three pronged attack on: geographic expansion, the introduction of radial tyre building technology to the aircraft tyre market and improvements in the manufacturing cost base.
This strategy led DATL to establish a joint venture in China for retreading aircraft tyres for the Asian market and Dunlop Taikoo (Jinjiang) Aircraft Tyres Ltd was formed in 2009. Edmondson explains the opportunity and the challenge: “Because of the safety-critical nature of aircraft tyres, it’s not easy to retread them other than by the OEM tyre manufacturer. That means in order to sell a tyre one must have a retread capability within reasonable distance of the operating base of the airline. In Asia we had nothing so in order to sell new tyres we needed to retread. We’ve created significant geographic expansion, where those new tyres are made here but retreaded in a China factory for the whole Asian market.” The strategy planned a similar move into North America, but the recession intervened. Now DATL retreads tyres there under contract to a third party. The second leg of company strategy was in radial tyre investment. Radials are popular in the automotive market and large aircraft. “We are spending a lot of money on designs, materials and products and the manufacturing technology that goes with it,” says Edmondson. “We bought in several people to enhance our knowledge base and have invested in manufacturing equipment because you need slightly different equipment to make radial tyres.” He says the company was fortunate to be able to purchase the assets and some manufacturing knowhow from Yokohama’s tyre plant in Japan when that company withdrew from the aircraft tyre business in the recession.
DATL has traditionally covered the regional jet market very well, especially supplying turboprops like the Bombardier Q400. Now, it wants to go large.
“The key driver with radials is the weight saving that you can often get – but not in every case, which is interesting,” says Edmondson. “As fuel prices continue to increase the value of weight saving increases. The disadvantages are that they don’t retread as many times as bias tyres do. Looking at the simple economics of the tyre, you can argue that the bias tyre is cheaper because it retreads so often. And sometimes it is cheaper regardless of weight saving, depending on the flight duty of the aeroplane – that is, how heavy the plane, how long haul the flight is and the number of flights. As the plane gets smaller and the duty cycles get shorter, the economics become more compelling.” While DATL’s business was built serving the regional aircraft market, radial tyres now gives it an entrée into all the larger aircraft platforms.
Manufacturing – a survival guide
There are restrictions on what you can change in the aircraft tyre manufacturing process without having to retest and recertify the tyre, but Edmondson says these constraints present opportunities. DATL has developed more semi-automated processes. “We have increased the amount of tyres that can be built with semi-automatic machines and we have a programme for the next 18-months to expand that capability,” he says. “It’s only semi-automatic, but it does save labour. As with anything you can automate, you get much better repeatability, consistency and certainty.” DATL has also invested heavily in technology to optimise the cure profile on its products. Tyres vary in thickness around the envelope, and the skill in the process is to cure the rubber material without overcooking the thin side wall sections. “With the ability to modify the cure profile of the component materials, we can devise an optimised cure regime,” Ian says. “We tweak the properties of some of the material constituents, we control and understand what goes on in the heat transfer process in the mould cycle, then we measure, test and check. The final outcome is an optimised cure profile, which leads to more productivity, lower energy usage and better performing tyres.
Dunlop Aircraft Tyres is 101-years old – what’s the secret to survival? Like all aerospace and defence parts, says Edmondson, tyres are so safety-critical that the technology matters enormously, even more than on a car, which creates barriers to entry. “The real issue is the ongoing development of the technology and speciality of designing and making products like aircraft tyres.
It means that the labour cost component, while important, does not drive us to a low labour cost environment because the fundamentals are the knowhow, the quality and the integrity. We are perfectly happy with the UK and we are encouraged by the slight weakening of the pound.” He offers a personal view of global manufacturing economics. “As the pound has stayed weak, we will continue to see the currencies of developing countries strengthen. We see this in China with our business there. The labour cost issue will become more favourable in UK terms, while the technology and quality of the workforce available will become more relevant. The UK has by-andlarge a good workforce and good technology, but the Government should concentrate on this; incentivising people to study science and technology. We should subsidise the cost of science and engineering at universities, which would encourage them to do it because they’d pay lower fees.” Edmondson also believes the time is overdue for a proper approach to modern apprenticeships.
Where government can help
As an engineer who runs a business in a global market, what else does he think government should do to help rebalance the economy? “As well as educational incentives there could be tactics adopted to support technology development, providing preferential or favourable tax regimes.
More tax-efficient tools could be used to encourage companies to do that, for example, to encourage some of these foreign-owned companies to get their technology development done here in the UK.
“Government can identify the factors critical to success, such as in Formula 1 for example, and see if we can encourage those in other sectors. In some cases the manufacturing may not be done in the UK.
But that doesn’t matter necessarily, if the technology is here and the ownership is here then the money comes back here from overseas manufacturing.
That’s what happens with foreign-owned companies, they invest a lot here and we benefit but they take a lot out as well.” Could Dunlop Aircraft Tyres spread its wings? “Manufacturing location has to be done under strategy. The day may come here when we’re full here, need another site and it’s a global industry so we may not choose the UK. That’s not a threat but just a fact of life. When we fill this place up we’ll have to decide what to do – that will be a lovely day to look forward to.” With a Queen’s Award for Enterprise, a healthy share of the regional aircraft market, a Chinese JV serving Asia and radials providing access to the big league, a wise man would not bet against that day being too far away.
Biography – Ian Edmondson
He is married with two grown-up children and lives in London and the Cotswolds.