STOW, Ohio—Harm J. Voortman, president and CEO of VMI Holland B.V., knows the formula tire manufacturers can use to compete in high-labor-cost regions like the U.S. and Europe.
Yes, a company can succeed by purchasing VMI tire production equipment, he's quick to say. But that's not his point.
Automating production and producing high-end tires, the strategy followed by major tire makers, especially in the U.S., is the proper course, according to Voortman.
“Let commodity tire production go overseas. Focus on the high tech, where you can make money,” he said during a visit to the VMI Americas Inc.'s new operation in Stow, an Akron suburb.
VMI itself pursues a similar approach to business. The Epe, Netherlands-based company quit manufacturing tire-building equipment in the U.S., concentrating it at its headquarters plant in Holland and in the lower-cost operation in Yantai, China, where it makes modules and parts.
“Strategically, we made the decision two years ago to change the role of VMI Americas, to concentrate our production core technology in Holland, and a lot of production coming from China, to stay competitive,” Voortman said. “Then the role of VMI Americas would be more sales, and having the contact here with the major tire companies close by, as well as Michelin in North America.”
Without the need for the bigger shop floor where production was done, the firm's Fairlawn, Ohio, operation was relocated to Stow, and the previous building sold, said Arie Kroeze, president and CEO of VMI Americas. He and Voortman talked about the company at a recent open house at the new building.
Voortman said VMI's business in North America is growing.
“There has been a lot of VMI equipment installed in the U.S., Mexico and Canada,” he said.
“We would like to help our customers keep these machines up and running by retrofitting and providing service. So the role of VMI Americas has changed a bit, now sales and service, but with some production on the side.”
A tire plant utilizes a variety of machinery—from mixing to batch offs and calendering, large extruders and tire-building equipment, and VMI doesn't supply all of it. “But if you look at the specific equipment we supply, tire building, which is the heart of the factory, we are by far the No. 1 in the world market—we are the global leader,” Voortman said.
Some customers are certain that they know more about tire-building equipment than anyone else, he said, and it is VMI's challenge to convince them of the Dutch company's expertise.
That means despite VMI's market share dominance in its field, there still is some room for growth.
On the tire side, VMI supplies millroom equipment and a complete line of tire manufacturing, curing and testing systems for radial and bias passenger, truck, utility and off-road tires. Voortman sees his firm's role as that of a provider of labor-saving and quality- enhancement equipment.
“Tire manufacturers need to go for highly automated production,” he said, again emphasizing his thoughts on the subject. “Take out the human factor in output and quality—obviously you need people to run a factory, but right now a lot of people are doing manual labor, and that's influencing quality and output. It's very costly.
“You can overcome all that by using highly automated equipment. Then your people can do other things in the factory.”
Adding to the mix
VMI helped pump up its knowledge of automation via acquisitions in recent years. In 2004, for example, it acquired the extrusion division of Germany's A-Z Formen, now called VMI-AZ Extrusion GmbH. That division supplies a comprehensive range of machinery for rubber extrusion, compound straining, rubber preforms, high-precision rubber feeding and tire retreading.
Another change occurred in 2009. The firm's EBM Product Handling Systems division, merged into VMI Holland by parent company TKH Group, gave VMI a specialist in automotive robotic handling systems and machinery for rubber processing as well as other fields.
VMI employs more than 900 worldwide. Voortman said there are about 550 staff members at its headquarters offices and plant in a rural area of Holland, which includes its engineering research and development and product development. At that location VMI builds prototypes and high-tech equipment.
In China there are about 300 employees, who also do final assembly for the Asian markets.
Besides the Stow site, the firm has a relatively new, small location in Sao Paulo, Brazil, which includes some production; a unit in Runding, Germany; and sales offices in Moscow and Kuala Lumpur, Malaysia.
While the company is known primarily for its tire production equipment, representing 70-80 percent of its overall business, it also serves the technical rubber goods sector. Kroeze said VMI Americas already serves various molding shops and sees an opportunity for the company to advance in that area.
Kroeze said there are differences in dealing with tire companies versus technical rubber goods processors. Tire manufacturers create a sophisticated product and are easier to convince or deal with “because the equipment we are selling is high-tech and innovative,” he said.
The job is to show how a tire can be efficiently built with VMI equipment, he said.
Comparatively, mold shops often have smaller, older equipment, he said, and the VMI people typically deal with a chemist. They will show the potential customer a demo unit, run samples and analyze them for the client.
“With tire companies, I think our reputation is already there, they know if they choose VMI the quality will be good. There's not so much interest about having testing,” Kroeze said.