Disruption already has happened in the tire industry. Decades ago, the introduction of radial tires gave huge first-mover advantage to the innovators who developed this approach. Several leading players lost traction and went into decline. Early adopters saw rapid international growth.
We at VMI also have played our part in causing disruption. Automated tire-building, based on our own Maxx technology, changed the game for many. Investment in automated machines has made it possible for smaller, newer companies to reach the highest quality levels and target sales to major industry players at premium prices. That has driven rapid growth for many new entrants and has seen new centers of excellence in tire-building appear across the world. It has permanently changed the market.
In the next two decades, we expect the pace of disruption to increase and, though it is rash to predict the future, we believe that three main drivers for large-scale change will prove especially important.
Changes in buying patterns threaten the existing value-chain by connecting the factory direct to the end-user. This is helping to fuel a growth in mass-customization to order, leading to smaller runs and greater variations. That makes many aspects of traditional tire manufacturing potentially obsolete.
Finally, after a long period of rapid globalization, we are now seeing a potential backlash, with new tariff barriers slowing the apparently unstoppable transition to global trading.
Emerging environmental issues, which are now impacting on public opinion and feeding through into public policy as never before. We see growing demand for lower pollution levels, together with much tougher regulations, driven by fears about air pollution, already causing a collapse in diesel sales across many markets—down 33 percent in the United Kingdom during recent months.
To reduce emissions and use of oil, we are moving to lighter materials, with a strong emphasis on recycling and "zero landfill" waste protocols. The long-awaited move to all-electric vehicles is now in sight, with many regions of Europe and North America reaching critical mass for electric infrastructures in the next decade. That will be a game-changer for tire-use as well as for vehicles.
Autonomous vehicles, however, are the future. They now seem a little further off, following recent test failures in the U.S. This is likely to prove a temporary hitch, however, given the sheer scale of commercial and government investment in this technology.
The rise of autonomous vehicles is one of those changes that may take time, may not happen evenly, but that will have a transformational impact when it does. We may see a massive reduction in car ownership. Vehicles may be developed and managed by new players—using a model more closely related to city-bike schemes than to traditional automotive.
For tire manufacturers, we could see a move to commoditization, with safety and efficiency being the only criteria that matter, and to different production techniques, perhaps focused on "build-to-order" from small, automated factories close to point-of-use.
We can't ignore the likely impact of disruptive change, but we can do something about it. We have four top priorities, right now:
• Connecting islands of automation. Every leading manufacturer already has automated their processes and is looking for ways to automate further. Yet in our industry there remain many points of human intervention.
We believe it is time to talk about machines as platforms. This means continuously updatable machines, with new capabilities retrofitted to safeguard investments while enhancing quality and productivity. In the future, it also implies strategic platforms that bring together multiple machines, progressively eliminating entire process stages, leading to automated, end-to-end manufacturing with no hand over-points.
• Machine intelligence and robotics. Currently, we use robots to remove operators and improve processes. If you employ robots but keep operators, you actually waste money and gain no benefits. Yet operators do a lot of intelligent and important things, so to replace them, you have to make your machines intelligent enough to do what operators do faster and better.