Rinaldi knows a thing or two about rubber. When the Brazilian company first opened its doors in 1969, its operations centered around the production of retread materials. As the years passed and the company grew, new lines were added. In 1974, it began manufacturing inner tubes for motorcycles and industrial vehicles. In the mid-‘80s, the opening of Brazil’s economy to imports allowed the company to acquire top-of-the-line American machinery enabling it to produce tires for motorcycles, agricultural and non-motorized industrial vehicles, and carts. If a vehicle had two wheels, Rinaldi had the technology, not to mention a freshly recruited team of highly qualified technicians, to make its tires.
Although the company was growing at a steady rate, the tire market is a fiercely competitive one in which staying on the cutting edge is crucial. As such, beginning in the 1990s, Rinaldi began adopting strategies that would guarantee its lead. Aside from constantly updating its equipment and prioritizing advances in technology – Rinaldi invests 10 percent of its gross profits in new equipment and infrastructure – an important step was transforming the family-owned firm into a public corporation with a horizontal structure that allowed the company to make significant gains in flexibility and efficiency. Comments Rinaldi’s president, Luiz Carlos Sella: “The fact that our company isn’t a multinational has distinct benefits. We run a leaner operation and are significantly more agile. We also are able to trim certain costs that a bigger corporation can’t.”
Indeed, Rinaldi’s manufacturing facilities are concentrated into a compact 388,000-square-foot complex that boast a monthly processing capacity of 2.65 million pounds per month and a production capacity of 330,000 units. Relying on a workforce of 500, the company currently manufactures 180,000 tires and 90,000 inner tubes a month, an output that has led it to become one of the national leaders in its segment and the number one supplier of the reposition market. Constantly sought out by national and multinational firms that are seeking to establish partnerships, lately Rinaldi has found itself in the envious position of turning away prospective clients. “Today, we have all the best clients operating in the domestic market,” explains Sella. “So we are actually limiting new customers in order to concentrate on the relationship with those we already have. We want our long-time clients to grow and prosper, and we don’t want to do anything to compromise their position in the market.”
Commitment to Quality
When asked what keeps clients in the company’s fold, Sella emphasizes Rinaldi’s commitment to quality and performance, which ends up giving the consumer the best product from a cost-benefit perspective. “Some of our Asian competitors might offer a tire for $45 that we sell for $50. So with us, you’re paying a bit more, but you’ll receive more advantages. For instance, due to our superior technology, our tire will last for 15,000 kilometers whereas our competitors’ will wear out after 10,000 km. Furthermore, if your tire explodes, you’ll have to pay labor costs to replace it. So in the end, which tire is a better deal?”
To ensure quality control, Rinaldi’s Bento Gonçalves complex includes a state-of-the-art laboratory where products undergo rigorous internal testing. Products are further subjected to a barrage of road tests carried out by professional pilots. In recent years, the company has worked to modernize its product lines, increasing the sizes and models of preexisting products while creating new designs to satisfy growing niche markets. In fact, its desire to keep up with the growing motorcycle market has resulted in Rinaldi’s recent decision to increase its focus upon this up-and-coming two-wheel segment.
“Sales of motorcycle are on the rise both in Brazil and overseas,” explains Sella. “In Brazil, the market is growing by around 10 percent a year, which is quite strong – and we’ve been growing along with the market. Meanwhile, we are also getting more demands for our products overseas in places such as California and Europe, where we have distributors. As gas prices rise, people are looking for more economical and environmentally friendly transportation alternatives. Motorcycles are more agile in heavy traffic situations, parking is easier, and they are cheaper.”
However, Rinaldi has also discovered that motorcycles aren’t just a convenient means of transportation, but increasingly popular sports and recreation vehicles as well. To take advantage of this trend, it has launched cutting edge products for on-road and off-road motorcycles and motocross bikes that take into account new uses and measurements for tires. Says Sella: “We’ve worked on making our production process more flexible as well as creating new technology such as highly resistant tires that can be used without an inner tube. We’re even studying the possibility of developing tires for tricycles and quadricycles. And since 2002, we’ve begun sponsoring two-wheel sporting events, supporting both championships and pilots on a regional and national level. This marketing strategy has so far beenvery successful in allowing consumers to become more familiar with our name.”
Rinaldi is hoping that its successful strategies here at home will spill over into the export markets it is assiduously courting. Reaping huge profits has been difficult due to the significant drop in the dollar over the last two years, yet the company is prepared to sacrifice financial returns – at least, temporarily – in return for a chance to penetrate international markets. While it has already been supplying customers in other Mercosul countries since 1978, more recently it has concentrated its efforts on making headway in the European Union and North American markets. “In the U.S., clients have been impressed with our technology and we’ve had considerable success with our tires for off-road vehicles,” admits Sella. “Currently, exports represent 10 percent of our business. But we really want this figure to increase.”
Aside from investments earmarked for expansion of its plant and the acquisition of new equipment, Rinaldi plans to keep on growing by continuing – as Luiz Carlos Sella puts it – “to manufacture quality.” Rinaldi’s president recalls there was a time, not so long ago, when costs were rising and the company was forced to make a choice: would it opt for quantity or quality? “Well, we opted for quality,” confesses Sella. “And to this day, I still don’t know if we’re doing the best thing for the company’s profitability. I am, however, completely certain that we’re doing the best thing in terms of satisfying our consumers.”