Pelmar Delivering Right Mix of Product & Price

It doesn’t take an expert team of analysts to realise the tyre industry isn’t exactly awash with cash at the moment. Thus it is hardly surprising that sales of tyre building equipment have dropped off considerably. Yet one company whose business centres on the equipment used in tyre manufacture is bucking this trend – for Pelmar Engineering Ltd, a weak market equals strong sales.

The Israel based supplier of refurbished and pre-owned tyre industry machinery notes that while Pelmar is naturally successful in times of industry strength when many companies are expanding and instigating new projects, the prices it can offer enable Pelmar to also do well during periods of market contraction. This is perhaps to be expected when, as the company points out, the landed cost of pre-owned tyre building machinery is approximately a quarter of that for its new equivalent. Even after full reconditioning such items can be obtained for 60 per cent of the price a similar new machine would command.

Pelmar typically supplies European and American manufactured equipment, brands and products that have proved their reliability over the years and are still in use in tyre manufacturing facilities worldwide. The large variety of machinery purchased and stocked by Pelmar allows its customers to select their preferred brand. This is an important selling feature – Hagai Peled, son of company founder Jacob Peled and today in charge of the group’s marketing, sales and operations, notes that most of Pelmar Engineering’s customers are familiar with a particular brand and prefer to purchase additional machinery from the range. This is not only due to compatibility issues; the affordable cost of machinery from Pelmar means that a number of units are purchased for use as spares.

Regardless of the location, if a tyre of rubber manufacturer wishes to sell its equipment, Pelmar handles the logistics involved in its acquisition, including dismantling, marking, loading, containerising, and transportation. Once the equipment is dismantled, it is moved to one of the Pelmar Group’s global warehouses. From there, it is sent either to a workshop for refurbishing or directly to the end user.

The ability to supply such in-demand equipment at a markedly lower than new cost is of course a major benefit Pelmar Engineering holds, yet it is not the company’s sole plus point. As previously mentioned, Pelmar ships equipment directly from its own warehouses, so unlike with new equipment – where equipment often takes at least a year to arrive – there is no waiting period. “We purchase equipment regardless of whether we have a customer or not, which is reflected in the fact that we own thirteen warehouses and a large variety of ready to be supplied tyre and rubber processing machinery,” explains Hagai Peled. “We are able to supply complete plants, door to door, including installation and operator training.”

Much of this equipment has been upgraded to keep pace with the latest technological developments. Peled shares that Pelmar Engineering’s chief suppliers are Goodyear, Dunlop, Michelin, Continental, Bridgestone and Pirelli, and the bulk of the equipment they sell has been maintained and upgraded during the course of its service with the tyre maker. Should a customer wish for a machine to be further upgraded, however, Pelmar can design and upgrade the equipment to their specifications.

The result of this combination of price, range and availability is sales growth of 20 per cent for the last five years and a customer base covering more than thirty countries. According to figures released by the company last December, Pelmar enjoys annual revenues of approximately US$50 million. About half of this comes from the sale of used machinery; the remainder is generated by TGL SP Industries Ltd, a company in which Pelmar is part owner. TGL manufactures products for both military and civilian customers, including tank wheels and tracks.

Such figures are impressive when one considers that Pelmar Engineering got underway in 1966 with just three employees and an annual turnover of half a million dollars. Company founder, Jacob Peled, was still an MBA student at the time he established the company. “Alliance Tyres of Israel was interested in selling some of their machines, which I bought and afterwards sold in Europe,” he explains. “At the time, there were no other companies doing such business and I began to receive offers from other tyre manufacturers worldwide.” This was, Peled says, the beginning of the company’s continuous growth. Over the years Pelmar has enlarged its research and development department in order to support this swelling customer base. Today the firm is in very close contact with the leading manufacturers of new machinery and often uses their services and facilities for upgrading its inventory. Pelmar is also, the founder and group managing director adds, working on the development of new machinery.

Pelmar claims machinery for agricultural, OTR and giant tyres (up to 63-inches) to be a particular area of expertise for the Israeli firm, however its activities are not restricted to equipment for these products. The company deals in all types of tyre and rubber product machinery, providing everything up to and including complete turnkey facilities. “One of our greatest satisfactions is purchasing a plant and relocating it as a whole entity to the customer’s desired new location,” says Hagai Peled. “We are proud that we have been able to open plants for our customers all over the world and create new jobs and products which would not have been possible without the availability of our pre-owned machinery.”