Living and Breathing the Product

During the previous three years Alliance Tire has invested US$300 million in the company’s further development. This sizeable sum has been directed into several key projects. The highest profile of these, of course, has been last December’s acquisition of certain GPX assets, including the Galaxy and Primex OTR tyre brands. A specific focus has also been placed upon Alliance’s principal market of Europe: In December Alliance Tire Europe BV’s new headquarters was opened, and several weeks later Alliance Tire announced the appointment of a new president for the operation, former head of Goodyear industrial, farm and OTR tyre initiatives for the Middle East and Africa region, Manuel Pintado. Recently Tyres & Accessories paid Alliance Tire’s new European headquarters in Halsteren, the Netherlands a visit to hear Mr. Pintado’s views on Alliance’s recent activities and where the company plans to go from here.

According to Mr. Pintado, Alliance currently holds five per cent of the global off-highway segment’s market share, and the end goal of the company’s acquisitions and setting up additional teams worldwide is to grow this share. “Globally, our customer base has grown five times through the GPX acquisition,” he comments. “The Galaxy brand is very well accepted in North America. Our strong agricultural sector image in Europe will help us expand the Galaxy brand here. The Alliance Group’s global footprint now covers North America, Europe, Latin America, Asia and Australia.”

Of these regions, Europe is – in the words of Alliance Tire Group CEO Yogesh Mahansaria – “historically the most important market” for Alliance. Here the Israel based manufacturer holds a 40 per cent share of the flotation steel radial market, the single largest market share. It was therefore vital for the company to select the correct person to head operations within the region. The man they chose has more than four decades’ experience in the earthmover tyre and related industries. Pintado began his career in Angola in 1964, working for a commercial earthmover machinery dealer. Ten years’ later, the country’s war for independence from Portugal was winding up and the stage was being set for the West African nation’s protracted civil war. During this period of uncertainty Pintado was fortunate enough to secure a Brazil based position with a global tyre manufacturer, and he began employment there as the company’s earthmover tyre manager. He remained in this role until 1981, when he took on responsibility for Latin America. In this position he was in charge of some of the world’s largest mining markets, such as Chile, home to Chuquicamata, the world’s largest copper mine where some $15 million a year was spent on tyres alone, and Brazil, where some of the largest iron ore and bauxite mines are located. During his time in this position Pintado forged numerous strong relationships with tyre customers and gained an in-depth understanding of their needs.

This insight into customers in the off-highway segment still holds Pintado in good stead today. “It is important that we consider how we, as customers, would like to be treated,” he shares. “One thing I have learnt from many years visiting customers in the field is that after sales service is crucial. End users appreciate more than just price, as can be witnessed in the experiences of those who purchased off-highway tyres from certain Chinese manufacturers in recent years.”

The office in Halsteren, the Netherlands serves as the European headquarters for Alliance Tire, and has taken over the direction of all commercial, marketing and servicing activities for the region. This was a logical decision taken to bring Alliance closer to customers in its main market. The office employs nine staff at the moment, and growth is anticipated as business further develops. Indeed, at present Alliance Tire Europe is building up a team of language specialists for Europe. “Speaking the language of each market is essential,” states Pintado. “We are developing a team of language specialists so that we can communicate with each market in its own language. Communication is very important.”

For Alliance in Europe flotation tyres will remain the main growth area for the next few years. “Trailer use with tractors is increasing. A casing that can sustain greater loads and is capable of speeds up to 65km/h is needed,” comments Pintado. However it should not be forgotten that tractor horsepower is becoming ever higher as more and more agricultural users adopt the view that one large tractor is better than two or three medium size tractors, and this constitutes another growth area. This is reflected in the fact that the most important sizes in Europe today are 710/70R38 and 710/70R42. “These are becoming more popular with contractors that perform, on average, more than 1,500 hours per year,” the Alliance Tire Europe president elaborates. “This is a Europe-wide trend, occurring in the UK, Belgium but particularly in the Netherlands and the eastern regions of Germany. And it is where the business is, as these heavy use tractors require a change of tyres every 13 months or so.”

In both Europe and in the wider global market, Alliance Tire’s focus has of course traditionally been the agricultural tyre market. Yet the GPX acquisition late in 2009 opens the door to a whole new sector. “The Alliance brand has been very strong in agricultural tyres, especially flotation radials for trailers – a product that Alliance has helped pioneer,” Pintado reflects. “Now, with GPX, the company has a range of OTR tyres for ports, underground mining and for the earthmover segment. This makes for a rich portfolio of products.”

This rich new portfolio calls for, in Europe at any rate, the setting up of an entirely new distribution network, as Manuel Pintado explains: “Existing distributors of the Alliance brand will continue as before. With GPX and Galaxy, we have the opportunity to sell to other segments. We will sell directly to key OEMS. Aftermarket users, such as ports, require a very technical and specific application. There are, for example, many safety aspects to consider. Therefore we need highly specialised people for mounting, de-mounting, rotation, follow-up and such operations. Some distributors of our agricultural products do not possess the specialised knowledge required to provide the needed level of service to this very different customer base. For this reason we may require brand new, separate distributors for this segment.”

In the wake of the GPX asset acquisition, shares Pintado, Alliance Tire holds the aim of securing ten per cent of the OTR aftermarket share within three years. “We now have a huge footprint in the industrial, construction and port segments. Previously with Alliance alone we didn’t have that possibility,” he notes. Inroads into new markets will be made using the existing brand names. Alliance, Pintado explains, will continue to exclusively be an agricultural tyre range, while Galaxy and the other acquired brands will remain off-highway line-ups.

New products will be developed at Alliance’s three R&D centres, located in Israel (specialising in radial tyres for modern, more powerful machinery), India (crossply tyres and smaller size radials for vehicles up to 100hp) and North America (a former GPX facility, now Alliance’s centre for earthmover and industrial tyre development). Europe is also extremely important for the development of Alliance agricultural tyres. “Europe is the driver of farm tyre development and the driver of agricultural radial technology. What is successful in Europe is generally successful in other markets,” Pintado confirms.

It is worth noting that one of Alliance’s three R&D centres deals in what some consider an obsolete technology, yet there is good reason for continuing the development of crossply tyres. “In some of our markets much bias tyre dependant machinery is still used for economic reasons,” Pintado explains. “We are thus starting in India with the production of bias tyres and targeting price oriented countries with these products, especially East European countries where Russian tyres were previously bought. We also sell bias tyres in Greece and Turkey – Turkey today is like Portugal in the 1980s in terms of its market development.” He notes, however, that no large OEM customers mount crossply earthmover or agricultural tyres today, and therefore the aftermarket will over time become increasingly radialised. According to his market figures the European OTR aftermarket is now 80 per cent radial and 20 per cent crossply, while the US is still crossply oriented. “There will always be a niche for bias, even in Europe,” Pintado concedes. “The use of these products is a cost factor for low use users.”

While the GPX asset acquisition has broadened the company’s product portfolio considerably, the key to maintaining a successful business continues to centre on developing and maintaining strong customer contacts and providing these customers with specialised after sales assistance. “It is essential to drive the market through support,” the new Alliance Tire Europe president elaborates. “We conduct training for farmers, our so-called ‘field shows’, where products and applications are explained. Word of mouth is even more important, and therefore it is necessary to foster relationships with users. These relationships are arguably better than the field shows as they involve interaction on a more personal level.”

In its battle for market share, Alliance Tire comes head to head with several major tyre industry players. Yet Pintado believes the company, who is unknown in the mainstream consumer and truck tyre markets, holds a major advantage over its competitors. “For the majors, off-road use is just another sector,” he says. “The people at the top aren’t necessarily off-road specialists. Selling off-road tyres is very different from selling passenger car tyres through a wholesaler. With off-road, you must win the customer’s trust and really get to know the customer. Alliance lives and breathes this product. It is our core business and all our attention is put into this product.”

An understanding of the product clearly plays a major role in Alliance Tire’s success. Yet in conclusion, Manuel Pintado outlines one further factor even more important for Alliance as it prepares for the future: “Without good people, a company cannot succeed. And we have good people.”