ROSELAND, N.J.—Israeli tire maker Alliance Tire Co. Ltd. has refocused its resources on agricultural tires, and is exploring new distribution strategies—including warehousing opportunities—in the U.S. in order to help it build its business base in North America.
In the past year, Alliance consolidated manufacturing to one plant, in Hadera, Israel, and invested $75 million to expand operations there as part of a shift to round-the-clock operation that is expected to increase production capacity by 50 percent.
While Alliance makes passenger and truck tires for the domestic market, it has decided to concentrate its export efforts on agricultural tires, which are less dependent on mass production volumes for profitable output, the company said in prepared statements. Instead, farm tire production, with growing demands for special sizes and types, lends itself more to the "batch" manufacturing that Alliance specializes in.
"Our new business model is a circle," said Zvika Meiri, president and CEO of Alliance Tire since last August. "In the center is the customer, supported on all sides by our sales, engineering and logistics departments. We exist to build tires that our customers—and their customers—need...."
In North America, Alliance up to now has dealt only through independent wholesalers, which order by containerload from Isreal and then distribute the product on their own terms to independent farm tire and/or equipment dealers. If a particular product is not in stock and must be ordered, turnaround time can be up to six weeks.
In order to improve its estimated 2-3 percent farm tire share in North America, though, the company has identified as top priorities a warehousing arrangement and a streamlined order processing system, according to Leslie Gurland, general manager, Alliance USA Ltd.
Other initiatives Alliance USA has on tap are an increase in the company's sales force, a public relations effort to increase brand awareness, improvements in co-op marketing benefits and participation in key trade shows.
>From a product standpoint, Alliance is banking on its experience in Europe, where it claims its radial drive tires have been well received because of the company's development of tires for use on faster, more powerful tractors that spend increasing amounts of time driving on roads between fields. This trend is spreading across the U.S. as well, Alliance contends in its prepared materials.
Alliance promotes its tires as durable, exhibiting both in-field puncture resistance and on-road wear. It also is working to improve its presence with original equipment accounts as a way to drive sales. During 2000, the company introduced 28 new designs and sizes.
Considering the slump the American farm economy has been experiencing the past few years, Alliance feels farmers see upgrading their equipment with newer, more versatile tires as a cost-effective way to improve the performance of their vehicle fleets, Ms. Gurland said.
Alliance provides a range of tires to North America, from 11L-15 implement tires to 54-inch narrow crop tires and several flotation-type drive tires, offered at "attractive" prices. The company's development efforts are focused on radial drive tires, a segment with considerable growth potential.
"Our success is not going to come from winning a price war or trying to cut any corners," Mr. Meiri said. "We will be neither the cheapest, nor the most expensive in most cases."
"We are not seeking to be another low-cost supplier," said Simon Soesan, vice president of sales and marketing for Alliance Tire.
"We are delivering a tire that is every bit as good as—or better than—the market leaders, but a slightly lower price point."