The “Fast Follower”
This year’s Reifen Messe Essen saw Alliance Tire share its stand with exclusive German marketer, Bohnenkamp. With Alliance president Joseph Anglister leading the way, several of the specialist Israeli manufacturer’s managers were on hand to speak to visitors.
European sales and marketing manager, Rami Einav, confirms that the $85 million dollars the company has invested in recent years is now paying dividends, with Alliance becoming an attractive off-take partner for larger companies. This is particularly important when you consider that the company’s 900 highly productive employees work around the clock, 363/364 days a year.
Between 60 and 65 per cent of the company’s total production is destined for export on the world-wide market (70 per cent as far as radial products are concerned) with America returning to its position as a strong export destination after some set backs a few years ago. However, no market is as important as Europe.
On the one hand there is a trend towards cheaper products (cross-ply tyres from China, Russia or India), because many tractors are already decades old and seemingly everlasting – and the large manufacturers are almost completely uninterested in these products. On the other hand strong growth rates in the radial premium segment are being registered in some regional markets. Alliance believes it fits in extremely well between these two scenarios.
The company “loves niche markets,” says Einav using forestry tyres as an example. The fact that Israel is not covered in forests means the country is not home to large competing development programmes of this kind. Alliance saw this as lucrative gap in the market. The company did not have to invest much at all to become to the only alternative important forestry tyre manufacturer says Einav, referring to Nokian. The company also recognised that it could use a similar strategy to gain market leadership in certain niches too. For example Alliance tyre recognised as far back as the 80s that there was a need for radical development in the Floatation tyre segment.
Currently about 85 to 90 per cent of the floatation radial ply tyres manufactured by the Israelis go into the OE business because this is the best sub-segment is the best way of increasing your image with vehicle manufacturers. This position is naturally worth defending, something that is best done through the continuous introduction of new sizes – suddenly making the competitors followers of Alliance.
Naturally the market does not only consist of niches, Alliance wants to be an important competitor with conventional tractor tyres too. And as far as “care tyres” are concerned, in the last year the gap between leader (this time meaning Michelin) and follower has narrowed. Certainly, on the subject of radial tractor tyres at least, Alliance is not always the outrider in the market, but is certainly a fast “follower.” Rami Einav doesn’t see large companies like Michelin, Bridgestone or Goodyear as a “danger“ for his company, but as opportunities: One looks first at what the large make, and then at what they don’t make so well or so many of. Nevertheless he knows that Alliance is not in a simple tyre world, because there are “the unknown Chinese”, and nobody knows exactly, what they can do today already, less still about what they will be able to do in a short time.
Europe is a key market for Alliance, because product-mix here is better than in a fast growing export market like USA. Turnover rose by 27 per cent in 2005 in Europe. In Great Britain, where the Alliance products are sold by Kirkby Tyres, this figure is even further above average, but this is attributed to orders in the earthmover range also served by Alliance. One tries to see Europe as a whole, says the European sales and marketing manager, but there are considerable regional variations. Remaining with the example of Great Britain, here there is a smaller price level than elsewhere – and so each market has its peculiarities and even is own problem fields.