Alliance ‘Well Placed’ for Global Growth
Between establishing a new factory in India and acquiring assets from GPX in North America, the Alliance Tire Group (ATG) has been busy in the last couple of years. And in terms of new products, this momentum is continuing. At the Reifen 2010 show Tyres & Accessories learned the company originally intended to bring along all the new tyres it’d released in the previous four months. “But then we realised there’d would have been no space on our stand for anything but tyres,” said an Alliance representative. “Our range is growing very fast.”
This is unsurprising when bearing in mind that since late last year the company’s brand portfolio has increased from one to three brands. Alliance is now taking advantage of the large Galaxy & Primex distribution channel in the US to distribute Alliance brand products, and sees itself as being well placed to tap the needs of the market in the United States.
ATG CEO Yogesh Mahansaria sees the acquisition as a strong foundation for the company’s next aim. “As a group we’ve covered a significant part of the market and made significant investment dedicated to off-highway tyres, probably the largest single investment that’s come into this market in the last two or three years,” he explains. “I think this positions us very well. Our aim is to grow significantly. At this time there is a lot of market volatility so we don’t have an official market share target as it’s very hard to set such a goal in this environment, but we do have a target to grow our group turnover to half a billion dollars by 2012, and I believe we are tracking that well.”
Growth to a point where half a billion in annual turnover can be achieved, states Mahansaria, is expected to occur organically. “But we are also looking for the right inorganic growth opportunities to further build the business,” he adds. “So we think, we will get to the half a billion dollars purely on the back of organic growth; anything we do inorganically would be over and above that. We definitely have a clear direction about our position in the market. Inorganic growth has played an important part in the group’s creation, and will continue to play an important part.”
Mr. Mahansaria anticipates organic growth will occur through all the product segments now covered by ATG, plus in several key regional markets where the company’s representation may previously have been low-key. “In the past Alliance was much more reliant upon the agricultural market, but with the acquisition of the Galaxy business now we have a presence in the OTR and construction market. Our aim is to grow in both of these market segments over the next year. It will be a mix of growing in different segments and growing in different regions. We foresee a significant growth in our business in North America, Latin America and in Africa.”
Thanks to recent changes and short-term growth plans, Alliance is a much different company than it was even five years ago. Yogesh Mahansaria sees the company as having evolved from a largely Europe-focused agricultural tyre company to a more global company, which is also present in a broad range of off-road tires sectors. “We believe today that Alliance Tire Group is the only company in the off-highway business apart from the big two major brands in the industry, to have an on-ground presence in every continent in the world,” he comments. “As an off-highway specialist, we think we are unique in this regard.”
According to the company CEO, Europe accounts for “somewhere between 35 and 40 per cent of Alliance’s business” while North America now holds between 40 and 45 per cent. He cautions that this calculation depends upon the comparative value of the euro and the dollar, but for the moment North America is the larger market. Despite its relegation to second place on the regional market table, Mahansaria believes that Europe has recovered well from the 2008 crisis. He states that Alliance has seen a strong recovery here since the start of February/March, however he anticipates recent problems in some euro zone economies affecting the off-road market.
“From our business perspective we certainly see a meaningful long-term impact in Europe,” Yogesh Mahansaria explains. “But we have a lot of faith in the emerging economies. Demand for tyres in Latin America and Asia is extremely good. We foresee that those economies will continue to grow. So, yes, there will be some sort of realignment of the global tyre market. Nevertheless, Europe and North America will still be a very important part of our business for many years to come.
All in all, Yogesh Mahansaria views ATG as being “very well placed with our presence in all parts of the world.” The company, he adds, will retain its commitment to the off-highway segment, a market sector where it has made significant investment. “We believe today we’re very well positioned to emerge as a leader in this sector because of our manufacturing platform, which includes our two factories and contract production we do in China, the sales and distribution capabilities that we have across the world, and our engineering resources, including over a hundred engineers in different parts of the world dedicated to new product development,” he says in conclusion. “So in each of these parameters we have made a significant contribution to the market and that put us in the right track to develop the business and achieve a very good position. And we think, this allows us to offer a very good value proposition to our business partners as well us to the end customers who eventually use our products.”