TREADING THE WORLD
BY Jayashree Mendes
Brief us into the history of Alliance Tire Group.
Better known as ATG now, we began operations close to 10 years ago with the acquisition of Israel based Alliance Tire Company in 2007 and US-based GPX in 2009 which owned the popular Galaxy and Primex brands. Alliance was already a strong player in the agriculture segment in Europe and Galaxy was segment leader in the US, that’s how we managed to get a solid foothold in the diverse off road tyre industry.
Soon after, we built two plants in India—Tirunelveli (2009) and a second one in Dahej (2012-13). Importantly, as a 10-year old company, we acquired companies that were already 50-60 years old in the industry. Both these companies brought in their own domain expertise and offered us knowledge in the respective markets they were present in and that became a perfect fit for us. Driven by a very able entrepreneur Yogesh Mahansaria who scaled up the business from $150 million to a $500 million company when we were acquired by Yokohama in 2016.
Overall, we are a good blend of old and new, because most of the employees from Alliance and GPX continued to stay with us. So we are well embedded within geographies, cultures and also across various segment profiles. What further strengthens us is that the acquisitions not only gave us a strong foothold in the US and European markets but also in terms of segment superiority. Alliance is a strong player in agriculture, while Galaxy has a good hold in construction. Over a period of time, we’ve built up the team, encouraged and nurtured talent across geographies and today we are 4000 people. In 2016, Yokohama, one of the largest tire companies in the world acquired us and now we are on a new journey of growth, aiming to touch $1 billion turnover by 2020.
How did the Japanese connection come in considering you have been playing in European and US markets?
Companies looking to acquire first consider the advantages they can gain and what the new company brings to the table. ATG was one of the fastest growing companies in the off-highway segments of agriculture and construction. We have a huge range of products, close to 3,000 SKUs with two plants in India, and one in Israel.
Yokohama was seeking to acquire a company with a high growth rate, sound product portfolio, excellent market reach, and strong distribution capabilities. They already had a strong presence in passenger vehicle tyres and truck tyres and this acquisition in the off-highway segment therefore complements and completes their entire portfolio.
What has changed since Yokohama too over?
Yokohama has already been in the tire industry for a 100 years. A company that long into the business has gained maturity, is visionary, and is much respected in the market.
Our 8 year growth plan perfectly ties in with the Capex commitments and support from Yokohama. The belief that we can continue to grow and add value is the most important attribute that Yokohama brings to the table. Our organisation and top management remains the same even after the acquisition, and the zeal and endeavour with which we grow at double-digit is not lost either.
The $6 billion Yokohama brings in much R&D and technical expertise. Tyre technology is fairly complex and they have much more expertise when it comes to subjects like compounding, R&D, sourcing raw materials, supply chain, and cutting edge manufacturing processes. Another change is an enhanced focus on safety and quality. We learn much from the Japanese team in terms of Six Sigma, Kaizen, and quality and safety standards. Quality has two aspects to it: Quality for today and quality for the future. That’s a DNA change. These are some of the learnings that Yokohama has kicked off from day one.
Considering that you look at numerous markets, what is the strategy employed to deal with them?
When Alliance and Galaxy became a part of our portfolio 10 years ago, there were already well-crafted strategies in place. Those acquisitions were not only from a financial perspective. It was a vision of finding the right fitment and leap-frogging in the market.
The tyre business requires a basket of product that can beat or negate cyclicity. It is important that one does not rely on just few product lines or few segments to counter cyclicity. Which is why we have one of the widest product range in the industry with almost 300 new SKUs’ launched every year!
Each market is unique and a product that is perfect for one may not work in another, that is why it is important to have a wide range of offerings, we are able to bring out new tires consistently because of our strong R&D heritage from Israel and the technical expertise from Yokohama.
Does the company invest in new products?
Although we have been around for ten years, we have a pedigree of 60 years with Alliance and Galaxy. In the last decade, we have put up two plants in India, and restructured the Israel plant, and there’s continuous investment in manufacturing and the proof of the pudding is in the number of SKUs we have. We have strong R&D teams in India and Israel who are constantly working on developing new products. Since we are not into PV and CV tyres, there’s little dilution of focus. Though we have a good product, there’s a constant drive to enhance it. We do spend time and money in making the product more suited for a given application. For example in agriculture we cater to 20 different sub-segments/applications and in construction/industrial we have tires that cater to 25 sub-segments/applications. There are very few players in the world who can cater to such diverse requirements and who work around this philosophy.
How do you stand out in terms of your competition, in India and abroad?
Our key differentiation is the better value that we offer our customers. Quality that is world class – at value pricing. Another key differentiation is the speed with which we can launch a tire that is exactly needed by the customer. We do the entire process from concept to launch in a matter of few months.
We also invest heavily in a strong field team unlike most other off-highway companies, this ensures that we have our ears close to the ground in terms of customer demands and feedback that allows us quick responses.
Overall, how does Yokohama handhold ATG in terms of developing the Indian market?
ATG is a fairly structured organisation and Yokohama’s focus is on retaining our fast paced growth. From Yokohama we have senior representatives who are a part of our Technology, Projects, Processes and Integration teams and these representatives facilitate the exchange of knowledge both ways. ATG’s brands – Alliance and Galaxy have been prominent players in the off road segment for over six decades, the wealth of knowledge and expertise in this segment is a valuable asset for Yokohama. Similarly the expertise Yokohama has in technology can accelerate ATG’s growth ambitions. Wherever possible globally ATG is free to utilise Yokohama’s distribution and warehousing facilities to optimise costs and improve synergies. So I would say it’s more a partnership approach than handholding.