Israeli Tire Company Hopes to Rebuild North American Presence

Like the economy, Alliance Tire Co. (1992) Ltd. has bounced up and down in the North American market, feeling the effects of pressure from all over the globe. But after a few years on the down slope, Alliance is making a strong comeback, posting its first quarterly profits in years. And the tiremaker’s new top management is looking to rebuild its North American presence with some technological advances and market positioning.

Recently appointed to their posts, Israel Tchetchik, chairman, and Joseph Anglister, president ®“ along with Alliance Tire veteran Shaul Nuri, manager of marketing and sales ®“ were at the recent SEMA Show to meet with tire wholesalers and commercial dealers interested in taking on its lines of agricultural and OTR tires.

Headquartered in Hadera, Israel, Alliance Tire’s North American business is based in Denville, N.J., and has sales representatives in Denville, upstate New York, Phoenix and Memphis, as well as in Canada. A technical sales manager was recently added to the fold.

Anglister said Alliance offers one of the widest ranges of ag tire sizes available. Over the last few years, Alliance has enhanced its products, adding low profile and steel-steel radial ag tires to the mix, he said. Nuri said Alliance’s strategy is to position its products as an alternative between higher priced major brand products and low-price imports by leveraging its line-up of new radials and high flotation/low compaction tires.

American Roots

Even as Alliance Tire is working to regain ground in North America, it’s somewhat ironic that the tiremaker has its roots in the U.S. Back in the early 1950s, many industries were called on to help build an industrial base and create jobs in the then-young Israeli state. Alliance Tire was started by U.S. citizens, giving Israel its first full-fledged tire company.

Initially, Alliance focused only on the Israeli market. But as competition grew, primarily from foreign tire companies, Alliance decided to grow its export business. Today, Alliance exports 75% of its products, primarily to Europe. In Israel, Alliance produces and sells everything from passenger tires through OTR units. Export-wise, Alliance is a niche player, primarily in the ag, industrial and small OTR markets.

Trying Times

By 1997, Alliance had grown to some $20 million in sales in North America. Then the economy began to slip, causing customers to slow their purchasing. Severe cash flow and financial problems threatened Alliance’s existence, and North American sales fell to just $10 million.

In mid-2002, an investment group headed by Harvey Brodsky, executive director of TRIB, planned to purchase controlling interest in Alliance for $50 million, a cash infusion the company sorely needed. Last February, however, the deal collapsed, leaving the tiremaker in dire straits.

Tchetchik and Anglister said it has taken a lot of hard work and sacrifices to get Alliance back on firmer footing. Significant cost cutting, new technology, and a refocused strategy brought the tiremaker back from the brink. Alliance posted a profit in the first and second quarters of 2003, and expects positives for the rest of 2003 and into 2004.

Alliance also began another round of capital investment, adding new molds, mixers and tire building machines to its lone plant in Hadera, which currently runs at around 70% capacity.

Another of Alliance’s strategic initiatives is to fill that available capacity. Anglister said Alliance recently signed a three-year agreement, worth about $9 million, to do off-take production for an unnamed "major label." The tiremaker is also actively pursuing OE business on ag, forestry and small OTR equipment.

"We are geared like a small job shop," Anglister said, and can develop and produce small lots of vehicle-specific tires to meet OEM needs.

As for other financial options, Tchetchik said his company is still seeking outside investment, but it is not rushing into anything. "We’re looking for a synergistic relationship where we can compliment each other. We don’t need only money. We need someone who can help us use our excess capacity."