Certainly, much of Alliance Tire Group’s recent success can be attributed to organic growth; since it was formed and reformed through a confluence of events, the company has steadily built a loyal dealer base for its core farm and OTR tire products.
Aeolus Tyre’s vast “new” truck tire plant is actively contributing the nearly 250,000 medium truck radials sold by ATG to U.S. dealers.
And then there are new business opportunities, with a radial medium truck tire line that has paid surprising dividends for both Alliance and its Chinese partner. With its 2009 acquisition of portions of the bankrupt GPX International Tire, ATG inherited the U.S. distribution rights for Aeolus medium truck tires.
In its first two years, ATG saw Aeolus sales increase by 60%.
Aeolus Tyre Co., headquartered in the heavily industrialized and old city of Jiaozuo (population: 3.6 million) in Henan Province, about 370 miles southeast of Beijing, is the 20th largest tiremaker in the world and the fifth largest tire company in China, according to Tire Review statistics. Besides the company’s offices, Jiaozuo hosts Aeolus’ four tire production facilities, located on two vast campuses.
Aeolus (most commonly pronounced “yoe-lus”) was founded in 1965 as Henan Tyre Factory. The publicly traded company produces Aeolus and Henan brand radial truck and OTR tires, a variety of brands of bias ply tires, and (under license from Goodyear) Kelly-Springfield brand radial medium truck tires for the Australian and Middle East markets.
Radialization began in 2001, first with truck tires and then with OTR in 2007. The “Old Plant,” located on the same campus as Aeolus’ headquarters and R&D center, is actually a series of buildings in which workers produce thousands of bias and radial tires each day.
Across town lies the “New Plant,” a matched pair of massive structures. One building houses radial truck tire production, and started commercial production in 2009. Its twin is home to radial passenger and light truck/SUV tire production (see October 2012 issue, page 18) that began in 2011.
In 2004, Aeolus posted sales of $253 million, $82 million of which was export. In 2011, sales reached $1.54 billion, and a third of that came from exports.
In September, ATG brought a group of its truck tire customers to China to meet with Aeolus officials and tour the facilities. Making the trek were Maggie Buckholtz of D.B. Rice Tire in Frederick, Md.; Darrin Malone of Malone Warehouse Tire in Athens, Ohio; Dale Talbert of J.P. Thomas Tire in Asheboro, N.C.; John Todd of Atlanta Commercial Tire in Doraville, Ga.; and Joyce Cole of Parmenter Inc. in Odessa, N.Y. They were hosted by ATG’s John Hull, national truck tire sales manager, and Seth Walters, vice president of marketing and logistics.
Striving for Quality
Language barriers made it difficult to gather much detail about production levels and long-term goals, and the portions shown of the “Old Factory” and the newer facility were comparable to many other tire plants.
Aeolus chairman Wang Feng told Tire Review that the focus has been on technology, product quality and delivering a green tire through both raw materials and lower rolling resistance. As of November, for instance, Aeolus has three radials that have been EPA SmartWay verified.
“Most of our focus is on quality, on professional tire manufacturing,” Feng said. “Our best customers are going to sell quality.”
While Aeolus claims 600 SKUs in its truck tire portfolio, the North American distributor carries far fewer options, but still delivers a pretty complete product screen with tires the maker vows will deliver at least two retreadings.
ATG officials said the company will sell between 220,000-250,000 Aeolus truck radials in 2012. “Dealers can invest in this brand,” said Hull. “The ‘two retread ‘guarantee is important to emphasize the quality of the casing. When you combine all the other advantages and features of the tire with the retread warranty, it makes a very competitive package compared with our competitors.”
While it was not a focus of the visit, Walters reminded that ATG also offers Aeolus OTR tires. The current offered size range is 17.5R25 through 24.00R35 and 65/35R33, including a full line of crane tires in 14.00R25 and 1600R25 sizes and into the large L5 loader tires.
Aeolus is the only brand of truck tire ATG currently offers, and ATG appears quite happy with that arrangement. “We have made a commitment to Aeolus and they have made one to us with the sole distributorship for the U.S.,” Hull said. “We have not entertained any other brands at this point.”
Dealers Like Product
The dealers on the visit also said their fleet customers were happy with the products and the fill rates. “I don’t think there are any real ‘hot button’ issues with our dealers,” said Hull. “Most of them have been selling Aeolus from the beginning and are comfortable with the quality and availability.
“We know we need to grow the brand in the U.S. for Aeolus to maintain a stable relationship with them, and we will,” he continued.
“One of our advantages for our Aeolus dealers is that we work hard to protect their sales territory so they can invest in the brand with their customers and not have to compete with another Aeolus dealer down the street,”Hull said. “This adds value to the brand, and staying power. We are looking to be a good supplier to our customers and provide a product they can make money with and depend on. Volume for the sake of volume is not in our or our customers’ interests.”
“The fill rate with Aeolus is excellent,” Walters offered. “But having said that, there are always situations where we both have to be flexible and contend with holidays, mold cleaning and shipping issues anytime you operate a container-based program. Our advantage is our ability to warehouse product so our customers see a minimum of supply issues.”
Going forward, Walters sees plenty of opportunity for ATG, Aeolus and tire dealers. “We offer Aeolus a lot of information on our market, new sizes and patterns that need to be developed. They do a good job of considering our requests.”
It’s not always easy, he admitted, as ATG has to remember that Aeolus “serves a global marketplace” and sometimes ATG has to “get in line for development of new SKUs.”
“We continue to explore growth opportunities with Aeolus in both TBR and OTR,” said Hull. “OE is an avenue for their OTR products to grow, as well as other distribution channels for truck tires if they make sense for us and our dealer base.”
