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‘Window of opportunity’

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‘Window of opportunity’

The weakness of the dollar and the ongoing shortage of OTR and farm tires in the United States, Canada and Mexico have opened doors for Asian tire manufacturers that were previously closed, or at the very least, very difficult to budge.

 

One Asian manufacturer that’s moving aggressively to capitalize on present market opportunities in North America is Balkrishna Industries Ltd. (BKT-Tyres), an India-based supplier of OTR, farm, industrial and other specialty tires.

 

Two months ago, the company — which exports to 100 countries -- established a North American office in Akron, Ohio, which is headed by farm tire market veterans Rami Bitran and Bill Haney, both of whom have worked for Trelleborg Wheel Systems and other specialty tiremakers.

 

While BKT has been selling tires in North America for the last 10 years, there’s plenty of room for growth, says Arvind Poddar, BKT’s managing director. The company reached $15 million in sales in North America during 2007. (It expects to generate total worldwide sales of $325 million this year.)

 

Poddar believes BKT has the potential to increase its North American sales by 60% in 2008 by building a network of distributors that already includes major chains like Prineville, Ore.-based Les Schwab Tire Centers; Orange, Mass.-based Pete’s Tire Barns Inc.; Batesville, Miss.-based Dunlap & Kyle Inc. and others.

 

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“We have a unique marketing program,” says Bitran, a 15-year farm tire veteran who has held vice president positions at both Trelleborg and Alliance Tire Co. (1992) USA Ltd. “We cater to the big distributors instead of creating our own army on the ground.”

 

In North America, BKT has taken a “good-better-best” approach to product segmentation. (The firm offers nearly 1,600 SKUs worldwide, half of which are currently sold in the U.S., Canada and Mexico.) “Everyone we know in the business carries at least two lines. Our aim is to be the second chosen line.”

 

Product flow

 

BKT introduced a new radial off-the-road tire, the Earthmax, at last month’s MINExpo show in Las Vegas, Nev. The tire also will be on display at the Specialty Equipment Market Association Show next month.

The Earthmax contains a steel casing, a non-directional tread block pattern, a cut- and heat-resistant tread compound and other features. Production is scheduled to start soon. “Development was done by our in-house research and development team,” says Poddar.

BKT re-invests up to 4% of its total sales in product development, which enables the company to roll out 150 to 160 new SKUs each year, he explains.

 

The Mumbai-based firm has plants in Bhiwadi, Chopanki and Aurangabad, India, that together will produce some 100,000 metric tons of rubber in 2008, a 30% increase over last year’s output. The factories are in the middle of a $50 million upgrade that eventually will result in a 30% production increase.

 

Also critical to BKT’s manufacturing capabilities is its proprietary mold making shop, according to Poddar. He says the company can change 25 molds a day. “When you have the ability to produce your own molds, you can do it cost effectively.

 

“We also have mixing warehouse capabilities in Mumbai for (mixing) OTR and farm tires in the same container.” BKT ships 100 to 120 containers to the U.S. each month.

“As much as we want to grow, supply must be there first,” says Bitran, who adds that BKT’s parent company, $550 million-a-year Indian industrial powerhouse the Siyaram-Poddar Group, is committed to keeping fill rates in-line with demand.

 

“BKT sees a window of opportunity in North America. Right now the most important thing we can do is build our network of distributors.”

 

 

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