FAIRLAWN, Ohio—Following a year when it solidified its position in the North American replacement market especially for farm tires, BKT-Tires (USA) Inc. has set its sights on earning a position as an original equipment tire supplier to farm equipment manufacturers and some of the other industries it supplies.
Sales for the Fairlawn-based unit of India's Balkrishna Industries Ltd. soared to $80 million in 2010, far outpacing the company's $50 million in sales the year before, with radial ag tires leading the way, said Rami Bitran, manager of BKT's North American team.
“We made a tremendous breakthrough and took a dominant position,” Mr. Bitran said of radial ag tires. “And I think within three years we will be the biggest producer of radial rears in the world.”
Mr. Bitran said BKT benefited in 2010 from the company's overall philosophy “of being the best and doing as we say and being always with, let's say, straight with the economy. We're not the cheapest in the market, but we're not taking advantage of higher prices.”
Value and integrity are core values of this effort, he said. “We don't sit on credits. We don't sit on deliveries. We never say we're going to do something and not do it. And whatever we do, even if it's a gift for Christmas or it's a show or it's a tire, we'll be the best.”
Having established the company in the replacement market, BKT's goal is to begin securing some OE contracts and supply-agreement approvals this year in North America in some of the tire segments in which it operates. Those include farm, OTR and construction, said Bill Haney, BKT USA's sales manager-North America.
“We've grown to the point where we can say to the OEs we're an accepted major brand in North America,” he said.
BKT is timing its OE move with the opening in 2012 of a new plant in Bhuj, India, located in the western part of the country north of Mumbai. “We want to be ready with the new plant for the OEs,” Mr. Haney said. “We need homes for this new output.”
Balkrishna is spending $275 million on phase one of the new factory, which will take 18 months to build, Mr. Bitran said.
The plant, which will be Bal¬krishna's fourth—all of them in India—will have in phase one an annual capacity of 90,000 metric tons of tires. It will make all of the products BKT offers including bias and radial farm tires; implement tires; flotation metric radials and U.S. standard; ATV and industrial forklift tires; skid steers; construction tires; lawn and garden styles; underground mining and forestry skidder tires; and bias and radial OTR tires.
The plant will cover 1 million square feet on a 300-acre site, “allowing plenty of room for growth,” Mr. Haney said.
Construction has begun, machinery has been ordered “and we are trying to push it forward as fast as we can,” Mr. Bitran said.
“You see, this plant has been in the planning at the beginning of 2009, but with the economy being what it is, it was put on hold. And now we're sorry about it, because we lost a year.”
Balkrishna's other plants are located in Waluj in western India and Bhiwadi and Chopanki, near New Delhi. Chopanki, the newest factory, opened in 2006. Annual capacity of the three is 140,000 metric tons, but Mr. Bitran said Bal¬krishna has been continually installing new equipment and machinery over the last five years to increase capacity.
“We are adding manufacturing infrastructure every day of the week to try and catch up, but the more we add the more we need,” he said.
Order fill is a top concern for BKT. While Mr. Bitran said BKT has not suffered as much as some of the other tire makers with fill-rate issues, the company does have “a hefty order book.” Backorders are at about 75 days.
“We do not want to get into a position where we have a serious backorder problem,” Mr. Haney said.
This has led BKT to budget conservatively for 2011 with a target of $78 million in sales, “just to make sure we have the product,” Mr. Bitran said.
But he added that the company likely will be over $80 million.
Mr. Bitran cited rising costs and availability of raw materials for tire manufacturing, and questions about the economy as other reasons for caution.
But it's delivery of products to customers that's the “name of the game,” more than anything else, he said. “And so far we are up to the challenge. We'll see.”
To reach Dave Zielasko: [email protected]; 330-865-6131.