API buys stake in Good Friend Tyre in China

By Bruce Davis, ERJ staff (TB)

Las Vegas, Nevada (SEMA) - American Pacific Industries Inc. (API) has acquired “management control” of Good Friend Tyre Co. Ltd. in Jiaozuo, Henan, China, to support its plan to make the Gladiator brand a global brand.

API acquired an undisclosed stake in Good Friend Tyre about six months ago and intends to rename the company to incorporate the Gladiator name, according to API CEO Jeff Kreitzman in an interview at the firm's booth at the Specialty Equipment Market Association Show in Las Vegas.

API shares ownership of the Henan tyre plant with the firm's original Chinese investors and investors from Hong Kong, where the partners have established an investment company to control the holding.

“We wanted to go beyond contract manufacturing,” Mr. Kreitzman said of the purchase, “and be able to control our product and the way we build it and sell it."

API is evaluating the possibility of investing in a second plant, he said, but cautioned that's a longer-term goal. He declined to say what API spent for its stake in Good Friend other than to say it was “substantial.”

The Good Friend plant has capacity for about 1.2 million truck tyres a year, Mr. Kreitzman said. Good Friend's investors spent $82 million in 2005 to build the plant, according to Good Friend's Web site.

To support its expansion plans for Gladiator, Valencia, Calif.-based API recently hired longtime Bridgestone Americas sales executive Art Campagnoni to be its director of truck tyre sales and earlier this year hired Barry Littrell, former president of Carlisle Tire & Wheel Co., to be the firm's COO.

“I think people judge a company a lot by the quality of its personnel,” Mr. Kreitzman said, “and I think we have a great team.”

Mr. Campagnoni will be evaluating the Gladiator truck tyre line and making suggestions for additions and improvements, Mr. Kreitzman said. The company is conducting tests now to get the Gladiator tyres certified under the Environmental Protection Agency's SmartWay program for fuel-efficient products.

“We want to elevate the product quality and develop a range of products that presents our customers with enhanced added value, to help them make more money,” he said.

API's plans for Gladiator also include expanding the line to include passenger, light truck and OTR tyres, Mr. Kreitzman said.

API already has set up two distributors in Europe to handle most of the markets there, he said, and is working on establishing distributors in Central and South America.

Supporting API's goals is its purchase two years ago of International Tire Engineering Resources L.L.C. in San Antonio, Texas. This engineering services company helps with getting new tyre lines introduced to the product mix at API's contract manufacturers and now will assist in improving the Good Friend plant to accommodate the expanded product range, Mr. Kreitzman said.

API also plans to expand its Pegasus light truck and Achilles passenger tyre lines, as well, he said, noting the Achilles line is made in Indonesia and therefore not subject to the high duties recently imposed on Chinese-made consumer tyres.

As for consumer tyres API does sell, the company raised prices for these products 15 to 20 percent Nov. 1 to compensate for the additional 35-percent duty imposed in late September.

From Tire Business (A Crain publication)