Published on March 3, 2014

Del-Nat @ 25 — dealer focused and 'Built to Last'

Del-Nat Tire Corp. photo
Del-Nat Tire Corp. President Jim Mayfield: "I think there's still plenty of opportunity for Del-Nat to grow...."

MEMPHIS, Tenn. (March 3, 2014) — "Built to Last," the theme of its recent annual stockholder meeting, pretty much says it all about where Del-Nat Tire Corp.'s been — and where it's headed.

The private brand cooperative recently celebrated its 25th anniversary in style, adding its 84th stockholder and committing to continued growth for the long term.

The company, formed Jan. 1, 1989, in the merger of Delta Tire Corp. and National Tire Corp., celebrated the milestone at the 2014 stockholder meeting, which took place in January in Clearwater Beach, Fla.

"Built to Last" are words Del-Nat is striving to live by.

"I think it's a major milestone," Del-Nat President Jim Mayfield told Tire Business, noting that there aren't many private branders left in the U.S. market. "We're talking now, and our plan is to prepare for the next 25 years."

Since it was founded, Del-Nat has added distribution in nearly every part of the U.S. and has grown to reach annual sales of $200 million. Much of the company's success, Mr. Mayfield said, comes as a result of its unique cooperative structure in which program members are non-competitive and share equal ownership in the business.

Each stockholder operates within a protected territory under one or more of Del-Nat's brand names: Delta and National passenger, light truck and SUV tires; Chaparral light truck tires; and Akuret commercial tires for farm, OTR, truck and trailer applications.

Del-Nat Tire Corp. photo
Del-Nat Tire's 500,000-sq.-ft. warehouse in Memphis, Tenn.

"I think we have a group of stockholders who are committed to the private-brand business," he said. "We're somewhat different because the owners of our company are tire dealers. They understand the market and they're involved in many of the same things that we're involved in, so when we get with our board of directors we're talking to people who know what's going on in the industry.

"They give us good advice, they give us good direction and, because of the relationship between the stockholders — where they're not competing directly with each other, and they all have exclusive territories with their exclusive brand — we have a camaraderie between stockholders that's different than a lot of companies," he continued.

"They all are equal owners of the company, and it's in their best interest for Del-Nat to be successful."

Mr. Mayfield said Del-Nat is always looking out for additional stockholders in areas where it isn't represented. Ultimately, the company would like to establish a Delta-brand and National-brand stockholder in every part of the U.S.

"I think there's still plenty of opportunity for Del-Nat to grow. We do a lot of business with our stockholders, but there's still business there that we're not doing," he said, adding that expansion can come "by growing internally through our existing stockholders and growing by signing new stockholders in open areas."

Tire Distributors of Georgia Inc. photo
John Plumstead, president, Tire Distributors of Georgia Inc., and Del-Nat Tire's newest stockholder.

In January, the company added its most recent National-brand stockholder, John Plumstead, president of Macon, Ga.-based Tire Distributors of Georgia Inc. The company supplies tires to hundreds of dealers throughout Georgia and is operated by Mr. Plumstead along with his wife, Chief Financial Officer Donna Plumstead, and his son, Vice President and General Manager Sean Plumstead.

Mr. Plumstead, who spent 25 years in the tire business before starting his own company in 2003, told Tire Business he was drawn to Del-Nat's program for several reasons.

"No. 1, they're just a great bunch of people up there," he said. "They're very easy to do business with. Of course exclusivity on the product makes a big difference."

Mr. Plumstead added that he's "just a program type of guy," having grown up with a father who worked for Carroll Tire Co. for 35 years. "I grew up in that environment as (Bobby Carroll) started out, and then of course I went to work for him and ran several distribution centers."

But things have changed since those days, he said. "Now you've got daily delivery, and twice-a-day delivery and on-demand delivery."

Mr. Plumstead praised Del-Nat's product mix and cited its distribution capabilities as a major advantage, giving Tire Distributors the ability to fill orders "on a pretty much as-needed basis."

"Needless to say, no retailer can stock the SKUs that are out there now, just because of sheer numbers," he said. "…Where I'm at in South Georgia, we just have a lot of pickup trucks and larger vehicles like that. These (dealers) know that on any given day they're likely to sell a set of 265/70R17s. Whether they inventory those tires or not is their decision, but the ones that do always have first crack at the sale."

According to Mr. Mayfield, Del-Nat's primary goal going forward is to serve its existing stockholders.

"We believe that we're one of the companies in the market that help independent tire dealers stay independent, and that's our goal is to work with our stockholders to provide the type of product and program that they need to be successful in going to market," he said. "…We want to grow the company.

"We've got modest growth in our budget for this year, we think we will achieve that and going forward we want to continue to grow by finding other tire dealers that value their independence and want a partner that will be right there with them to help them maintain that."

Del-Nat will be adding several new products in 2014, Mr. Mayfield noted, and the company is working with Cooper Tire & Rubber Co. to develop a value-priced model that the tire maker would supply under the Delta and National brands.

In addition, the co-op plans to add some products under its Sentinel tire brand, including a sport truck tire line and mud-terrain tire line. Those products will be manufactured at plants in China, though Mr. Mayfield did not say what companies would be producing them.

For the near future, the firm's greatest concern is the continued devaluation of inventory, Mr. Mayfield said.

"For any distributor that has tires sitting in their warehouse, we're concerned about continued price erosion. That's one of the issues we're seeing," he said. "We feel that the consumer is still reluctant to spend money, and so tires continue to be an expense that consumers are putting off as long as they can."

He noted that prices have been stable over the last few months, but "if (the price of) natural rubber continues to fall then I think we're going to continue to see some price erosion. I'm hoping that we've seen the bottom of it, but time will tell."

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To reach this reporter: wschertz@crain.com; 330-865-6148

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