DETROIT-Most people commit to doing things differently at the beginning of a new year, and Metro 25 Tire Centers Inc. is no exception. On Jan. 1, the group officially became the tire industry's newest cooperative.
The business venture, which allows dealers and distributors to take ownership in the organization, will amount to much more than a novel way of doing business, according to Metro 25 President Duane Rao, who said he believes cooperatives are the future for the tire industry.
``We are taking the $800,000-a-year tire dealer and making him part of a multi-multi-million dollar conglomerate,'' he said. ``That puts him in the same ball game as the 10 (biggest dealerships).''
Under the cooperative, dealers and distributors have the option of becoming owners with full voting privileges by making an initial stock purchase of $5,000.
Owners must also make a $200-a-month investment in the cooperative for each of their locations to defray the costs of point-of-sale materials, meetings, and advertising and training programs.
Dealerships with more than five locations will be eligible for a discount-in part, to help attract larger dealerships to the cooperative, Mr. Rao said.
Mr. Rao said he would not know the number of dealers that agreed to become owners in the cooperative until February.
But he noted that about 170 of the 300 current Metro 25 dealerships agreed to become owners in the cooperative during a meeting held last March. In addition, all eight Metro 25 distributors have become owners.
Metro 25 dealers who do not choose to buy into the cooperative still can take advantage of the cooperative's programs.
If a dealership decided to forego ownership, it would pay a $95-a-month fee to belong to Metro 25 and would not receive dividends nor be allowed to vote on cooperative business.
The theory behind the Metro 25 reorganization is to give dealers both control and buying power that they might not have on their own, Mr. Rao said.
With the effective buying power of all of its owners, the Metro 25 cooperative will be able to get better deals on products and services, including uniform rentals, advertising materials and insurance.
A nine-member executive committee has been formed to facilitate the opening of the cooperative, but owners will be able to elect representatives to the committee later this year, Mr. Rao said.
Mr. Rao and distributors Bill Brown of Oklahoma City-based Brown Distributing Co., Craig Myers of Allen Tire & Rubber Co. in Philadelphia and Dan Gracious of GBA Inc., Chicago, will sit on the committee, along with appointed dealers Mike Manginelli of Medford Tire, Medford, N.Y.; Melvin Novey of Hub Tire Co., Norristown, Pa.; Rick Waddell of Waddell Tire Co. in Ponca City, Okla., Doug Kochneff of Action Tire Center in Grand Rapids, Mich.; and Tom Tokar of Metro 25 TIRE-Novi, Novi, Mich.
Plans for the cooperative initially were announced at the Metro 25 dealer meeting held in Las Vegas last March.
Since that time, the cooperative has bought back the Metro 25 name and trademark, which had been owned by Del-Nat Tire Corp., a private-brand marketer based in Memphis, Tenn.
Del-Nat is a stockholder in the cooperative, according to company president Bob Gardner.
Del-Nat has been a cooperative since its formation in 1989, and Mr. Gardner said, for dealers, the Metro 25 cooperative is ``the best of both worlds because it gives the dealer his independence, which he wants, and it gives him more purchasing power, the power of 300 dealers.''
Mr. Rao said the cooperative is close to signing two large tire dealerships in the United States and dealerships in two foreign countries, though he declined to reveal their names.
``Starting right now, we will be aggressively seeking new distributors and dealers to grow the program,'' he said. ``We simply want to be the largest independently owned group in the tire business.''