PALM SPRINGS, Calif.-Pirelli Armstrong Tire Corp. executives took the bull by the horns during the company's national dealer meeting, admitting the company had some very real weaknesses in 1993-in service, in pricing, in advertising. Yet this meeting, held Jan. 27-31 at the Stouffer Esmeralda Resort in Palm Springs, was far from simply a gripe session with time allotted for atonement.
According to new President and CEO Paul Calvi, PATC is a company working hard to resolve those weaknesses and should make some marked improvements within the year, thanks to the valued input of one of its ``mightiest'' assets: its independent dealers.
Because it regards such input as an essential ingredient for its success, PATC revealed plans to create a dealer council this year.
The more than 300 dealers in attendance at the meeting had the opportunity to review the company's plans and goals for 1994, as presented by PATC executives, and to do some aggressive test driving of two new light truck tires, including the first Pirelli-brand LT tire to debut in North America. (See story, page 22.)
They learned the company is working hard to improve fill rates and shipment times for dealers' orders and is changing its Pirelli-brand advertising to appeal to a broader range of customers.
Profitability-when and if PATC will achieve it-also was on the minds of many. Though the company has found itself in the same boat as many of its competitors, that's no consolation, Mr. Calvi said. ``We must be profitable,'' he said. ``We want to finance our own expansion.''
Cost-cutting experts from the firm's Italian parent have been helping PATC find ways to run more efficiently, he said.
If there was one pre-eminent topic of conversation among most PATC dealers at the meeting, it was the company's inability to meet their demand for product.
Mr. Calvi acknowledged as much in his remarks at the opening session, saying, ``We had a crisis due to higher than planned demand for some of our products which, in turn, caused back orders and delays for other products.''
At one point, Alan Bennett, vice president, sales and marketing, said a survey of dealers revealed that the average time it took to fill orders, in some cases, was 41 days. The company has whittled that down to 17 days-``better than our competition.''
One of PATC's goals, he said, is to service ``our accounts better than our competitors,'' including everything from clarity and accuracy of invoices, fill rate and timeliness of shipments, to accessibility of top management, field service competence, training and timeliness in handling problems.
Still, Joseph Denton, senior vice president, manufacturing, stated bluntly: ``Our level of service in 1993 was unsatisfactory.'' He blamed several occurrences, including flooding in the Midwest last year that closed PATC's Des Moines, Iowa, plant for two weeks and the introduction of six new product lines and 123 new sizes.
He promised dealers that continuous quality improvements, increased capacity, more flexibility and teamwork would prove a successful antidote.
Fielding a question from a skeptical dealer who griped, ``Four years ago you said the same thing, that you'd fix these problems,'' Mr. Denton replied: ``I was probably too naive'' then. He said he had not expected the new-product introductions ``to create such chaos,'' nor had he anticipated the poor condition of the company's plants.
``I'm not going to stand up here next year and make excuses. This year we have to achieve certain things in our plants, and the solutions have to be achieved through our people.''
One of those people is Ron Smart, who recently joined the company in the newly created position of director of logistics. An expert in perishable goods from the food industry, he said he would draw on his 15 years of experience to bring Pirelli Armstrong's service to a ``predictable'' level in 1994. His goal is to ship dealers' orders within five days and with a fill rate of 95 percent.
In the advertising arena, Pirelli's past campaigns, which have emphasized its original equipment fitments on exotic sports cars, have successfully positioned Pirelli as a premium tire brand, reinforcing what Mr. Calvi called the Pirelli ``mystique.''
But that aura of exclusivity also has hindered the company, a number of its officials said.
Thus, PATC is embarking on a new advertising and marketing campaign keying on the message that Pirelli tires aren't just for the Ferraris and Lamborghinis of the world, but are a ``whole new generation of tires designed specifically for the cars America drives most.''
Plans call for the company to replace its ``Original equipment on the world's finest'' slogan with the theme: ``Pirelli. No matter what you drive.''
The company plans to increase advertising expenditures by 20 percent over those of 1993, reported Kevin Gilhuly, manager, marketing operations.
For the Pirelli brand, the company's sales goals, according to Mr. Bennett, ``are to sell more product, but...with particular focus on high performance tires. Overall, we are looking for 13 percent unit growth with our dealer channel, but with significant increases in the high performance segment of 34+ percent.''
Armstrong brand focus will be similar to last year, he said.
PATC's co-op advertising strategy in 1994 will adapt the firm's ``no matter what you drive'' theme to local venues, Mr. Gilhuly said, in order to help ``dealers' dollars be more effective and efficient.''
For instance, some ads will use favorable quotes sbout Pirelli tires from ``enthusiast'' magazines, such as Car and Driver.
``We're going to do some things differently this year,'' he promised, ``because our No.1 objective is to help you sell more tires.''
Mr. Bennett noted that many dealers have grown ``tired of over-buying'' to take advantage of monthly or even weekly price specials, and he announced that PATC would continue its 1993 policy of keeping specials in effect for a full quarter.
While officials said the company would continue to carry out plans to launch new products and upgrade its factories, 1994 could prove to be a pivotal year.
``We are not entirely satisfied with the performance of our plants (in the areas of) labor cost, utilization of equipment (and) attention to detail,'' Mr. Calvi said.
He explained that he has frozen all investment pending results of the upcoming United Rubber Workers contract negotiations in July. PATC has some specific plans to cut costs and enhance productivity, he told dealers.
``Once our negotiations are successfully completed...our investment plans will resume in an even more aggressive mode.''