ORLANDO, Fla.-Lee Fiedler is bullish on Kelly-Springfield Tire Co. He's so upbeat, in fact, that the company president and CEO is making plans for additional manufacturing capacity at the firm's Tyler, Texas, and Fayetteville, N.C., passenger tire plants.
This is on top of major on-going expansion and modernization projects at those plants as well as the tire maker's Freeport, Ill., farm tire facility.
``We'll need this new production to produce the many new sizes and types of tires customers will be demanding,'' he said.
Mr. Fiedler said he will seek approval for the expansions from Goodyear, Kelly's parent, at a board meeting later this year.
In a speech at the national conference for Kelly-brand dealers in Orlando, March 10-11, and in an interview afterwards, Mr. Fiedler said Kelly-Springfield has been the fastest-growing and most profitable replacement tire manufacturer in North America. He also labeled Kelly the fastest-growing tire brand.
Double-digit percent growth in sales over the past few years has moved the Kelly brand even with the firm's Associate Brands division, he said. The third Kelly division, Custom Brands, remains the largest at just over one-half.
Mr. Fielder said Kelly needs to continue to grow in order to balance the increasing cost of doing business. ``Wages and benefits and other costs grow each year. Therefore, we must do more business just to stay even, and do a lot more in order to grow.''
Distribution is a key to the future, he added. Heading into the next century, the winners will be those companies in the replacement market that best understand and plan how their products will cost-effectively reach the consumer. ``We must work and spend to get Kelly tires closer to the consumer,'' he said.
Dealers can expect to see lots of new tires from Kelly as the company works to differentiate its products from those of competitors, Mr. Fiedler said.
``The secret, I think, to how you make money in this industry is: You've got to have new tires and new products, because this industry has been a total failure over lots of years in getting prices up,'' he said. ``You're trying to sell last year's dress styles for next year's price, and it fails....The way you get your prices up is: You come out with new products.''
In 1993, due to discounting, passenger tire prices in the industry fell 3 to 5 percent, Mr. Fiedler said. He wants Kelly to get that back and more this year. ``Part of that is going to be with a price increase, and the rest is with new tires,'' he said.
Kelly raised prices 3 percent on all lines effective March 1, and announced four new broadline tires and expansions of its light and medium truck and farm tire lines during the national conference. (See story, page 3.)
Mr. Fiedler said Kelly increased its dealer base 20 percent in 1993, and is looking for additional growth this year. ``My goal in Kelly brand is to have as many dealers in the country as I can (as long as) they don't interfere with each other and ruin the profit-making ability of the Kelly brand.''
Dealer profitability is a key component of Kelly's long-range strategy. Mr. Fiedler wants dealers to be able to make a profit selling Kelly tires.
That, he said, was the strategy behind the company's new Aqua Tour, a high-mileage, wet-weather tire. ``We started out and said: What can we do for (the dealers) that gives them something they can make money on that no one else will have, (something) that if they keep the price up, the only thing that will ruin the market will be if they ruin it themselves?''
Kelly is spreading its efforts beyond the United States in its search for growth. In 1993, the Cumberland, Md.-based tire maker formed a joint marketing partnership with Goodyear Canada Inc. to promote sales in Canada. The partnership will draw on Kelly's marketing and sales resources to promote the firm's lines.
Prior to this arrangement, Goodyear Canada had handled Kelly products in Canada, but with the new partnership, Kelly is taking a more active role in the sales and marketing.
Kelly also is expanding south of the border. In 1993, the company appointed a general manager for Mexico and began signing dealers late in the year. ``We didn't get many sales in '93 (in Mexico), but we'll get quite a few sales in '94,'' Mr. Fiedler said. ``It looks good.''
Looking at the industry as a whole, Mr. Fiedler thinks it may be on the verge of another wave of changes, including mergers among tire makers. ``What's driving this is a lack of making money,'' he said.
Last year only three U.S. tire makers were in the black-Goodyear, Kelly and Cooper Tire & Rubber Co.-he said. Bridgestone/Firestone Inc. also achieved a small operating profit-its first since Bridgestone Corp. acquired the former Firestone in 1988.
Still, that leaves Michelin North America, General Tire, Sumitomo/Dunlop and Pirelli Armstrong Tire Corp. in the red, he said.
Mr. Fiedler suggested some companies will be under pressure if they don't begin to turn around their operations, and may close or sell tire plants. ``Circle any plant that's under 15,000 tires (per day)-it's gotta go,'' he said.
He also doesn't foresee any new plants in the near future. ``The industry is not making the money that it can afford to build a new plant in North America.'' he said.