PALM SPRINGS, Calif.-Even the briefest conversation with him leaves one with the impression that Paul Calvi took a ``no bull'' pledge when he signed on in October 1993 as president and CEO of Pirelli Armstrong Tire Corp. Independent tire dealers who attended the company's recent annual conference, held in Palm Springs, heard the relative newcomer to PATC offer few excuses, but a lot of straight talk about tough issues facing the tire maker.
Mr. Calvi, a native of Rome, Italy, who will be 52 in June, joined the Pirelli Group in 1990 as director of operations for the Milan, Italy-based Pirelli Tire Sector. Previously, he worked for Groupe Michelin in France, the U.K. and Canada, and served a stint as president of Toyota Motor Corp.'s Canadian division.
He characterizes his leadership style as one heavy on methodology. ``There are certain ways I believe things are done well,'' he said. ``So we spend a lot of time at PATC asking ourselves, `Why do we do this?'-not `Who is doing it?' or `Who has done it wrong?'
``In that respect, I think I'm a hands-on leader....But in many other respects, I think our people have the freedom to apply their skills, their knowledge and enthusiasm to get things done.''
He admitted PATC faces three critical areas: contract negotiations with the United Rubber Workers at the firm's Hanford, Calif., plant; industrial objectives; and initiation of new sales and marketing programs.
During a wide-ranging interview with TIRE BUSINESS at PATC's dealer conference, Mr. Calvi broached those and other topics. He was joined by Alan Bennett, vice president, sales and marketing, and Alex Coggi, vice president, marketing.
The following are some edited comments from that interview:
Question-How does PATC intend to reach profitability?
Answer-Paul Calvi: ``We're working on cutting costs everywhere we can....Pirelli is good at producing certain (high-end) products on demand. If we can sell more of them, rather than the low end, then we've got a better chance...to make a profit.
``The company is shooting for profitability by the end of '94, but, frankly, our management plan...does not call for that this year.''
Alex Coggi: ``The market is going to help us....The economy seems to be coming out of recession, and that, along with cost-cutting measures, should help.''
Mr. Calvi: ``We've got tremendous customers with a high degree of loyalty. If pricing sticks, we're going to do very well. But our projections are that it won't stick, so we'll just have to work harder.''
Q.-In the next six months, what is your greatest concern?
A-Mr. Calvi: ``It's contract negotiations, which will be held in July, and the health care (concerns) that go with them. The fact is, we've got to cut costs in every corner of the company, and we've got programs to do that. We want to arrive at an understanding with our (union) people about where we are, where we're going.
``I'm basically optimistic about our people and the negotiations....But we have tough issues to discuss. We have to be demanding of ourselves and our people because our customers are very demanding.
``We must break certain habits we've had that don't work anymore. Work smarter, not harder.''
Q-How do you motivate people to break those habits?
A-Mr. Calvi: ``My formula-so far, I've used it four or five times in the last six years and it's been successful-is to physically take your people to another organization either within or outside your company to see how others operate. Last year we took plant management and hourly employees to a rubber plant in Japan.
``It has never failed. People get convinced by seeing it, touching it, talking with other people, rather than by the boss telling them.
``Another technique we're beginning to apply in New Haven (at PATC's headquarters) is cross-functional teams from various departments working within PATC.
``Put these two techniques together, and it's hard to fail.''
Q-How is your relationship with your dealers, and will you do anything differently to improve that relationship?
A-Mr. Calvi: ``Our dealer relationship has got to continue to grow. I believe we can do more with the people we have-and we've got some of the best dealers in the country. They're the foundation of our company.
``We get tremendous feedback from them. They tell us, `We love you,' then spend two hours telling us what's wrong with us. But then they say, `If we didn't love you, we wouldn't tell you all this.'''
Alan Bennett: ``...When I talk of dealers, I talk about our mutual partners. I don't want a little piece of business with lots of people all over the country. I want lots of business in selected markets.
``We're not out to sign 50 new customers. We've targeted seven new accounts for the year in areas we're not strong in-and we're already doing business with five of them.
``When we have supply problems, it hurts them. Dealers are emotional about their business with us.
``They have concerns which are well-identified, well-understood. We've got to fix our problems. We need better labeling on tires, better invoices, improve(ment at) our order desk, better fill rates....''
Mr. Calvi: ``We've got to do a better job of telling dealers what we're doing and how we're doing it in order to make them more proud of the company.''
Q-How will PATC handle the Armstrong line in 1994?
A-Mr. Calvi: ``If we did away with Armstrong, half our dealers would kill us-people have been with Armstrong 20, 25 years. They're encouraging us.''
Mr. Bennett: ``Our Armstrong dealers are very loyal to that brand. But five years ago the products we offered were of low to average quality, so many dealers placed Armstrong at the private brand level.
``The new Armstrong products are moving us to more middle- rather than low-end positioning. Many Pirelli dealers are viewing Armstrong as Pirelli-like products....''
Mr. Calvi: ``PATC's research and development machine was rusty-its people were doing sophisticated research, but there were not a lot of new products being launched. In the last couple years we've made great strides....Our people are pumped up. They're devising new ways to get new products to market faster, in a more complete fashion than ever before.''
Q-Has the introduction last year of the Evolution line helped bolster the Armstrong brand for dealers?
A-Mr. Bennett: ``Dealers are excited about the Armstrong brand again. When it was a price-point tire, there was nothing dealers could sell up to, so they sold up to other brands. Now it's a two-step, where they can sell up to the Evolution or Pirelli brands.''
Q-Why is PATC holding capital improvements and R&D spending to 1993 levels?
A-Mr. Calvi: ``It's an issue of utilizing our plants' installed capacity better, of asking people in the plants to consider the machine they're working on as their machine. In that way, I know we can do better with what we have.
``The second issue is negotiations. We also have to be certain of our people's loyalty. Our people have to deserve the money we put into our plants....We can get all the money we want from Milan-investment is no problem. But we have to deserve it. If we do things right, the sky's the limit.
``...I've frozen investment in some plants, at least until July negotiations....We have no layoffs planned. We're running flat out.''
Q-What are PATC's prospects in the OE market?
A-Mr. Calvi: ``We don't want to get into (OE) just yet in the short term. In the medium term, we're after OE share. There are transplants here-like BMW-who are our big customers in Europe. If you want to be an OE player-and we do-you have to be global.
``Maybe the day will come when Ford or General Motors will want to buy tires from us in North America, as they do in Europe.''
Q-Does the Pirelli brand have a weakness in the U.S.?
A-Mr. Coggi: ``We're considered top-of-the-hill-sort of a dream product for many consumers. That's a very nice weakness, if you want to call it that.''
Mr. Bennett: ``The brand's image has been too exclusive. Our goal this year is to try to appeal to a broader audience. The trick is saying we're affordable, without losing high-end consumers.''
Q-What's in store for PATC in the next couple years?
A-Mr. Calvi: ``We've got a couple tough years ahead to overcome. The next two years will tell the story of what kind of place we have in North America. Is it as a niche player? As more than a niche player? Will we need more plants? More capacity?*''