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April 18, 1994 02:00 AM

FALKEN TIRE SEARCHING FOR A FEW GOOD DEALERS: SLENDER CUSTOMER BASE FORCES MORE AGGRESSIVE MARKETING

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    AKRON-Starting from scratch-an apt way of describing the task ahead of Frank R. Dorso. Upon becoming vice president, sales and marketing, for Falken Tire Corp. last November, he came to the quick realization that all was not as it appeared.

    While the Rancho Cucamonga, Calif.-based tire distributor has struggled the past few years to become a player in the North American market and achieve profitability, it has been an uphill climb.

    Mr. Dorso readily admits he's faced some serious obstacles: The company-which is 80-percent owned by Japan's Ohtsu Tire & Rubber Co. Ltd.-``had no credibility, no leadership, no programs, no policies, no procedures.''

    And perhaps most crucial, he found it seemed to have little, if any, customer base.

    So much for previously reported figures that the company enjoyed a 400-dealer network.

    Falken Tire was formed in 1991, when the name of its previous incarnation, Empco Industries Inc., the major distributor of Falken tires in North America, was changed. At the time, Empco, teetering on the brink of bankruptcy, was controlled by T. Chatani & Co., which had a 60-percent stake in the company, and Ohtsu, which had a 40-percent interest. Chatani now holds 20 percent of Falken.

    Back then, Mr. Dorso said, there were ``deals being made all over the place-a trailer load of tires here, a container-load there. It caused a lot of confusion with the customers (Falken) did have.''

    He's slowly changing that.

    If anything, call Mr. Dorso, 46, an eternal optimist who relishes-even thrives on-a challenge. He said as much in a recent interview in Akron as he tried to put a positive spin on the difficulties ahead.

    ``(I'm) an avid and staunch supporter of the independent tire dealer, and I sincerely feel our success will be through them, from the retailer to the distributor,'' his preferred term for ``wholesaler.''

    Before joining Falken, Mr. Dorso spent 17 years with Bridgestone/Firestone Inc., where he directed sales teams and played an integral role in the development of BFS's Affiliated Dealer Program.

    In his few short months with Falken, he has bolstered its sales force by 30 percent, strategically placing nine district managers throughout the U.S. ``who have a (wealth) of retail and commercial knowledge.'' He has plans to add four more salespeople soon.

    ``With the team I'm building, I'm trying to utilize the success of tire manufacturers-very successful basic knowledge from the mid-'60s and '70s-and incorporate it into the very different tire business of the '90s,'' he said.

    But some things never change. It still ``doesn't take a rocket scientist to sit across from a tire dealer and intelligently discuss the industry with them,'' he said, quickly adding that ``Falken has been pretty quiet, and it's a shame-there's no reason to be quiet-and in the future, it won't be.''

    The company has targeted 25 key markets throughout the U.S. where it would like to sign one dealer/distributor in each, including Atlanta, New York, Philadelphia, Boston, Chicago, Dallas, Minneapolis, Houston, Denver, the state of Florida, and northern and southern California.

    Though each area is different, Mr. Dorso is confident he can tailor-make marketing, sales and pricing programs with attractive terms ``that will be conducive and profitable'' for retailers and distributors, as well as for Falken.

    For years the company had a niche, especially in high-performance radials. But as competition heated up, sales of Falken tires declined. Now, Falken must overcome the misconception that it's a private brand, Mr. Dorso said, rather than an associate brand manufactured by Ohtsu, Japan's fifth-largest tire maker.

    This July, Falken Tire will add five sizes to the Falken light truck line (it has four sizes now), will introduce a P-metric 80-series touring tire, and is developing a 75-series tire and new products for its Visa line. Dealers should have the new offerings by about Aug. 1.

    Where it once marketed as many as 28 brands, the company has pared those to the Falken, Visa, Solar, Federal and Donin lines.

    Falken also is scouting locations in the Northeast for a new distribution center it hopes to open by the third or fourth quarter.

    Mr. Dorso said the firm's board has ``pledged (its) loyalty and support.'' Last year, Falken's then-new president, Hiroshi ``Henry'' Umegaki, reported Ohtsu was pumping $16 million into Falken, just a million less than Ohtsu itself earned in net profits in 1992.

    But Falken needs a customer base, Mr. Dorso reiterated. ``Once we get that, we can move forward....(We) get calls daily from dealers who want to buy Falken tires, and it disturbs me immensely that I don't have a dealer base which can serve them.''

    In 1993, the company did not enhance its presence in the U.S. market, he admitted. In fact, it lost a point in high performance sales due to ``a decline in its customer base and lack of direction.'' Neither did it achieve profitability, though he said it is ``on track'' in 1994, and he is anticipating ``a substantial sales increase.''

    And past supply problems are gone, Mr. Dorso said. Ohtsu's factories are ``geared up to handle any and all new distribution that is signed in the next two years.''

    But Falken will be selective. Mr. Dorso is looking to sign dealers with six or more retail outlets who ``professionally service consumers,'' or distributors who have sales and marketing programs in place with an associate dealer base that can ``properly service'' an area within a 100-mile radius.

    Pausing to reflect on why a dealer should consider Falken Tire, Mr. Dorso responded: ``Tire dealers today, contrary to what a lot of people think, are looking to put a trust back into a business relationship. If someone commits something, they want that commitment fulfilled. They want a supplier to make it easy to do business with them and keep them competitive-and not on price alone.

    ``Falken Tire will be able to make commitments and honor them...and offer support-something Falken never had with dealers before.''

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