ANDERSON, S.C.-Tread Systems Inc. President Bill Chapman has found a creative way to stay in business as the market wanes for his firm's passenger tire retreads. The Anderson-based, 29-press retread operation devotes at least 20 percent of its business to turning used passenger tires into tires for entry-level racing, which command a much higher price.
That translates into a healthier profit margin-just what the 52-year-old Mr. Chapman wants.
``I don't care how big (my business gets) anymore,'' he said. ``The bottom line is how much can you make off the product.''
After 13 years of operating as a passenger tire retreader, Tread Systems is in the midst of whittling down its operation to become more efficient and profitable.
Operations at Tread Systems' only production plant are being cut from five days to four, saving as much as $15,000 in energy costs, Mr. Chapman said.
Also, the firm continues to devote most of its capital to modernizing its equipment and upgrading its plant to produce specialized retreads with fewer personnel.
This ``scale-down mode'' is expected to push the company into more profit-rich markets as crews turn passenger tires that would have sold for just $25 into racing tires that can be sold for $60.
The conversion process hasn't been cheap, although Mr. Chapman admits the company has always been able to pay on its debt ``relatively quickly.'' Using an in-house engineer, Tread Systems has developed its own tread compounds and racing designs that are mold cured onto used, street-legal passenger tires.
The company has asymmetrical, directional and slick tread pattern options in its racing design series.
Since entering the racing markets in the U.S., Canada, England and Australia in 1989, Mr. Chapman said Tread System retreads have gradually gained acceptance by drivers as durable alternatives to more traditional bias-ply tires.
The low-cost retreads also have the added benefit of ensuring grassroots racing does not turn into a ``most-money-wins'' situation, he said, adding that orders for the tires are increasing nationwide.
Tread Systems, which used about 600,000 pounds of tread rubber to produce 350 retreads daily in 1993, is North America's seventh-largest passenger tire retreader, according to this year's TIRE BUSINESS ranking. Those numbers are up from 450,000 pounds of rubber consumed for 200 retreads a day in 1992.
While racing is a growing part of Tread Systems' business, most of the firm's sales come from regular and high performance passenger and light truck retreading.
Recently, the company also has begun retreading some antique tires which, Mr. Chapman said, also command higher profit margins than typical passenger retreads. But he said the cost and time involved in converting presses for retreading specialty tires will probably limit the company's efforts to five or six sizes of redline and 2.5- and 3-inch whitewall tires sold through mail orders.
``I foresee it as a very small part of the business,'' he said.
Still, Mr. Chapman finds it's difficult to predict the future of retreading, largely because each year there are new products to contend with. To counter the rocky nature of the business, he said he spends most days dressed in ``jeans and a T-shirt'' overseeing plant operations.
In the next 10 years before he hopes to retire, Mr. Chapman said he intends to take Tread Systems out of debt and place it on a more profitable plateau for the future.
``It's a tough business. You have to stay on top of it,'' he said. ``You have to adapt.''