MOUNT VERNON, Ill.-Like proud parents bragging about their toddler's first steps, General Tire officials took the wraps off their new Commercial Division Tire Technology Center on Oct. 12. Likewise, they did a little boasting-not only about the facility, but about the company's improving performance. And nary a pair of rose-colored glasses was in sight.
Separately, General said it will cut 70 information systems workers, who will be rehired by a subcontractor.
General Tire President and CEO Alan Ockene told journalists visiting the $7.5 million tech center and adjacent tire plant that, compared with 1993, ``General is doing much better. We should be, if not at, then at least close to breaking even'' this year.
That breath of optimism is due, in large part, to the land-office business the tire maker's commercial division has been doing.
The Mount Vernon factory occupies 1.3 million square feet and employs 1,990. It manufactures 22,000 passenger and 2,000 truck tires daily, but the truck portion is at capacity and may be expanded.
But the company's progress in the last several years ``has been mainly through manufacturing efficiencies and savings,'' according to Mr. Ockene.
Much of the commercial division's success, acknowledged its executive vice president, Thomas J. Reese, comes despite the fact ``we have not generated substantial improvement in profits in the commercial division through sales. We run commercial as an autonomous division...and we have stripped it of all non-value-added costs.''
On the other hand, state commercial contracts awarded to General Tire over the past 24 months have doubled-`` a substantial increase,'' he said.
``Our national account business is up well into the double digits. The export business is suddenly exploding for us...and our (original equipment) business, of late, is starting to pick up.''
If the commercial division is General's bright spot, so is the GTY Tire Co. adjoining the Mount Vernon plant.
The joint venture among General, Toyo Tire & Rubber Co. Ltd. and Yokohama Rubber Co. Ltd. is pushing full capacity and, according to Jim Rippy, senior vice president of manufacturing operations, ``Our customers are using all the tires we can produce and are asking for more.''
``I never thought I'd see this day,'' he joked. ``Last week I got a call from Reese. He says, `We sold out your d—- plant. Get off your rump, son, and start building more tires!' ''
Engineers are studying tooling requirements while the companies examine how and when GTY might expand.
The new technology center is home to 30 tire engineers, chemists and equipment design personnel who will develop radial highway truck tires. According to Andre R. Heijnen, General's director of tire technology, a $4 million, 12,000-sq.-ft. chemistry lab is under construction in the center and is due for completion by January.
Despite the rosey outlook, Mr. Ockene warned, ``This is a highly cyclical business....Right now we're in a boom time, but that will not stay forever. We're enjoying it for the time being'' before overcapacity saturates the industry.
General is ``gaining a lot of ground with customers we didn't have before,'' he added. ``That's new business. And ifwe can maintain that track, then there will certainly be justification for expansion.''
Several times Mr. Reese stated, ``The hungry will survive in this expansion'' in reference to General's strategy for continued growth.
Business with the company's ``top 15 to 20 huge replacement truck tire dealers is very good, and has taken a quantum leap in the last three years,'' he said.
``If we can maintain our pace and market penetration in 1994-and anticipate that big dealers will continue to get bigger and bigger and bigger-that has to increase our replacement sales.''
But, he noted, ``We are respectful of territory, of growing dealers' programs with us.''
He admitted General ``lost some big dealers over the years,'' but believes the company is now recouping that business be-cause of the quality of its products. And he promised: ``We'll stay with dealers and markets we've worked with, but there are certain pockets of the country where we have room to make some gains.''
Jim Dickson, national manager of truck tire sales, said the tire maker's commercial sales force ``has no charge to go out and sign new business'' indiscriminately, but ``rather to grow with our existing customers'' while remaining selective in signing new ones.
Since changing its sales operations a year ago, General Tire is no longer tied to one person in the field selling passenger, light truck and commercial tires, Mr. Reese explained. Its field staff of commercial-only specialists has grown from 16 last year to more than 40 now-``and the dividends have been very apparent.''
GTY and the new technology center, Mr. Ockene believes, have helped dispel rumors General Tire and its Continental A.G. parent are in deep financial straits.
``There is no basis for that kind of speculation,'' he said, adding that some of the doomsaying may have been precipitated by last year's failed attempt by Pirelli S.p.A. to merge its tire operations with Continental.
While no takeover attempt by Pirelli is pending, Mr. Ockene said the two firms are working on some cooperative arrangements, such as a steel cord plant, and are ``looking at other joint venture operations.''
With regard to the company's information services department, General has hired an outside contractor, Integrated Systems Solutions Corp., to handle its information services operations.
According to a General spokesman, Integrated Systems will ship the work to Buffalo, N.Y.-based CTG Corp., which is supposed to rehire the 70 terminated General employees.
However, General said it had no control over Integrated Systems' plans after the contract was signed, and could not speculate on CTG's future plans.
Affected General employees will receive severance pay, and the company said those who qualify will have the chance to accept an early retirement package.