AKRON-About a third of Pope Tire's sales are generated from retreaded tires, yet the Fresno, Calif.-based dealership was forced to shut down its retread plant a year ago due to one problem-a lack of skilled workers. Pope Tire isn't the only retread
ing firm to face this problem. A shortage of qualified job applicants is a growing concern among many retreaders, according to a TIRE BUSINESS year-end survey.
In addition to the problem of finding qualified workers, retreaders find it extremely expensive to keep them due to rising labor costs.
While retreaders are enjoying flourishing truck retread sales, they face increased price competition and labor problems, according to the TIRE BUSINESS' survey.
Labor issues are the most pressing concern among respondents, with the lack of qualified, responsible people willing to learn-and stay on the job-an often-citedproblem.
At the same time, labor costs-including health insurance, wages and workers compensation coverage-are the largest operating expenses for most retread plants in North America.
Pope Tire, which produced all types of retreads using both mold-cure and precure processes, usually operated with a staff of one to three people.
But after the 75-year-old wholesale-retail dealership was unable to find an applicant knowledgeable in both processes to fill a longtime vacancy, owner George Pope decided to shut the shop down at the end of 1993 and outsource tire retreading.
``Most people who come through (for job applications) say they are retreaders. But they aren't. They know about doing only one part (of the retreading process),'' Mr. Pope said.
``They would get a real decent wage if they knew the whole job,'' he added.
He believes there should be a school that certifies retreaders in all aspects of retreading a tire-one that provides more education than the training classes that are currently being offered through retread suppliers.
In addition, such a school ``would save shop owners a lot of time in training,'' he said.
Nelson Richards, general manager of Joe Rossi Tires Inc. in North Las Vegas, Nev., finds employment turnovers highly frustrating because the company has to take the time to train all new hires. And like Pope Tire, his company has found skilled labor a scarcity-especially during the last couple of years.
Often job applicants, whether or not they are qualified for the job, ``feel they are worth more than we can pay, in order to make a profit,'' Mr. Richards said.
But retreaders' pay scales are not the whole problem; the availability of more ``comfortable'' jobs and downright laziness are factors, too.
Marvin Bozarth, executive director of the American Retreaders' Association, believes the labor shortage has gotten worse in the past year largely due to an improved economy and an increase in available jobs.
An example of this trend, he noted, is the number of fast-food restaurants and convenience stores that are posting ``help wanted'' signs for a variety of jobs, and offering wages on par with entry level wages at many retread plants.
And there are more young people entering the job market who often don't emulate the hard-work attitude of older generations, according to Mr. Bozarth.
``It focuses on the fact that many people will take a job that pays less if the job is easier and has more comfortable working conditions,'' he said.
Joe Rossi Tire, like many retreaders, experiences a high turnover in workers, who sometimes leave without warning. ``It's a bit of a pain in the neck,'' Mr. Richards said.
And the retread plant has trouble maintaining production capacity when employment is down.
``Right now we're in good shape (with six shop employees),'' Mr. Richards said, wryly adding, ``That's subject to change without notice.''
To attract applicants-and keep employees-Mr. Bozarth recommended that retreaders review how they treat their employees, the generosity of their benefits packages and the overall working conditions in their plants.
About half the retreaders surveyed said they maintained employment levels in 1994 and plan to continue operating with the same number of workers throughout this year.
However, an additional 34 percent of the retreaders said they plan to increase employment in 1995.
Only about 16 percent said they expect employment levels to dip in 1995.
According to the survey responses received by TIRE BUSINESS, salaries for plant managers last year averaged $32,600, while hourly wages for inspectors averaged $8.60, buffers $9, builders $8.56 and curing operators $7.90.
Most of the retreading firms said they plan to give their workers raises averaging 4 percent this year.
Sales up, margins lag
Despite the labor concerns, a majority of the retreaders sur-veyed enjoyed higher retreaded tire sales during 1994, up an average of 14.6 percent. Although profit margins didn't fare as well.
Some retreaders garnered an average 10-percent increase in profits last year, others suffered about a 7-percent drop or no change in their profit ratio compared to the previous year.
Gross margins, as reported by truck tire retreaders across the country, ranged from 7.5 percent to about 40 to 50 percent. They reported an average gross margin of about 26 percent on light truck retreads and 24 percent on medium truck retreads.
Sales for both types of retreads thrived in 1994 for most retreaders surveyed. Light truck retread sales climbed an average 14 percent; commercial retread sales jumped about 15 percent.
However, retreaders see a slowing down on continued sales growth. They predicted light truck retread sales would climb another 10 percent this year while medium truck retread sales would only grow by 8 percent.
It comes as no surprise that, as in years past, passenger tire re-tread sales in 1994 were on par with or lower than those of the previous year, with retreaders netting an average 19 percent gross margin. Sales activity is expected to change little this year.
Meanwhile the prices of retreaded tires are expected to increase across the board this year, with passenger retread prices predicted to rise about 5 percent, light truck retreads an average of 6 percent and truck retreads by about 8 percent.
This is in line with anticipated escalating costs for raw materials and labor, both expected to jump 5 percent during the year.
Last year most respondents felt the effects of two rounds of price hikes by tread rubber manufacturers, which ranged from 2 to 7 percent.
Retreaders, hit with an average 6-percent jump in their raw material costs during 1994, tended to adjust their own prices by an average 4.5 percent.
Yet increasing prices to adjust for escalating operating costs isn't always good business for some retreaders.
For James Stankiewicz of Valley Tire Co. Inc. in Charleroi, Pa., his company's major concern is ``our (in)ability to increase our price on new and retread (tires) to our customers-competition will not allow this to happen.''
Low-ball pricing by competitors and new-tire dealers has been a perennial problem for many retreaders. Bob Brownridge of Timmins Tire Sales in Timmins, Ontario, claimed low-ball pricing is spurred by ``retreaders who don't know their true costs.''