Is it any surprise that it keeps getting harder to run a business nowadays? Apparently not. If there's ``strength in numbers,'' then there should perhaps be some comfort in being ``in the same boat'' when it comes to problems facing tire dealers across the nation.
Geographic regions not withstanding, many dealers appear to be crammed into that undersized boat, judging by comments garnered from TIRE BUSINESS' annual independent tire dealer survey.
Take some solace in knowing that, from coast to coast, one of the most pressing problems facing tire outlets is the lack of qualified employees at all levels of operation-but especially in the service end of the business.
Feel better now?
Unfortunately, that lack of qualified workers, and the inability to retain the good ones once a company has them-a fact bemoaned by so many dealers-just reinforces recent studies which have predicted a dearth of some 60,000 automotive service technicians over the next few years.
That also means competition will continue to heat up among dealerships seeking to hire professionally trained workers.
Just what you wanted to hear. Feeling better yet? Keep repeating the mantra, ``We're all in the same boat,'' though it does seem to be listing a little.
Other big gripes uncovered by our survey: Competition from discounters and mass merchandisers is still putting a dent in ``Joe Independent's Tire Store.'' It's been the same story the past few years that TIRE BUSINESS has conducted these annual surveys of its dealer readers.
Those old favorites, government regulation and taxes, still have dealers hollering ``Uncle Sam.''
And let's not forget those suppliers. Basic sentiment there: A lot of dealers can't live with them-but can't live without them.
If you're hoping to read about some magic solution to those and other problems, alas, this story is more a kind of ``state of the industry'' report provided by a number of dealers whose businesses-including retail, commercial and wholesale-range in size from one outlet to 170.
While many regretted, as one dealer put it, the lack of ``good, honest, reliable employees,'' about two-thirds of the respondents indicated they did not plan to add to their dealership's overall employment in 1995.
Though far from a scientific observation, not surprisingly the survey tended to show that dealerships in more economically viable areas were apt to do some hiring.
On the other hand, more than half said their employee ranks remained constant in 1994, and only a quarter reported new hirings. The most prevalent positions filled were tire service workers and automotive technicians.
Echoing the sentiments of many, Ray Hill, president of The Tire & Muffler Center, Goldsboro, N.C., acknowledged he's had trouble finding ``anyone with the desire to work.''
Almost half the respondents described economic conditions in their specific market as typical or average; a fifth called their areas ``depressed'' due to a number of factors. Those included massive flooding last summer in parts of the South and Texas, and still-slumping economies on the West Coast.
One dealer who labors in a depressed Golden State economy simply wrote: ``California!''
But Bob Bleakley Jr., owner/manager of Crystal River Firestone in Crystal River, Fla., sunnily replied that his area's economy is favorable because ``folks retire to Florida.''
New equipment purchases dealerships are planning in 1995 include: lifts; tire changers; balancers; alignment machinery; vans, pickups and service trucks; air compressors; buffing machines; engine analyzers; computers and their accompanying software.
Every survey respondent noted membership in at least one industry association, with the majority belonging to the National Tire Dealers & Retreaders Association as well as their state's respective dealer association.
Though last year the combined Automotive Aftermarket Industry Week mega-trade shows in Las Vegas-especially the SEMA/AI show-reportedly drew a number of tire dealers, only two survey respondents said they belonged to the Specialty Equipment Manufacturers Association (SEMA).
Among other survey results:
Tire sales were up last year for half the respondents, by an average of 13.4 percent, with increases ranging from 3 to 45 percent; a quarter of them saw sales decline by 12.7 percent.
Contrasting that, almost 71 percent said they were banking on tire sales to bolster their company's overall profitability this year. That's up nearly 10 percent from last year's survey results.
Tire-derived profits rose an average of 13 percent for 35.5 percent of the respondents but slid 10.6 percent for 28.8 percent.
Auto service sales increased 12.7 percent for a quarter of the respondents; an almost equal number grappled with a plunge of 19.6 percent.
Service-derived profits, for a little better than half the respondents, were up by 12.7 percent; almost a third reported stagnant results in that category; and 18 percent saw those profits drop by an average 15.4 percent.
`Service' still counts
Only about 42 percent of the dealers surveyed said they planned to rely more heavily on automotive service as their company's cash cow in 1995 compared with 67 percent of respondents the previous year. Half of them said service would remain ``as important'' to their operations.
While tire sales in 1995 will continue to be important to R*&*R Tire Service, a retail outlet in Macon, Ga., C.L. Register, president, plans to push auto service sales.
He hopes to accomplish that with the addition of a just-opened two-bay muffler shop, which he forecasts should increase his auto service sales by 20 percent.
Another dealer, Jimmy Britt, president of American Discount Tire Inc. in Athens, Ga., emphasized that ``automotive service is a must. We will have to be diversified to pay for the cost of doing business.''
Nonetheless, ``being a modern tire dealer will mean also having to increase tire sales,'' he added.
His dealership grew to four retail outlets last year with the addition of a new store, plus expansion of another. Plans call for the opening of another location in 1995.
On the down side, Mr. Britt said the continuing rubber industry labor strikes forced the company to add a new supplier.
According to C. Craig Mock, president of Mock Tire at South Park Inc., Winston-Salem, N.C., if current tire trends continue-that is, ``less profit, less unit (sales)''-auto service ``must fill the void.''
Finding ``quality technicians,'' he wrote, is a constant problem.
A little less than half the respondents said retail sales of passenger and light truck tires were up by an average 13.2 percent.
Sales of high performance passenger tires were not as strong as in 1993, with only 38.9 percent of the respondents reporting an average rise of 10.6 percent.
While the majority noted commercial truck tire sales were flat,those sales plummeted by an average 23.8 percent for better than a quarter of the responding dealers.
Specialty tire sales-often referred to as an untapped profit source for dealers-were stagnant for some 71 percent of them last year. And the majority noted that, as in recent years, custom wheel sales continued to be lackluster.
``All the profitability has drained away from tire sales over the last few years'' for Michael S. Field, president of Field Tire & Service Center Inc. in Tampa, Fla.
The dealership is located in a small neighborhood where Mr. Field said he knows most of his customers personally. He has reached the point where he's even considered changing his company's name, because it is more a repair shop rather than a tire store.
``I don't even get excited about selling tires anymore,'' he admitted. ``It doesn't pay to keep a lot of tires in stock.''
He does inventory a few, as a service to customers, but sells less than 100 tires monthly. Mr. Field has found that because of the cut-throat market he's in-with a plethora of tire discounters and wholesalers-he can't compete.
The outlet specializes in electronic and mechanical repairs, and its mechanics now handle tire service chores, as well.
There's ``no loyalty'' anymore-from customers, dealers, manu-facturers-Mr. Field said. ``It's a `whore's market.' Customers are not looking for name brand tires anymore. Only the cheapest price.
``It's really a sorry situation for the small independent dealer, as far as tire sales go.''
Look a dealer in the eye and ask what really makes doing business difficult, and chances are he or she will reply: ``Shrinking margins-especially on tires.'' The TB survey seemed to bear that out.
Apparently, at least some of the average 3- to 5-percent price hikes instituted by tire manufacturers last year stuck. In the case of passenger tires, dealers surveyed said their purchase prices rose an average 4.4 percent.
However, while retail margins in that category were up by almost that same percentage for about a third of the dealers, an equal number noted their margins were down by some 5 percent.
Results were much the same in the light truck tire category, with 60 percent saying prices jumped 4.4 percent, but only a third responded that their margins were up, by an average 8.7 percent.
In the truck tire category, margins remained flat for the majority, while a little better than half said their purchase prices climbed by 4.2 percent.
According to the survey, dealers' average gross margins were 29.9 percent on passenger tires; 26.4 percent on light truck; 15.6 percent on truck; 26.4 percent on industrial; 17.2 percent on farm; 11 percent on large OTR; and 28.8 percent on specialty tires.
The TB survey did uncover at least one dealership that is bucking the trend toward doing more automotive service.
Tony's Tire Service in West Plains, Mo., got out of the service business last year-though not entirely by its own choosing.
Finding qualified help was getting increasingly difficult, according to Rodney Friga, co-owner with his brother, Kem, of the dealership their father founded 28 years ago. Rather than get embroiled in an eminent domain hassle with the state Highway Department, the company lost its frontage and highway access in 1993 and was forced to remodel to provide a new entrance way.
That shrank the outlet's size to the point where the brothers decided to eliminate alignment service altogether.
Eventually, a seven-year employee quit and went to work for a competitor, Mr. Friga said. So midway through last year, the company-which had lost a service bay in the remodeling-dumped its brake service.
``We do real well with tires-make good money on them,'' Mr. Friga said. ``When we got out of (the service business), it was like a weight off our shoulders.'' Now Tony's Tire has more time to devote to servicing its ``tremendous following'' of customers.
``Industry-wide, maybe we did a dumb thing,'' he added. ``But it's sure worked out for us.''