SAN DIEGO-Republicans have their much-vaunted ``Contract with America.'' Now Continental General Tire Inc. (CGT) has its ``Contract with our dealers,'' according to at least one executive at the company's annual dealer conference in San Diego, Jan. 12-15.
If the convenant sounds strangely similar to promises made to tire dealers at the company's 1994 conference, it is-and purposely so.
A parade of CGT officers-each touting how ``layers of fat'' have been trimmed from the company-sounded the message that the independent dealer is now the prime focus for the company.
``Creative destruction'' is how Bernd Frangenberg, newly named CGT president, described the structural, management and strategic changes that have affected CGT the past few years.
These, he said, resulted in a lot of friction and ``constant stress'' for CGT employees and dealers.
Unfortunately, the company's principal customers-its independent tire dealers-were lost in the shuffle, he said. That, he confessed, was a mistake made by a company often criticized for making changes just for the sake of change.
But if anything further must be readjusted, it is CGT's relationship with its dealers, he said: ``You are the focus of our strategy. Whatever we do is for you.''
Judging from the warm reception his pledge received from the nearly 700 dealers in attendance, the tire maker may finally be on firmer footing.
CGT's 1994 battle plan will remain virtually unchanged in '95, said Thomas J. Reese, executive vice president and head of CGT's profitable commercial division.
To continue the momentum begun last year, Mr. Reese said, the company's commitment to its dealers will include:
Improving its product lines;
Taking increased advantage of technological and manufacturing synergies;
Improving inventory levels-``We have 60,000 commercial tires in inventory today,'' he said, compared with some 260,000 a year ago;
Introducing ``QVP''-Quality, Value, Performance-to enhance the image of its products;
Raising prices-``We will probably do that more than once in 1995,'' he said;
Increasing capacity and gaining ISO certification for CGT plants;
``Growing'' existing customers; and
Building the company's state contract business.
To live up to those expectations, Mr. Reese said CGT must continue to stress its research and development capabilities, aided by a greater sharing of technology and closer synergies with its German parent company, Continental A.G.
Joe McCarthy, senior vice president, sales and marketing, for the passenger/light truck division, said he found it ``very distressing'' that CGT has been ``off balance for some time'' because it ``lost sight that its dealer network is what makes the company successful.''
Two major changes in the way CGT will deal with those customers received generally positive reactions from dealers, though many seemed to be cautiously optimistic about what they heard.
CGT will take the money it formerly spent on its annual ``buyers' fair'' and instead put it ``into improving relations with its dealer organization.''
In place of the fair-where dealers ``pledged'' an amount of tire purchases in the first quarter to become eligible for gifts and merchandise-the tire maker has switched to a year-long ``Award Plan.''
That marketing system includes promotional and training opportunities, award packages, employee incentive programs, and purchase opportunities based on an accumulation of points via tire orders.
Dealers can, for example, use points to purchase tire and automotive service equipment or business software.
Mr. Frangenberg said the company made headway in 1994, despite the numerous changes, including CGT's decision to move its headquarters to Charlotte, N.C., from Akron in 1995. He called that a ``catalyst'' to cutting ``unwanted extra expenses.''
Though it did not escape the stain of red ink last year, due in part to the move, CGT will be profitable in 1995, he predicted.
He sketched out various improvements the company undertook last year, including:
Divisionalization-splitting its commercial and passenger/light truck divisions;
Decentralization, in order to ``get the power where the action is,'' into the field and ``closer to our dealer partners,'' resulting in quicker response times and fewer levels of bureaucracy; and
Benchmarking exercises among its plants worldwide to improve overall efficiency.
Everyone in the company, from top executives down to blue-collar workers, is responsible for CGT's profitability, he stressed.
``We have only just started to get our act together,'' Mr. Frangenberg said, though he warned dealers there is ``no magic wand-just dedicated work.''
Not satisfied yet with the firm's marketing program, he did say it is on the right track. But ``all the brilliant designs don't affect the bottom line unless we have the people to carry them out....All we're doing isn't worth a thing if we don't have the sales, marketing and customers.''
The company's recent name change reflects its closer ties to Conti, he explained, admitting he was baffled that those ties had not occurred sooner, in the wake of Continental's acquisition of General Tire seven years ago.
During a luncheon with the trade press, Mr. Frangenberg said the company's 1995 initiatives were based on conversations with more than 100 General dealers in dozens of dealer meetings held throughout the country last year.
``There's no point formulating strategy without consulting with the dealers,'' he said, adding that the practice of meeting with-as well as making mandatory monthly calls to-dealers to discuss various subjects would continue.
One common dealer complaint has been CGT's many different pricing strategies and discounts. That, Mr. Frangenberg said, has been streamlined so dealers now can quickly and easily get to their purchase price.
The company also will embellish its current sponsorship of National Football League games by adding promotions of various motorsports activities, with many of them keyed to General's Hoosier-brand street radials.
And dealers and consumers soon will be reacquainted with the longtime General Tire slogan, ``Sooner or later you'll own Generals,'' which the company replaced in 1992 with the ``Family Tire'' theme.
A new advertising campaign will feature pony-tailed country singer Willie Nelson crooning a General-ized version of his hit, ``On the road again,'' with a ``Sooner or later.*.*.'' tagline.
CGT will continue its marketing efforts for a wide spectrum of products, positioning the Continental brand as the premium offering in the passenger/LT and, increasingly, in the commercial division, as well. General-brand tire lines will cover a full range, from premium on down. The firm's Semperit brand will round out the low end.
Mr. Frangenberg agreed that the Conti brand is a ``tough sell'' for tire dealers, because what works for Continental in Europe doesn't necessarily translate to North America. But a new Conti-brand passenger tire developed specifically for the U.S. market will debut by June.
CGT also will make a concerted effort to bolster its private brand business, after years of ``flip-flopping,'' Mr. Frangenberg said.
Currently, the company is making tires for at least a dozen private branders, and has ``more private brand work in the door than we can handle,'' he said.