SOUTH SAN FRANCISCO, Calif.-Seeking an established private brand it could market worldwide, Treadways Corp. has acquired private brander El Dorado Tire Co., based in Troy, Mich. The move gives South San Francisco-based Treadways, which does business as Sumitomo Tire (U.S.), an established private brand to market worldwide in areas that already contain the Sumitomo and Dunlop brands.
At the same time, the acquisition will modernize and expand the El Dorado passenger and light truck tire lines, according to Treadways Vice President Dan Wire.
El Dorado also markets radial and bias-ply medium truck tires.
Much of the rationale behind the purchase lies in the complicated structure of two separate Japanese parent companies that, according to Mr. Wire, traditionally has been difficult to explain to the industry:
Treadways Corp., doing business as Sumitomo Tire (U.S.), is a subsidiary of Sumitomo Corp. of America, which is itself a subsidiary of Sumitomo Corp., a Japanese holding company publicly traded on the Tokyo Stock Exchange.
Dunlop Tire Corp., by contrast, is a subsidiary of Sumitomo Rubber Industries Ltd., which is itself a subsidiary of a separate Japanese holding company, Sumitomo Electric.
Sumitomo Rubber manufactures the Sumitomo brand for both Sumitomo company families, which is the only connection between the two company lines, Mr. Wire explained.
Marketing limitations between the two company families on the Sumitomo brand in some countries have slowed Sumitomo Tire's worldwide marketing strategies.
The answer was to begin marketing another brand, according to Mr. Wire, and El Dorado offered an established brand name with a strong dealer base, marketing program and reputation.
The private brand line will be marketed in the U.S., Canada, Mexico, Puerto Rico and possibly Australia by Sumitomo Tire, he said.
Sumitomo Corp., which operates trading offices in 150 cities throughout the world, will handle further overseas marketing of the product.
The parent company's established worldwide presence should enable El Dorado to have a ``pretty solid worldwide marketing effort'' by the end of the year, Mr. Wire said.
Purchasing El Dorado, which is manufactured in the U.S. by Findlay, Ohio-based Cooper Tire & Rubber Co., also helps Sumitomo Tire reduce its reliance on imports, whose profitability is impacted by the strength of the Japanese yen, Mr. Wire added.
Sumitomo Tire already has signed a long-term agreement with Cooper to continue manufacturing El Dorado brand tires, and that agreement could be extended in the future.
``We anticipate a very long-term relationship with the Cooper Tire & Rubber Co.,'' Mr. Wire emphasized.
Domestically, Sumitomo plans to operate El Dorado as a separate company, Mr. Wire said, with El Dorado founder H.R. ``Kelly'' Calamari remaining with the firm as an advisor.
Mr. Kalamari, a pioneer in private brand tire marketing, established El Dorado in 1966, and was inducted into the Tire Industry Hall of Fame in 1986.
Jim Tyler, who had been El Dorado's president before the acquisition, has become national sales manager for the new subsidiary, which will continue to maintain its headquarters in Troy.
``We've had a lot of questions (from) El Dorado dealers who think Sumitomo dealers are going to get the El Dorado brand, and Sumitomo dealers who think El Dorado dealers are going to get the Sumitomo brand, and neither one of those scenarios is true...,'' Mr. Wire said.
``One thing that we strongly want to emphasize to both dealer organizations is that they are separate companies....We don't think the customer will notice any change in the day-to-day operations.''
What will change, however, is the El Dorado product line-up, which Mr. Wire said quickly will be ``expanded and modernized'' in the passenger and light truck performance markets.
``We think the line will grow very rapidly domestically'' as a result of new product introductions, Mr. Wire said.
Currently, there are about 100 El Dorado dealers in the United States.