PORTLAND, Ore.-Fifteen years ago Al Taylor, owner of Al Taylor's Tire Factory in Portland, was worried about the viability of independent tire dealerships-particularly, his own. He wasn't alone.
Two other area tire dealers, Roger Madtson and Bob Hannington, had the same concern. So the three banded together to form a buying group in the Portland area that would, they hoped, help their businesses cut costs and survive.
What they created has evolved into the Northwest Tire Factory Group L.P., an organization of 70 locations in Oregon, Washington, Idaho and Montana with combined sales of $72 million.
``We didn't have a handbook when we started out, and we still don't,'' Mr. Taylor said, reflecting the day-by-day attitude of the group's membership.
Originally, the group leased a 20,000-sq.-ft. warehouse in Portland to store the large orders of tires they were buying at volume discounts. Soon, however, more and more dealers along the upper West Coast expressed interest.
Last year Northwest Tire Factory opened its own 32,000-sq.-ft. warehouse in Portland's ``Rivergate Industrial District'' to store Kelly-Springfield, Cooper, Dunlop, Pirelli, Armstrong, Hankook and Visa passenger, light truck, medium truck, farm and industrial tires and tubes. Recently, the partnership added a Monroe private brand shock and strut line and brakes from EIS Brake Parts, a division of Standard Motor Products Inc.
``With so many (parts) numbers, I thought (adding shocks) was going to be a dog,'' Mr. Taylor said. ``But it's such a profit opportunity for the members, it's one of the greatest things we've done.''
In total, the warehouse stores 15,000 units or about $1.4 million in inventory, Mr. Taylor said.
But the group already is adding 28,000 square feet to the building-though a little more than half of that will be leased to another company for about five years, Mr. Taylor said.
Eventually, the entire addition will house tires and related parts for Northwest Tire Factory, according to Mr. Taylor, who added he'd like to see the group grow to include 100 dealers in the next five years.
But the partnership is more than growing; it's changing as well, Mr. Taylor stressed. Northwest Tire Factory has advanced well past its days when ``our main objective was to buy tires and get them out to the stores.''
The group's current focus is on establishing a marketing plan with a common identity for all member stores, as well as warranties and advertising.
The first real step was the creation of a red-and-blue logo. The members unanimously agreed to incorporate the design and the words ``Tire Factory'' into the names on their storefronts within three years.
Having a common identity will make the group's advertising more effective, Mr. Taylor said. ``It's not effective unless you can drive from one town to another and you realize, `Hey, there's a Tire Factory.' ''
The group recently began airing television ads throughout its marketing area and will have completed a newspaper ``tab'' section by the beginning of July, he said.
To become part of the group, dealers must be members of the Northwest Tire Dealers Association as well as make an initial capital investment of $2,000. Members can add to their investment at any time but cannot exceed the maximum investment held by the original members.
Northwest Tire Factory has boasted a return of about 25 percent per year, Mr. Taylor said, adding that the group wants to keep the return between 15 and 18 percent.
Each month, members also must make a $350 investment and pay $150 warehouse and $30 group advertising charges.
Currently, the partnership totals 54 owners with 70 stores averaging $1 million in sales each, he said.
Although the limited partnership currently is looking for new members, Mr. Taylor said the group's growth will remain ``conservative.''
Every existing member has the power to disallow a new member for competitive reasons, Mr. Taylor said, because ``there's no reason to get somebody who's going to hurt a present member.''