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August 07, 1995 02:00 AM

SUCCESS IN NEW ENGLAND: NEW DEALERSHIP OWNERS USING THEIR 70 YEARS OF COMBINED EXPERIENCE TO HELP THEM SUCCEED AND GROW IN A TOUGH COMMERCIAL TIRE MARKET

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    Sixteen months ago, John Stevens was a truck tire sales manager for Michelin, Brian Davis was vice president of commercial sales for Stratham Tire of Stratham, N.H., and Robert Tellefsen was general manager of Merchants Tire Co. in Avon, Mass. Now they have completed their firstyear as co-owners of New England Truck Tire Centers, one of the region's newest full service commercial tire dealerships.

    With 70 years of commercial tire experience among them, they are confident they can succeed in a field where capital requirements are great, price competition stiff and gross profits declining.

    The new firm began operating June 1, l994, after its owners pooled their savings and severance pay to purchase the Scarborough, Maine, headquarters and retread plant and an Auburn, Maine, truck tire service center from Merchants Tire Co.

    Three weeks after start-up in Maine, the company added a truck tire service center in Hudson, N.H. It soon will begin moving its headquarters and retread plant into a 22,000-sq.-ft., two-floor facility now under construction in Scarborough. The building also will house a truck service center and warehouse.

    Mr. Stevens, president of the firm, said the company's growth was progressing as planned. ``We've been taking it a step at a time, being careful not to over commit,'' he said.

    So far this approach has been working. ``It's also kept us at a growth pace we can manage,'' he said.

    Asked how he and his colleagues could be so confident when several long-established New England commercial tire firms have folded in recent years, Mr. Stevens said: ``I think they lost sight of what is important, and that, of course, is the customer.

    ``Being in the commercial business has advantages and disadvantages,'' he said. ``The one disadvantage is it's not a cash business. But the big advantage is you can really control the business because you take it to the customer. You don't wait for the custmer to come to you.''

    Mr. Stevens said he understands the dissatisfaction many veteran commercial dealers feel about present-day conditions in the industry.

    ``I've seen the transition that the old timers are complaining about,'' he said. ``I was in the commercial tire business the whole 18 years I was with Michelin and certainly as the number of dealers has grown and tire manufacturers' programs have forced dealers to buy in larger quantities to obtain larger discounts, smaller dealers have found it harder to compete.

    ``If small dealerships don't have a uniqueness-something they can tell the customers about themselves-they may have a hard time competing in today's market,'' he said.

    Mr. Stevens indicated that practices of both manufacturers and dealers have led to intense price competition that has plagued the commercial tire field in recent years.

    ``If I have a complaint, it's manufacturers' programs that require dealers to buy a large number of tires (to receive a satisfactory discount). When dealers find that their inventories are too high, they start blowing them out to customers-reducing margins.

    ``Some salesmen, if you don't have control, will respond to competition by lowering prices. We won't do that. We know what we have to maintain as a margin and we know that we have to keep close control of our expenses.''

    Mr. Stevens said his firm places heavy emphasis on customer service as a sales tool. ``But we have to be paid for our service,'' he said.

    ``We now have 18 trucks. We keep control. We maintain a reasonable margin.*.*.*.and provide the quality and service that customers need. And we consult with them to find out what their needs are and find ways to further reduce their costs. We feel strongly that we will survive and make a decent living doing it.''

    Mr. Stevens said he believes most commercial tire customers are ``too sophisticated'' to expect dealers to sell at unrealistically low prices. ``There are always exceptions, but the good operators-people who pay their bills-realize they can only push the price down so far before it begins to cost them in both quality of service and quality of product,'' he said.

    Asked if the high cost of equipping a new tire business was a problem, he said: ``The money we need is available to us. The bank we are working with has been very good to us and, fortunately, we have been very good back to them.''

    With 27 employees, eight service trucks and five salespeople, including two of the owners, the company serves the lumber, logging, construction, refuse hauling, concrete, parcel delivery and trucking industries. It sells Michelin, Bridgestone and Kelly-Springfield tires and produces Bandag retreads.

    Mr. Tellefsen is secretary of the company and Mr. Davis, treasurer.

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