NEW ORLEANS-Nine months after settling a devastating strike, Pirelli Armstrong Tire Corp. is on the road to recovery. The New Haven, Conn.-based tire maker is ``recovering quickly'' from the effects of the nearly eight-month walkout and is returning to normal in terms of plant efficiency, organization and trust between workers and management, said new president and CEO, Giovanni Ferrario.
At the same time, the company is again approaching independent tire dealers with new programs and opportunities for business.
``We trust that the customer is on our side,'' Mr. Ferrario said, despite the negative effects of the strike, which crippled production at the company's two U.S. tire plants, resulting in product shortages. ``They understand the past situation. But.*.*.*the past is the past, and we are giving them new opportunities.''
As he guides PATC into the future, the 47-year-old Mr. Ferrario has established short-and long-term goals. In the short run, he wants the company to recover from the effects of the strike, be consistent in its dealings with customers and ``make things happen.''
But for the long term, the firm must define its strategy for competing in the U.S. ``We want to recover a good position and not just be a marginal player,'' he said.
And he put to rest speculation that the company has placed its tire plants on the market. ``The plants are not for sale,'' he said.
Interviewed during the recent National Tire Dealers & Retreaders Association convention in New Orleans, Mr. Ferrario said PATC will focus on two areas as it strives to achieve profitability. The first is to improve plant efficiency; the second, to significantly increase Pirelli-brand tire sales, although not at the expense of the Armstrong brand. ``I want to increase output in Pirelli in absolute terms,'' he said.
Currently, Pirelli accounts for 60 percent of PATC's estimated 1995 revenues of $330 million, with the remainder consisting of Armstrong-brand tires and some private brand tires for Sears, Roebuck and Co.
Last year, PATC posted an operating loss of $21.4 million on sales of $393 million. In 1995, with sales down about 16 percent, the company will face another ``high loss,'' Mr. Ferrario said.
In 1996, PATC will enter the second year of a three-year, $100 million investment program. Capital expenditures will be heavily concen-trated during the year as the company seeks to increase capacity for Pirelli tires and to remove factory ``bottlenecks,'' improving product flow and boosting output, Mr. Ferrario said.
The firm's Hanford, Calif., factory will receive the bulk of the investment, but PATC also will use more of the available capacity at its Nashville, Tenn., facility for manufacturing Pirelli tires. A program also is under way in Nashville to competely convert to the Pirelli tire-building process, which will be expanded to all lines-Pirelli, Armstrong and private brand, Mr. Ferrario said.
Although the company is emphasizing the Pirelli brand in its plans for 1996, it has no intention of abandoning Armstrong.
``I like the Armstrong brand,'' Mr. Ferrario said, adding it has a good image and a definite role as a typical second-brand line.
He especially likes Armstrong's potential in light truck tires.
``Light truck is very interesting to us,'' he said. ``And I think the role of Armstrong in light trucks is a particularly good position in the market and with the customer.''
Although the strike took a hard toll on Armstrong production, Mr. Ferrario disagreed with the assessment of former vice president of sales and marketing, Alan Bennett, that it ``virtually killed'' the brand. But he admitted the company had informed customers that Armstrong production would suffer more than Pirelli whenever a choice had to be made.
Previously managing director of Pirelli Group's tire manufacturing and sales company in Italy, Mr. Ferrario said PATC will move aggressively to add dealers in selected areas, while in others it will encourage dealers to increase their business with the company.
In assessing the company's potential in the U.S., Mr. Ferrario expressed confidence PATC can be successful. The company has lowered its costs to be in line with competitors', offers quality products and has good employees.
Last year, thanks to an advertising campaign featuring Olympic sprinter Carl Lewis, consumer awareness of the Pirelli brand increased from 21 percent to 37 percent. Consumers will again see Carl Lewis in 1996, but with more focus on products.
Mr. Ferrario also hopes the company can regain a reputation of being easy to work with.
``We like to be very close to the problems of the market and understand what (our customers) need and be consistent with the answer,'' he said.
With PATC's recent history of changing its top executive about every two years, Mr. Ferrario was asked how long he will stay at the helm of the U.S. company.
His reply: ``All the time that is required to finalize our strategic view in this market.''