AKRON-Convincing a tire dealer that joining a larger group is necessary for his survival in today's retailing age is a tough sell, Metro 25 Tire Chairman Duane Rao mused. Small, family-owned dealerships are the toughest.
``They say, `Who the hell are you to tell me how to run my business,' '' Mr. Rao said. ``It's hard to get people to change.''
That's why Metro 25, the nation's largest tire cooperative, has transformed itself from a marketing-oriented to a bottom-line-oriented partnership.
``Guaranteed financial improvement'' is easy for even the most stubborn owner to understand, Mr. Rao said. ``We used to be a marketing program. Now it's a financial program. The bottom line is what matters.''
Gone is the cooperative's ``white-glove'' policy, where representatives focused more on outlet appearance.
``We know the guys who survive will all have the clean stores,'' he said. ``We went from baby sitting to hard-core financial impact.''
The cooperative believes its host of tire buying, training and support services can help independent dealerships, particularly small ones, compete against larger retailers by capitalizing on economies of scale.
Perhaps surprisingly, however, the first benefit Metro 25 representatives mention to potential member dealers has nothing to do with tires or automotive parts, but with employees.
The worker leasing program Metro 25 contracts through Sterling Heights, Mich.-based Simplified Employment Services Inc. (SES) can save a dealership $500 to $1,000 per worker per year, Mr. Rao said. That's a savings of $5,000 to $10,000 each year for a dealership with 10 employees.
``It's the greatest financial impact of all the programs that you can see in dollars and cents,'' according to Mr. Rao.
Employee leasing is becoming more common among many industries. A leasing company like SES hires all of a dealership's employees and then leases them back to that company. As the ``employee of record'' SES then handles those employees' personnel matters, including health insurance, workers compensation, retirement plans and payroll processing.
Because the leasing company handles employees from a large number of companies, it is able to capitalize on economies of scale as well, according to Den-
nis Lambka, SES chairman.
Those savings are passed onto the cooperative, which posted a $250,000 profit in its first year, and its dealers. Both parties also benefit from not having to handle the administrative chores involved with personnel.
``The job in the tire world is to service tires, to market the product. . . their job is not to worry about this (administrative) stuff,'' Mr. Lambka said. ``(Tire dealers) need to service the client.''
The financial benefits of the SES program often offsets a dealer's initial expense to join the cooperative, according to Mr. Rao. Dealers front a $6,000 initial investment and then make $200 monthly payments to participate in the Metro 25 program.
So guaranteed are the savings from the employee leasing program itself, Mr. Rao said, ``we can now say Metro 25 is free.''
It is important for the cooperative to attract new members, he continued, because the larger Metro 25 becomes, the more savings member dealers can obtain.
To that end, the cooperative recently hired former American Retreaders Association executive director John Wagner as president in hopes of expanding the cooperative's membership through larger organizations that could include O.K. Tire dealers in the U.S. and Canada and ``three or four major dealers,'' Mr. Rao said.