KAMUELA, Hawaii-Losing the confidence of customers, employees and the general public can befall a company almost overnight. Rebuilding that trust is often a long, uphill struggle. Just ask Continental General Tire President Bernd Frangenberg, who took the company's helm in January 1995 and is working to renew its faded public image following several years of downsizing, corporate restructuring, product difficulties and red ink.
Mr. Frangenberg believes the company, formerly named General Tire Inc., has overcome most of these difficulties and should produce operating profits this year for the first time since it was acquired by Hanover, Germany-based Continental A.G. in 1987.
However, convincing the skeptics remains a major challenge for Mr. Frangenberg and his recently relocated Charlotte, N.C.-based management team.
In a candid interview conducted during the company's International Dealer Meeting, Jan. 10-14, at Kamuela's Hilton Waikoloa resort, Mr. Frangenberg said the company ``lost its way'' during the years immediately following its acquisition by Continental.
Somehow in the stress and confusion of that change in ownership, management temporarily lost sight of the company's most important customer-the independent tire dealer. But that mistake has long since been rectified, Mr. Frangenberg was quick to point out.
During his past three years with CGT, Mr. Frangenberg said, that company has neither vacillated in its marketing strategy nor ceased its primary focus on the independent tire dealer.
One of the things his time with CGT has taught him, Mr. Frangenberg said, is to examine problems from the ``outside in''-beginning with the customer and working back to the manufacturer. This approach, he said, has resulted in ``a thousand and one changes'' initiated by the company to make itself easier to do business with, plus a ``thousand more ideas'' still in the formulation stage.
The company's management since 1994 has been meeting on a regional basis with groups of 20 to 25 dealers to learn what they want and expect from their tire supplier. ``We have listened carefully and are trying to deliver (on what dealers have outlined),'' Mr. Frangenberg said.
Apparently, such efforts are beginning to pay off. A number of former General Tire dealers, who had been ``sitting on the fence'' watching the company's reconstruction effort, recently have returned to the fold, he said. Moreover, CGT's sales through its dealer channel were up a healthy 25 percent in 1995 from 1994.
Mr. Frangenberg said that experience has persuaded him not to go head-to-head with the company's larger competitors-Goodyear and Michelin North America-when it comes to advertising. ``They spend a three-digit million budget on national advertising, promotion, blimps and God knows what else,'' he said.
``We're not in that league. . . , so we have to develop a strategy that fits us.'' That's why, he said, the company has switched to a micro-marketing approach, abandoning the idea of national advertising in order to put its money together with that of its dealers to create joint advertising and promotional activities.
In the future, Mr. Frangenberg said, ``the name of the game will be `quick,' not `big.' And that's where our advantage is: We can outperform them (larger competitors) in how we treat customers. That's our strategy put very simply.''
When he took over as company president a year ago, Mr. Frangenberg said he was particularly disturbed by the fact that ``there was hardly any dealer base.
``We had (almost) all our eggs in one basket''-Sam's Club, the 432-store discount chain owned by Wal-Mart Stores Inc., he said. ``You don't do that. That's treacherous-a little card house that can easily collapse.
``I really didn't want to lose business at Sam's, but rather to grow the rest or our business so Sam's would account for only a relatively small portion of the volume.
``But things don't always work out the way you want them to. They (Sam's) had to rethink their marketing approach and (as a result) went to a multibrand strategy. . . , and every additional brand they added was at our expense. . . .
``We took a real beating, which I had to accept. I didn't want it that way. I didn't foresee it that way. But I always knew it was a dangerous position from Day 1 when I arrived here and really pushed to build up every other channel. And it's good we did.
``Our dependency (on Sam's business) now is such that it still would hurt if we were to lose more business-but it wouldn't kill us.''
Thanks to volume increases in its dealer, private brand and original equipment channels, Mr. Frangenberg said, the company was able to more than make up for the business it lost at Sam's, ending 1995 with sales about 33 percent above those of the previous year.
And although its year-end financial results are yet to be officially announced, Mr. Frangenberg said CGT basically broke even in 1995. He emphasized that this was quite an accomplishment in the face of declining unit sales to Sam's, the industrywide ``explosion in raw material prices'' and ``tough labor negotia-tions''-for which the company had been stockpiling tires in anticipation of a possible work stoppage, only to have to curtail production afterwards in order to adjust its inventory.
``We're very upbeat for 1996,'' he said, ``because of all the structural problems we have solved and the progress in place. I think 1996 will be the first year we really deliver some operational profits.''
Moreover, he said, CGT has more than overcome any quality problems it might have had in the past and will take a back seat to no other tire maker on that score.
It's unfortunate, Mr. Frangenberg said, that some quality problems General Tire seemed to have in the past created a perception that still exists within the industry. ``You ruin your reputation overnight, but it takes a long time to build it up,'' he noted.
``We're probably the best-kept secret in the industry as far as our quality and our product range is concerned. And we have to talk about it to make sure (it doesn't remain so). No! I do not hide behind Michelin, Goodyear or anybody in the world in terms of quality and product range.
``I feel very comfortable about the quality of our products. They're second to none. We don't have to fear anybody. We're competing daily with the big guys at Ford, General Motors, Mercedes and BMW. You name it; we are there-Nissan, Toyota. These are all customers of ours where we have received quality awards from them year after year.''
The 55-year-old Mr. Frangenberg came to CGT in 1993, when he was appointed to head General's passenger/light truck tire division, becoming president a year later when former President Alan Ockene retired-in part because he didn't want to relocate from Akron to Charlotte.
The decision to move the company's U.S. headquarters was not an easy one, Mr. Frangenberg admitted. But he's convinced the move was necessary to revitalize CGT's corporate culture.
Besides being in close proximity to its Charlotte passenger tire plant, the company's new headquarters already is ``vibrating'' with activity, Mr. Frangenberg said.
The new Charlotte facility, he said, has brought a variety of operations under one roof-from research and development to sales and marketing. ``You can tackle a problem much quicker (when all affected departments are) in the loop. You don't have to have exchanges by letter. You just pop down one floor or next door or meet at lunch in order to discuss matters.''
As a result, CGT will be able to react more quickly to changing business conditions and able to bring new products to market faster. ``We now have the environment in which to do that and you can really feel it,'' he said.
Mr. Frangenberg said he is fully aware that the company's relocation has meant a hardship for many employees and their families. He said he regrets this, but the company's best interests have to come first: ``Only if the company is healthy, can we provide the food and the schooling for our families. As hard as this may sound, it's better than going bust.
``We couldn't-and shouldn't-have stayed in Akron simply because of the heritage, the bureaucracy and the old thinking of General Tire. We needed to get out of those buildings. If you've done business a certain way for 30 years, you're not ready to change. But if we don't radically change, we have not a chance in hell. Change is the only constant in our business.
``I keep reminding our people: If you are not ready to prepare personally and professionally for change, we're dead. . . . We have been very unsuccessful for seven years. That's a pretty good reason to change.''