LAS VEGAS-Sense and Sensibility is up for several Oscars in Hollywood, but it was also playing center stage during Big O Tires Inc.'s annual dealer convention, held in Las Vegas Feb. 11-14. In a meeting the antithesis of last year's stormy Las Vegas gathering, Big O dealers tried to make sense of where the firm has been over the last 12 months and where it's headed, as the leveraged buyout (LBO) by a group of its dealers and management lurches toward an uncertain resolution.
Added into the equation-and often the underlying buzz wherever groups of dealers gathered-was speculation about whether or not wholesaler TBC Corp. would also make an offer to purchase Big O after TBC's completion of a due diligence review of the Englewood, Colo.-based franchiser.
Although the oft-mentioned convention theme was ``Making tracks to a brighter future,'' management, for the most part, talked sensibilities: new programs aimed at boosting profitability.
However, they admitted the long, drawn out, excruciating path to a buyout had overshadowed most everything the company accomplished in 1995, including a 10-percent boost in sales, the opening of 21 new stores, and blockbuster sales performances from several Big O dealers.
Compared with the management power struggle that eclipsed any new programs emanating from the 1995 convention, this year's event was a walk in the park for dealers.
While they heard no promises about just when the matter of the company's ownership would be resolved-there had been no offer yet from TBC, and the merger agreement for the LBO legally expired at the end of February-they were assured Big O will move forward.
The evenly paced convention also gave dealers the opportunity in seminars to hone their ``street fighting'' marketing skills, and to re-evaluate their bottom-line profitability and hiring practices.
In what could only be described as a massive understatement, Big O President Steven P. Coward said the ``challenges of the past 12 months have been immense for management and dealers alike.''
He joked that ``it really is a pleasure just to be here. I don't want to imply things have been a little tentative for me, but for some reason, my secretary has been giving me my calendar only one week at a time.''
While 1995 provided ``more distractions and challenges than usual,'' Mr. Cloward-who heads the dealer-management buyout effort-called 1996 a ``transitional period,'' a stepping stone ``to a new level of success and prosperity.''
Quoting Thomas Edison-who said: ``Opportunity is missed by most people because it comes dressed in overalls and looks like work''-Mr. Cloward urged dealers not to ``miss the opportunity to preserve the sanctity of the proven Big O system simply because it involves hard work.
``Let's all put our overalls on, roll up our sleeves, and work together to start `Making tracks to a brighter future.' ''
Then in an upbeat ``state of the company'' address, he commended several dealers whose commitments stretched far beyond their stores into their individual communities, where many are involved in charitable and civic endeavors.
Despite an essentially flat replacement tire market in 1995, and a similar landscape expected this year, Big O Chairman John Siipola told dealers the company has increased its market share during ``a very difficult period.''
In 1996 he expects the company to open at least as many as the 21 new stores it opened last year. Although ``we still have some store closures, and they are both company and family tragedies,'' he said, ``our system has fewer closures than most franchise organizations. But every one of our stores should be successful.''
Dealer profitability is a company priority that will continue to be addressed, Mr. Siipola stated, noting that a couple new tires produced for Big O by its chief supplier, Kelly-Springfield Tire Co., and launched last year are selling better than forecasted.
Because two manufacturer price increases last year did not appear to stick at the retail level, according to Kelly O'Reilly, vice president of marketing, the ``only real winner'' was the retail consumer.
Still, Big O ``outpaced the industry, showing a 4.5-percent increase in unit sales,'' she said.
However, ``the days are gone when people bought things they didn't need, with money they didn't have, to impress people they didn't like.
``For the Big O customer, price, brand and value will remain the threesome that drives their tire-buying decisions.''
The ``other side'' of the company's ``Cost-U-Less'' purchasing program, introduced to dealers a couple years ago, is ``Make You More,'' she emphasized.
Consequently, as an offshoot to Big O's Dealer Planning Board, a Marketing Committee has formed. The intent, she said, ``is to unify our marketing efforts to increase profitability on both the dealer and corporate levels'' on a unit-by-unit and store-by-store basis.
And in what she called an ``exciting new development,'' Big O has aligned itself with the growing number of automotive companies belonging to the Motorist Assurance Program (MAP).
Big O stores accredited as MAP facilities-that is, conforming to strict repair and maintenance guidelines issued by MAP-will receive special signage and point-of-purchase materials, Ms. O'Reilly said. The purpose of these materials, she said, is ``to make sure the public sees our responsibility and commitment to play fair.''
The pilot program is ready to be launched in Big O stores in Louisville, Ky. It will gradually be fine-tuned and extended throughout regions where Big O operates, she said, with ``the real litmus test'' in California. There, the state's Bureau of Automotive Repair has snagged a number of companies for allegedly defrauding automotive service customers.
According to Bruce Ware, cor-porate manager, purchasing, deal-ers want ``the right products at the right price at the right time.''
And the keys to that are ``com-munication'' and being ``responsive to the front line-our dealer base.''
``The better the communication, the stronger leverage we'll have with our manufacturers,'' he said.
Big O will launch a new light truck radial tire, dubbed ``Big Haul,'' in the fourth quarter, and a Big Foot AT is currently in production and will soon be available.
The company is also overhauling its H- and V-rated Euro lines, and is in the process of rolling out new 75- and 80-series sizes in its Legacy Tour Plus stable.
Although the company's direct purchase program with Michelin Americas Small Tires has been discontinued, Mr. Ware said Big O will implement a new ``Dealer Re-bill Program'' involving ``a strategic alliance with a few key regional wholesalers.'' Its goal: offer more comprehensive product lines at competitive prices.
The ``Three R's'' referred to ``Readin', 'Ritin', and 'Rithmatic'' in the old days.
In Big O lingo, they pertain to ``Remodel, Relocate and Resell,'' said Ronald Lautzenheiser, vice president, business development.
When a company considers a leveraged buyout, he said, ``we know our construction financing budget, which enabled us to grow 20 to 30 units a year, cannot magically reappear overnight.''
Mr. Lautzenheiser tried to reassure dealers who find the idea of growing their business ``an intimidating concept'' by introducing a new revolving line of credit for new construction in conjunction with Heller First Capital in Chicago, and a similar program with the Money Store Investment Corp.
Both firms will facilitate construction growth and expedite the Small Business Administration (SBA) approval process, he said, so that ``by the time your new store is built, you'll already be approved for an SBA loan.''
If a dealer operating a ``volume-locked'' store is interested in relocation, both of those investment companies will offer an option providing a virtually ``cashless'' transaction, linked to an SBA loan plus dealer equity, he said.
As for an owner considering retirement and the sale of his dealership, Mr. Lautzenheiser unveiled a new program where, for a $5,000 fee, Big O corporate will find a qualified buyer.
Citing the advice of one of Big O's founding dealers, Bill Thomas, Mr. Lautzenheiser said: ``You should start to think about how you're going to get out of business the minute you get into business.''