Gregg Mathews, owner of 3M Collision Inc. in Gladwin, Mich., poses with his wife Carolyn and their daughter Alice on the set of the film ``Honey, I shrunk the kids'' at Walt Disney World during a moment away from Metro 25 Tire's recent shareholders meeting. Tire Business photo by Chuck Slaybaugh
ORLANDO, Fla.-Metro 25 Tire, having completed its first full year as a member-owned cooperative, disbursed profits of nearly $160,000 to dealers at its 1996 shareholders meeting, March 28-31 at the Omni Rosen hotel in Orlando.
During the gathering, Metro 25 dealer members, who participated in the group's purchase programs during 1995, received proportionate shares of a total of $159,527 in supplier rebates.
The Detroit-based buying group, which reorganized to become a dealer-owned cooperative in 1994, now has 89 shareholding members, according to Metro 25 Chairman Duane Rao.
He said an additional 38 dealers fly the Metro 25 banner although they haven't made the necessary $6,000 stock purchase to become voting members of the cooperative.
However, these non-voting members, who pay a monthly fee in return for the services offered by Metro 25, will be asked to become shareholders during the coming months, according to Mr. Rao. Tax laws and other regulations make it necessary for all participants to share a financial stake in a cooperative's operations, he said.
The group's founder and longtime chairman went on to inform the gathering of about 200 that he plans to turn the management of Metro 25 over to its recently hired president, John Wagner, and a ``working executive committee'' whose six elected members are to be installed by July 1.
Mr. Rao said he intends to remain active in the group, but wants Metro 25 to function as a ``true cooperative,'' taking better advantage of the talents and abilities of the members themselves.
``We hope to make the cooperative what it should be-owned and operated by the members, not by me, the executive committee or even a few guys,'' he told dealers. ``We need your support. We need commitment from everyone.''
Mr. Rao said Metro 25, which he founded as a buying group in 1981, has evolved into what he called ``big business with a lot of potential'' and now requires more attention than he is able to provide on a constant basis throughout the year.
During coming months, Mr. Wagner, a tire marketing consultant and former managing director of the American Retreaders Association who joined Metro 25 in November, will try to recruit at least 50 new members in addition to converting Metro 25's present non-shareholder dealers to full-fledged voting members. Metro 25's membership is strongest in Michigan, Ohio and portions of California, Oklahoma, New Jersey and New York, Mr. Rao said.
At one time, before becoming a cooperative and requiring a financial investment on the part of participants, Metro 25 boasted a membership of nearly 300 dealers. And Messrs. Rao and Wagner believe the group's membership may reach such numbers again. But meanwhile, both see Metro 25 as better off with a smaller but more dedicated membership.
While growth obviously is one of the group's long-term goals, Mr. Wagner stressed that Metro 25 wants no part of what he termed ``one-night stands'' with potential members not fully committed to the cooperative concept.
During the gathering, Metro 25 officials unveiled two new marketing programs which, in line with the gathering's ``bottom line'' theme, are intended to help members improve their profitability. These included:
Diagnosis M25, a computer-aided program for increasing automotive service sales by following the parts replacement cycles suggested by vehicle manufacturers; and
wwwPassport Inc., a new membership service to assist dealers in setting up and maintaining their own Internet addresses, from helping to design the individualized home pages to maintaining these electronic ``Yellow Pages'' on a per-month basis.
Mr. Rao predicted that one-third of all retail business will be done via electronic media such as the interactive kiosks frequently seen today in shopping malls and other heavily populated areas.
In recent years, Metro 25 has pioneered a number of new marketing concepts including:
Introduction in 1992 of a lifetime treadlife and road hazard warranty on the group's top-of-the-line, National XT 6000 radial, providing free replacement if the tire wears out or is damaged, and promoted as ``the tire for the life of your car;''
``Tires in 25 minutes,'' a program launched in 1993 and still one of the most effective marketing tools offered by the cooperative, in Mr. Rao's opinion. If tire installation takes more time than that, car owners are given one ``Metro buck'' for every minute the job runs over the time limit;
Increasing profitability at the lower-priced end of a typical dealer's passenger tire line-up by suggesting the use of ``remanufactured'' radials rather than in-expensive new tires. The coopera-tive makes both Achievor-and Colway-brand high performance retreads available to members.
Being the first in the industry to recommend leasing rather than employing a dealership's workers, thereby letting the employment agency function as the ``employer of record'' in order to reduce insurance costs and free the dealer from burdensome paperwork.
Sterling Heights, Ill.-based Simplified Employment Services, which specializes in such leasing plans, has become one of Metro 25's most important suppliers, contributing nearly 72 percent of the rebate funds disbursed at the Orlando meeting.
Mr. Rao estimated that nearly half of Metro 25's dealer members, including his own Michigan-based Rao Group, lease rather than hire their employees.
Dealer Dave Ricketts, left, of Valley Tire In Flint, Mich., receives his profit-sharing check from Metro 25 Vice President Fred Censullo.