PHOENIX-Fletcher's Cobre Tire has been aggressively gobbling up independent commercial/retread operations during the past year as it builds what CEO Jerry Fletcher calls a ``national service organization.'' Since January 1995, Phoenix-based Cobre Tire has made five major dealership purchases, including three this year, in its quest to service the tire needs of the nation's large earthmoving and truck tire customers.
These acquisitions include:
Forsyth Tire Centers Inc., Winston-Salem, N.C., in February 1996, which operated a single, Bandag retread plant. Cobre Tire has closed that shop and moved the equipment to an existing facility in Kernersville, N.C.;
Edwards-Warren Tire Co., Conyers, Ga., one of the nation's largest off-the-road retreaders with 15 service centers scattered throughout the Southeast, in January 1996;
Three B Tire Co. Inc., Torrance, Calif., also in January, which operates two truck tire retread plants and commercial centers in Commerce and Fontana, Calif., as well as a commercial center in Torrance;
McGrew Tire, Holden, W.Va., in June 1995, with four locations servicing the mining business of West Virginia; and
Mennco Tire, Knoxville, Tenn., in January 1995, a smaller dealership serving the mining industry in Tennessee and Kentucky.
Mennco and McGrew now operate under the Cobre Tire banner. The others will be renamed later.
With these additions, Cobre Tire's roster of locations includes: 40 retail tire stores in Arizona; 45 commercial outlets in six western states, as well as Georgia, North and South Carolina, Kentucky and Tennessee; one OTR and six truck tire retread plants.
The dealership also expects to finalize, in June, the purchase of Capital Tire & Fleet Service Inc., from owner Steve McCauley, which operates a single commercial and OTR dealership in Sterling, Va. Mid-Atlantic Retreading, also owned by Mr. McCauley, is not part of the transaction.
In its acquisitions, Cobre Tire encourages the principals to remain with the company.
``The companies we acquire are profitable and have good, solid management in place, and we want them to stay there,'' Mr. Fletcher explained.
Of the most recent acquisitions, Edwards-Warren owner Larry Duckett has joined Cobre Tire as president of his former company. So have Three B Tire's former owners, Robert E. Barron, Brent Barron Jr. and Robert Barron Jr. McGrew Tire's Roger McGrew and Charlie Roberts of Mennco also have taken positions with Cobre Tire, while the former owner of Forsyth Tire has retired.
Mr. McCauley also will be retained, once that deal is finalized, Mr. Fletcher said.
Mr. Fletcher sees Cobre Tire as unique among U.S. independent tire dealerships in that it is in a position to create a national service organization for the mining/OTR and truck tire markets.
``We're unique to have people specializing in these industries,'' he said.
The company also is well positioned geographically. With outlets in the west and southeast, Cobre Tire can service 80 percent of the major mines in the country, he said. In truck, the coverage is 50 percent.
``If you look at the other large dealerships, they are all locked in on one product,'' he said. ``We really have the ability to match up well with whatever opportunity creates itself in the U.S.''
While Mr. Fletcher envisions opportunities in the retail tire segment, it is the OTR and truck tire markets that capture his attention. These businesses ``are changing faster than anyone anticipated,'' he said.
He cited the trucking industry, which is undergoing consolidation. Today, 5 percent of the fleets in the U.S. control 50 percent of the wheel positions. ``We're trying to react to that customer base,'' he said.
As part of that effort, Cobre Tire switched from using the Oliver Rubber Co. retreading process to that of rival Bandag Inc., effective in January.
Over the past two years, Cobre Tire and Three B were two of Oliver's three largest precure customers in terms of tread rubber volume, Mr. Fletcher said.
Although the Oliver system produced a quality product, Bandag offers more support services and more of a national presence, he explained.
The alliance with Bandag will be one of the company's most important over the next 10 years, he believes, as Cobre Tire strengthens its position in the truck tire arena.
Cobre Tire currently is converting its Oliver shops to Bandag. In addition, Cobre Tire has installed a new, three-chamber Bandag shop at the Edwards-Warren facility in Conyers.
The company also is closing its Oliver shop in Casper, Wyo., and replacing it with a Bandag plant in Sheridan, Wyo., which should be in production May 15.
With Cobre Tire already well-positioned to service the U.S. mining industry, Mr. Fletcher will focus his efforts on expanding the company's commercial truck tire and retread presence nationwide.
He currently sees a number of companies that would be a nice strategic fit for the company.
The goal is to build a national service organization with strategic locations where the company can service the larger commercial and earthmover customers.
``We've not achieved that yet,'' he said, ``but we're in the process of going in that direction.''