LEAVITTSBURG, Ohio-Denman Tire Corp., in the early stages of merger talks with Fidelity Tire Manufacturing Co., has turned to Mexico's Tornel to supply it with medium/heavy bias-ply truck tires. Leavittsburg-based Denman invested $300,000 in new tire molds for Tornel's use in producing the Denman Express-brand tires in Mexico City, said Jim Pearl, Denman vice president of sales and marketing.
Denman previously purchased the tires from Apollo Tyres Ltd., but the Indian firm recently raised its prices 16 percent, Mr. Pearl said. Tornel already is making 9,000 tires a month for Denman for skid steers, front back hoes and specialty trailers.
Denman will buy about 5,000 more tires a month from Tornel-the same as it was purchasing from Apollo. Imports accounted for 16 percent of Denman's $60 million to $65 million in sales last year, nearly $10 million, he said. The only other units Denman imports besides those currently being made by Tornel are giant off-the-road tires, accounting for less than $500,000 in annual sales.
Denman expects its first shipment of medium truck tires from Tornel in late June, Mr. Pearl said. All Denman tires made by Tornel are sold in the U.S.
The agreement with Tornel eliminates one perk of a potential merger between Denman and Fidelity. The two firms resumed merger discussions in May after suspending talks early last year.
A merger last year would have allowed Fidelity to make the truck tires for Denman. But after the merger talks failed last year, Denman turned to Tornel.
However, other synergies that drove the firms' merger talks in 1994-95 still exist between both companies' predominantly bias-ply tire lines, Mr. Pearl said.
A merger will help Denman meet demand by using excess capacity at Fidelity, as well as help both firms enter new markets.
``I think it would give both of us a chance to sell different products to our respective customer bases,'' said Dennis Terwilliger, president and CEO of Fidelity's parent, Condere Corp. ``Our product lines are complementary; there's very little overlap.''
Nothing's being said about the talks because very little has been discussed so far, Mr. Pearl said.
Mr. Terwilliger said several issues-including the two firms' varying pay scales-have to be worked out and the Rubber Workers union at Fidelity's Natchez, Miss., plant must approve any deal between the two companies.