SAN JUAN, Puerto Rico—If patience truly is a virtue, heaven knows there must be some saintly Continental General Tire dealers out there. At the company's annual dealer meeting, Jan. 8-12, dealers listened to company executives present reports even they admitted, at times, sounded similar to what they've told dealers over the past three years.
Many dealers simply wanted to know whether they'd be able to get more tires in '97.
With apologies to Charles Dickens, it was a meeting covering some of the best of times for Continental General Tire Inc. (CGT), and the worst of times.
That longtime nemesis, quality problems? History. But supplying the right products to dealers at the right time? Well, that's an ongoing problem not unique to just CGT, but to most other tire manufacturers, as well. It is a dilemma being addressed, Conti General officials vowed, and should be solved. Hopefully soon. Your patience is appreciated.
CGT's commercial tire division is running at full capacity, highly profitable and sold out, reported Thomas J. Reese, CGT executive vice president, who seems like a miracle worker to some, even though that once-floundering unit also has experienced problems supplying customers.
Meanwhile, the passenger/light truck (P/LT) division—referred to at one point by its leader, CGT President Bernd Frangenberg, as ``our poor little child''—eked out a modest profit of 2 percent of net sales for the first time in 1996. But it ``is still struggling,'' he said.
That news was no surprise to the approximately 630 dealers and their spouses who attended the meeting—held an hour's drive outside San Juan at a plush cliffside resort/casino overlooking the azure waters where the Caribbean Sea and Atlantic Ocean meet. The meeting's theme was ``Setting Sales for Tomorrow.''
But perhaps tomorrow is too late for some things. Not-so-privately, many dealers griped that they want more product. Now.
Ironically, company officials alluded to problems with their new, high-tech order entry system as a contributing factor to fill-rate problems.
The meeting exhibited the openness typified by Mr. Frangenberg's administration, in which company officials have often admitted fault and dispensed solutions, rather than trailer-loads of excuses.
At an informal breakfast, for example, Mr. Frangenberg was told by a dealer that in spite of an extremely professional and helpful staff, the company's Buyline product ordering program was falling down on the job. In response, the executive admitted he had underestimated the training needed to integrate all CGT's systems to guarantee more fluent operations.
Strategic issues facing P/LT, he said, are two-fold: Problems exacerbated by a huge loss of business at Sam's Club, formerly CGT's largest customer; and puzzling difficulties within the tire maker's Mayfield, Ky., plant, where he said the cost structure and competitive level ``is not up to those of all our other plants,'' despite use of all the same technologies and specifications.
``It's a problem we can't tolerate any more,'' and it will be addressed this year, he told TIRE BUSINESS in a separate interview, hinting at upcoming labor contract negotiations this October.
There was a bright side to P/LT's woes, however. Growth in dealer business last year helped compensate for the loss of sales at Sam's, he said. CGT also made gains on the original equipment side, in market share and mix.
For P/LT to be profitable, he said, cost management must continue, while the business must grow. He was confident the recent split of P/LT into separate OE and replacement units would help.
But the company is banking heavily on what Mr. Frangenberg called a dramatic change for CGT: from a functional organization concerned with manufacturing efficiency to a process-oriented one focused more on customer service.
Simply put, employees will have more responsibilities, across various functions, all dedicated to bet-ter serving customers.
``You want to grow your business,'' he told dealers. ``We want your business, but we need to earn it'' by providing the services to get that business.
In that same vein, Tom Bruning, director of replacement sales, conceded: ``Frankly, we've recently been falling down in the customer service category, not being able to get you the tires you need when you need them.''
In order to maximize customer value, he explained, CGT's goal is to interlock its sales, telemarketing, production scheduling, deployment, warehousing, distribution and transportation units, physically moving them away from separate departments and into one area of the company's Charlotte, N.C., headquarters.
Sales regions have been reduced from four to two. With more decision-making responsibilities given to field reps, they will do more than just make sales calls, Mr. Bruning promised, becoming a dealer's ``business partner.''
After scrutinizing its total order cycle time—from order entry to customer delivery—Jim Rippy, senior vice president OE, manufacturing quality and operations, said improvements of from 10 to 40 percent across the board were made in 1996 and will continue.
CGT also is simplifying its manufacturing processes, reported Sonny Litz, director of marketing and administration, by incorporating common carcass and quick mold-change technologies, ``allowing us to be more flexible in our production operations, which will mean improved response'' to dealers' needs.
While the tire maker will replace all its major product lines by 2000, by this June it will introduce new AmeriÃTour GT and Conti Touring Contact CT85 tires with 80,000-mile treadwear warranties, Mr. Litz said.
On the commercial side, a confident Mr. Reese traced his division's dramatic turnaround in 1995, adding that 1996 was a ``coming out party—we rang the bell, and rang it again and again and again.''
Today, the division is profitable and supporting itself, while only a few years ago, he said, ``we were hemorrhaging cash.''
CGT will infuse $2 million in capital into its Bryan, Ohio, plant, and spend an additional $10 mil-lion on equipment for its Mount Vernon, Ill., truck tire plant. Also under consideration are plans to expand Mount Vernon. ``If we can increase production there,'' he said, ``we can get you more tires.''
Progress has come on the heels of the debut of new steer tires last year that, according to Mr. Reese, were the ``most successful radial truck production launch in the company's history.''
To enhance brand recognition for its truck tires, CGT will introduce new point-of-sale (POS) displays this year, as well as cover 50 of its delivery trailers with messages, such as: ``Continental General—proudly serving the trucking industry for 75 years.''
Of the unit's top 30 commercial dealers, all but two showed increases last year, Mr. Reese said, admitting, ``one was our fault; the other lost a state contract.''
``With `quality, value and performance' as our umbrella,'' he affirmed, the division ``will put continued emphasis on customer service'' via ``no-nonsense programs'' that will include CGT-paid visits for dealers to its Mount Vernon Technical and Bryan facilities.
But with all the hoopla about the commercial division, Conti General's retail dealers also found a number of things to which they can look forward.
Laced with promises of quicker order response and more supply, dealers heard Dennis DeLeonard, recently named director of business development and marketing, outline several new wrinkles meant to benefit CGT's fledgling associate dealer program.
This spring, the tire maker will kick off what it's calling a ``global'' ad campaign, airing 12 weeks of ``image-building,'' 30-second commercials.
New POS materials also will be forthcoming to help increase dealers' in-store traffic.
Sports page ads will no longer ``drive our business,'' he added, citing mushrooming interest in the Internet, which is ``quickly replacing the family TV hour.''
Mr. DeLeonard said CGT will continue to improve and expand its ``home page'' on the World Wide Web and will now offer links to dealers' home pages. Playing Johnny-come-lately to other major tire makers, CGT soon will establish a private intranet for its dealers, accessible via a special password.
There, they may access the company's ad planning services, see which ads and spots are scheduled to run in their market, and even sample commercials. They may also electronically order tires, POS materials, and monitor availability of product and shipping schedules, among other things.
Via a new program, ``Partnership Plus. . . Added Value,'' Mr. DeLeonard said CGT is offering dealers store-site, trade-area analyses using its proprietary computer data base system called I-MAP—which stands for ``Individual Market Analysis Profile.''
It can define who a dealer's customers are, where they shop, what they buy, how far they go to shop and where they are located.
Mr. DeLeonard also said CGT will help its wholesalers and distributors develop associate dealer programs that will include innovative retail support programs.
Help will come in the form of associate dealer benefits such as Yellow Pages and credit card programs; government and national account business; signage; training; motivation contests; inventory selection; and Internet connection.
That's all fine and dandy, noted several dealers, but as one put it: ``It doesn't mean a thing if I can't get the tires.''
Maybe he can take some consolation in the pledge Chris Dickson, vice president, replacement sales and marketing, made to dealers: ``We have a growing appreciation for the problems in your marketplace and we've become so customer oriented that we're gonna knock your eyes out!''