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Published on September 15, 1997

RETREAD BATTLEGROUND

Michelin North America's announcement that it will begin offering retreading franchises to its independent tire dealerships is shaking up the commercial truck tire business. With a brief press release Sept. 9, the Greenville, S.C.-based tire maker set the stage for its attempt to grab a bigger slice of the U.S. medium truck tire market by going after the retreading side of the business.

Already the move has resulted in one surprising development, Michelin's cancellation of an estimated $80 million worth of sales to five of North America's largest commercial tire dealership's, after these concerns agreed to sell out to retread rival Bandag Inc. Michelin said it doesn't want to do business with a competitor.

Now all eyes are on rival Bridgestone/Firestone Inc., the dealerships' other main new-tire supplier, which stands to gain much, if not all of the business being relinquished by Michelin.

Michelin's move raises a number of questions:

How fast will it roll out its franchise program?

Will BFS follow Michelin's lead and announce an aggressive retreading effort of its own? With Goodyear firmly entrenched in the retreading arena and Michelin ready to follow suit, can BFS afford to stay away for long?

What about market leader Bandag? How will it respond to Michelin's attempt to provide, as it put it, ``a more competitive alternative for dealers than existing retreader products, processes and programs?''

Where does this leave smaller retread equipment and tread rubber suppliers? How will they and their dealer customers compete against these behemoths?

Will competition cause the major tire makers to adopt franchise policies assuring them control of their own products from cradle to grave?

What limitations, if any, will these tire makers put on their retread franchises in regard to the use of their proprietary processes and tread designs?

The questions are many and the stakes high. The next few months will be exciting for the normally tranquil retreading industry.

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