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February 01, 1999 01:00 AM

MICHELIN TO ACCELERATE AG TIRE ROLL-OUT WITH ADS

Bruce Davis
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    GREENVILLE, S.C.—With its farm tire dealer network shaping up according to plan, Michelin North America will step up the pace of its agricultural tire roll-out, starting with a testimonial-based advertising campaign debuting in February. Assuming testimonials are accurate gauges of a firm's performance, Michelin met or exceeded the targets management set forth in the fall of 1997.

    ``They're a breath of fresh air in the ag tire business,'' Chris Owen, president of U.S. Wholesale Tire Inc. in Fulton, Ill., said. ``This program has allowed us, and our dealers, to speak of real profit margins for the first time in a long time.''

    Michelin's expressed goal was to have 2,000 points of sale throughout the U.S., Canada and Mexico by 2000. Without disclosing exact sales or numbers of dealers, Brent Robertson, manager of the agricultural product line, expressed satisfaction that Michelin was on target with its program, and cited two key reasons:

    ``No. 1,'' he said, ``we didn't have a single dealer choose to opt out of the program after the first year; and secondly, we had only three customers return tires to us under our 90-day satisfaction-guaranteed return policy.''

    Michelin farm tires are more expensive to buy—on average about 10 percent more—but the company and its dealers sell the product much like truck tires are sold, on a cost-per-1/32nd basis.

    ``When you figure it out this way,'' Mr. Owen said, ``the cost is about 20-percent less, calculated over the life of the tire.''

    U.S. Wholesale Tire is one of Michelin's key wholesale dealers, and these dealers are entrusted with building the company's network of retailers. U.S. Wholesale covers a large portion of the country's grain belt—all of Iowa and Nebraska and portions of Illinois, Kansas, Minnesota and South Dakota.

    The company has recruited about 75 dealers throughout its territory, and the sales forecast for 1999 is about 9,000 to 10,000 tires, up from 6,000 last year, Mr. Owen said.

    ``Exclusive territories are key to the program,'' Mr. Owen said. ``We are exclusive distributors for our region, and we, in turn, work out exclusive territories for our dealers.

    ``In addition to exclusivity,'' he said, ``this program offers higher profit margins, better warranties and a product that delivers on quality, performance, fuel savings etc.''

    Competitive pricing and exclusive territories also were important issues for OK Tire Stores, in Fargo, N.D., in its decision to add the Michelin program, said Gary Stevens, purchasing agent.

    ``We've been very satisfied with the Michelin program,'' Mr. Stevens said, ``even though we had a tough year in North Dakota, agriculture-wise.'' Heavy rains throughout April and May washed out most farmers' early work and delayed planting by up to six weeks, he explained.

    Mr. Robertson credited key dealers like Mr. Owen for the program's success thus far.

    ``The program is like a three-legged milking stool,'' Mr. Robertson said. ``It won't stand without all of them being strong. Our three legs are an experienced, dedicated field sales staff, a product that performs, and committed, enthusiastic key dealers.''

    Michelin's new advertising campaign—set to run in major farming magazines throughout 1999—will feature testimonials from farmers.

    The first ad shows Dan Freeman, general manger of farming at the Broken O ranch in Augusta, Mont., standing in front of his John Deere 4-wheel-drive tractor in the middle of an open field, saying, ``The Michelins held their ground when the others didn't.'' The ad copy quotes Mr. Freeman describing how the Michelin-equipped Deere was the only one on his ranch that didn't get bogged down during the spring rainy season.

    Regarding product performance, Mr. Robertson said, ``farmers are intelligent; they recognize that lower soil compaction results in higher yields. This aspect is becoming more important as `round-up ready' type seeds become more commonplace.''

    The traction difference of the Michelin product showed up in another way for one of OK Tire's customers: The farmer was able to replace his tractor's triple-tire drive fitment with duals, without losing traction, Mr. Stevens said.

    Michelin will respond to dealer needs and round out its farm-tire program this year, offering both Michelin- and BFG-brand bias-ply implement and steer tires, and specialty tires for irrigation equipment.

    The company has no plans at present for the forestry market, which has very specific performance requirements.

    Michelin still has made no decision about manufacturing farm tires in North America, but Mr. Robertson said the company's extensive investments of the past few years in overall production capacity reflect its readiness to react to local market conditions.

    Similarly, the company is taking a cautious approach to original-equipment contracts, saying it's necessary to have an adequate dealer sales and service network in place first.

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