CHARLOTTE, N.C.—Don't look for Continental General Tire to follow the example of other manufacturers that see their future in the commercial tire market tied to cradle-to-grave services such as fleet inspections, retreading and scrap tire disposal. Questioned on the subject by phone, Thomas J. Reese, executive vice president of CGT's commercial tire division, said the unit has been getting along just fine without trying to turn itself into a single-source purveyor of new and retreaded tires or taking on the tire maintenance duties of national account customers, as some competitors have done.
Mr. Reese said the Charlotte-based unit in 1998 enjoyed its fourth consecutive year of record sales and earnings—CGT truck tire sales grew more than 6 percent last year to $368 million—and just completed its ``best first quarter ever.''
Part of the division's appeal as a supplier to commercial tire dealers, Mr. Reese believes, is that it offers an alternative to the cradle-to-grave programs of competitors such as Goodyear and Michelin Americas Truck Tires.
``It's difficult for a dealer to go cradle to grave with one supplier,'' he said. As a result, many dealers don't want a single supplier for everything from new tires to retreading equipment and supplies.
Commercial tire dealers have discovered that the company's product performs equally ``with the best of the best''—while generating greater profits, he added.
He said the division serves about 150 commercial tire dealerships in all, with about 50 of these companies purchasing 65 to 70 percent of CGT's annual truck tire volume. Nine of the 30 largest commercial tire dealerships in North America, as ranked by Tire Business, list General as one of their brands.
Meanwhile, the company's share of the replacement market for radial truck tires also is on the rise, Mr. Reese said. In the months to come, he said, the commercial tire division will be striving to push its present 7-percent-plus market share to 10 percent. A key element in this effort will be the new-found availability of up to 450,000 additional production units at CGT's Mount Vernon, Ill., truck tire plant.
Some 250,000 of these units are the result of $50 million the company has spent to date on expanding the facility—an undertaking which is running well ahead of schedule.
The remaining portion of the anticipated increase in unit availability, he said, will result from transferring existing production of 19.5-inch, all-steel radials from CGT's Mount Vernon plant to the Stoecken, Germany, facility operated by CGT's parent company, Continental A.G. CGT has been a major supplier of such tires to Ford Motor Co.'s Super Duty F Series truck, a company spokesman said.
Meanwhile, CGT's commercial tire division is retooling its Bryan, Ohio, off-the-road tire plant to introduce radial production there. CGT currently dominates the domestic replacement market for bias-ply OTR tires, Mr. Reese said, holding about 30 percent of that market. Adding radial production to the plant was undertaken in direct response to dealer requests for radials to complement the existing bias tire line, he said.
Initially, the plant will turn out 12 sizes of OTR radials, effectively covering approximately 70 percent of the market. Dealers will see availability of the first radial OTR tires either late this year or early in 2000, Mr. Reese said.
Currently, the division has been turning its inventory 11 times a year—a happy situation from a profit standpoint but not necessarily for dealers wanting timely delivery of their tire orders.
Virtually all production capacity at both the Mount Vernon and Bryan plants has been completely sold out for two years. And most of the plants' new additional capacity already has been allocated as well. So despite these expansions, the division may have to settle for turning its inventory as many as 10 times a year due to the popularity of the product, Mr. Reese said.