AKRON—Perhaps Jim Parkhouse said it best: ``Those of us who are going to survive are going to get bigger.'' In describing his own situation, Mr. Parkhouse, president and CEO of Parkhouse Tire Inc. in Bell Gardens, Calif., summed up the general direction the commercial tire business appears headed.
Of the 30 companies ranked this year by Tire Business as North America's largest commercial tire dealerships, all but a handful showed sales growth last year over 1997—10 of them registered double-digit increases—and the majority carried out at least one acquisition during the year.
In spite of the overall growth, though, there still were only two independent chains with nationwide or near nationwide coverage—Tire Centers Inc. and Treadco Inc.—although a dozen or so of the largest dealerships have carved out strong regional representation.
This elite national list is now down to one, in light of the recent acquisition of TCI by Michelin North America Inc.
As a result, the Big 3 tire makers—Goodyear, Michelin and Bridgestone/Firestone—plus Bandag Inc. each now have captive distribution systems covering from 100 to 150 outlets, and $300 million to $450 million in sales.
With TCI removed from contention for the honor of largest independent dealership, Treadco and Canada's Kal Tire will vie for the honor in the future, with Les Schwab Tire Centers close behind. Kal Tire appeared to be a shoo-in for the 1998 runner-up title, until the falling Canadian dollar and 40-percent growth by Treadco intervened, boosting Treadco into the No. 2 spot.
There currently are only four independents with annual sales of more than $100 million, but the ranks could swell by two or three in a year or two, based on growth patterns.
The average commercial dealership location turns over about $4 million in sales annually.
The actual sales reported by dealers in this year's survey, however, ranged from about $1 million to more than $8 million per store, reflecting the wide diversity of products and services offered by individual dealers. Business with national accounts represent on average 25 percent of a commercial dealership's sales, according to survey respondents, with a low of 7 percent and a high of 50 percent.
Most dealerships operate between four and six service trucks per store, although the range goes from three to 14 per store.
Retreading is an integral part of being a commercial dealer, based on the survey's data. All 30 of the top dealerships are involved in retreading and, with only two or three exceptions, also rank among the largest 35-40 commercial tire retreaders.
On average, commercial dealerships carry five brands. Michelin and Bridgestone are the predominant, each listed by 24 of the top 30 dealers. Yokohama was named by 15 dealers, just ahead of BFGoodrich and Firestone, with 14 each, and General, with 13. Goodyear is carried by only eight of the top 30.
The amount of goods shipped throughout 1998 by truck, measured in tons, was 10.5-percent higher than in 1997, which in turn was 10.2 percent ahead of 1996, according to American Trucking Associations data. Trucking activity has increased on a monthly comparative basis for 27 consecutive months.
The bustling truck traffic led to record truck tire demand last year, industry sources said. Replacement and original equipment shipments, exports and imports as well as production of new tires and retreads all reached record levels last year.
At the same time, though, truck tire prices registered only minor gains throughout 1998, ending up the year slightly ahead of year-end 1997, but still below the indexed price level of 1990-1996, according to the U.S. Department of Commerce producer price indexes.
Other independent networks of commercial dealers that are not listed among the top 30 dealerships ranked by Tire Business include:
Premier Fleet Services: a network of 19 dealerships with 24 outlets in seven Midwest states and affiliated with Premier Bandag and the wholesale company Zurcher Group.
Northwest Tire Factory Group: the members operate 69 locations that are considered commercial, and report nearly $30 million in combined sales of commercial tire products.
T&W Tire of Oklahoma City, Okla., with five commercial locations and two retread plants.
In terms of nationwide distribution, TravelStops of America Inc. operates 125 truck stops across the U.S. These outlets feature Bridgestone, Firestone and Kelly-Springfield new tires, and recently signed an exclusive deal with Bridgestone's Oncor retreading arm to sell Oncor retreads through the network. The company sells an estimated 200,000 truck tires and retreads a year.