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June 07, 1999 02:00 AM

GOODYEAR GAINS TWO EX-BANDAG RETREAD SHOPS

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    AKRON—Two retreaders have recently had what you might call ``conversion experiences.'' For different reasons, both switched retreading systems. So on that big balance sheet, score two gains for Goodyear and a like number in the debit column for Bandag Inc.

    Purcell Tire & Rubber Co., among the continent's Top 10 retreaders and commercial dealers, was notified that the Bandag franchisee agreement at its Fenton, Mo., plant near St. Louis would not be renewed. That caused the Potosi, Mo.-based company in April to make a quick over-the-weekend switch of the plant to Goodyear's system.

    The firm operates seven retread plants in six states—two of which are still Bandag shops, the rest Goodyear. A year ago, Purcell bought a Bandag shop in North Las Vegas from Joe Rossi Tires Inc., switching it to Goodyear.

    Meanwhile, last November, ``lifelong'' Goodyear dealership Frasier Tire Service Inc. in Sumter, S.C., switched from Bandag to Big Blue after Goodyear's retreading program made ``better sense for us financially,'' said President and owner Julian Frasier III.

    It was not a matter of being dissatisfied with Bandag's system, products or people, he said. But when his contract was up after seven years as a Bandag franchisee, going with his longtime new-tire supplier was pretty much a given. That's because, along with its retreading system, he signed on to the tire maker's ``Truckwise'' program, a nationwide commercial service network for dealers.

    Picturing South Carolina as a piece of pie, Frasier Tire gobbles up the lower two-thirds of it, he said, with a big part of its business in fleet accounts and road service. It has 50 service trucks.

    The company operates a dozen outlets, nine of which are combination commercial/retail. All handle a full range of tires—overwhelmingly the Goodyear brand plus some Remingtons and Dunlops—from passenger, light and medium truck to farm.

    With Truckwise, Mr. Frasier said his dealership, which sells between 15,000 and 16,000 truck tires annually, can purchase Goodyears for about $8 or $9 apiece cheaper than he had been paying.

    Frasier Tire's sole retread plant, a 20,000-sq.-ft. facility in a semi-rural area about 20 miles outside of Charleston, S.C., produces about 100 retreads daily—some light truck, but the majority medium truck tires.

    The transition to a Goodyear retreading operation was ``easy'' and completed over a weekend with only about four days of down time, Mr. Frasier said, adding that he expects to sell to the same customers as before. ``It's a free market—they deal with Frasier Tire not Bandag. And in our part of the state, we're the only Goodyear retreader.''

    For both Frasier Tire and Purcell, the switchover resulted in an investment in the neighborhood of a half-million dollars, including new equipment, training and other peripherals. In Purcell's case, it was a ``natural transition,'' with the learning curve much quicker since the firm already was a Goodyear retreader.

    Like Frasier, Purcell Tire had no problem with Bandag's ``products or people.'' But the dealership's president, Robert G. Purcell, said the company was notified in writing by Bandag that its 12-year-old franchise agreement for the Fenton plant—which has an average daily capacity of about 100 medium truck tires—would not be renewed.

    However, verbally he was told his Goodyear plants create a problem because Bandag, through its ``Strategic Alliance'' program, is requiring a number of its retreaders to be 100-percent committed to the Bandag process.

    That ``sounds kind of domineering to me,'' Mr. Purcell said.

    Dennis Flynn, Purcell Tire executive vice president who was responsible for coordinating the Fenton plant's switch, added: ``They want 100-percent participation and, of course, we have Goodyear plants and are big in off-the-road retreading. But Bandag is not capable of supplying us with OTR strip rubber.''

    Despite the change, he said Purcell maintained 80 to 90 percent of its national account customers supplied by the Fenton shop. ``That means those Purcell Tire people took care of the customer and did what needed to be done.

    ``That's how you maintain and keep your customers. Then it doesn't matter (what) you're selling—they're going to stay with you.''

    Mr. Purcell said he ``was happy with parts'' of the program from Bandag, which ``controls a very large percentage of the market. But I see that changing. At this time, Bandag has lots of muscle.''

    However, he foresees the industry moving to ``cradle-to-grave'' tire service and he has found in Goodyear a program addressing that as well as other advantages, including training and sales assistance as well as incentives such as Truckwise.

    Nonetheless, the dealership still operates two Bandag shops and Mr. Purcell hasn't made a decision yet on what to do with them. ``Part of it depends on what Bandag does and Goodyear does,'' he said.

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