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Published on August 2, 1999

COOPER PURCHASE RAISES QUESTIONS

Cooper Tire & Rubber Co.'s acquisition of Standard Products Co. is intriguing and exciting, but also raises questions from the independent tire dealer's perspective. The most important of these is: Will this purchase cause Cooper to lose focus on its tire business and change its attitude toward dealers?

The $757 million deal, which is expected to close in the fourth quarter, will boost Cooper's combined revenues to $3.2 billion. But it also will change the company's product mix significantly.

Tires accounted for 77 percent of Cooper's $1.88 billion in sales in 1998, with engineered products making up the rest.

With Standard Products in the fold, however, the sales mix will move closer to 50/50, excluding any additional tire business generated from Cooper's recent alliance with Pirelli S.p.A.

It's not inconceivable that sales of engineered products someday may surpass those of tires.

Should this happen, how would the company's attitude toward independent tire dealers change?

For years, Cooper has been viewed as the dealer's tire manufacturer. The company is well known and respected for its staunch loyalty to dealers. It builds quality tires, sells them at a fair price and emphasizes fast, efficient service.

Just as important, the company has kept the Cooper brand from mass merchandisers and price clubs—both fierce dealer competitors—although some tires built for others are sold through these outlets.

These qualities have endeared Cooper to its dealer base and the company must ensure they are not lost or diminished.

Meanwhile, the Standard Products deal also raises a question about how Oliver Rubber Co. fits into the picture.

Oliver, a Standard Products subsidiary, is one of the nation's largest retread material and equipment suppliers. Acquiring Oliver should allow Cooper to expand its radial truck tire business by offering fleets cradle-to-grave service.

Oliver, like Cooper, has a pro-dealer reputation and should fit nicely into the tire maker's operations.

It will be interesting to see how Cooper exploits this opportunity. The Cooper-Oliver combination could make the company even more attractive to commercial tire buyers and dealers.

The recent deals with Standard Products and Pirelli show that Cooper aims to be a long-term survivor in the tire and engineered products industries.

The company appears well on the way to achieving its goal of becoming a global player in both of these segments.

However, the question remains: Can Cooper keep both businesses strong without sacrificing its support for independent dealers?

You can bet dealers and competitors will be watching.

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