GREENVILLE, S.C. (Feb. 25, 2000) — Six new Michelin Retread Technologies Inc. franchisees have started production, bringing to 37 the number of retread plants now operating in North America using the Michelin process.
The new plants give MRTI coverage in several key areas, including its first plants along the mid-Atlantic Eastern Seaboard and northern California/Pacific Northwest. With these latest openings, MRTI is close to its initial goal of coast-to-coast coverage, a prerequisite for pursuing business with nationally operating truck fleets.
Of the six companies that opened new plants, five are replacing existing retread systems—four changed from Bandag Inc. and one from Oliver Rubber Co. systems—and one is new to retreading.
MRTI, an operating unit of Michelin North America Inc., said it expects to have 50 MRTI plants operating by year-end 2000.
The latest independent dealers to open MRTI Pre-Mold precure retread facilities are:
* Big L Tire Co. in Harrisonburg, Va.
* Highlands´ Tire & Service in Carlisle, Pa.
* Inter-City Tire & Auto Center in Newark, N.J.
* Meekhof Tire Sales & Service Inc./MTI Retreading Co. in Grand Rapids, Mich.
* Schoettler Tire Inc. in Madera, Calif.
* Superior Tire Service Inc. in Salem, Ore.
In addition, Ziegler Tire Co. in Canton, Ohio, started production at its precure/mold-cure hybrid plant last November, and as reported earlier, Phelps Tire Co. in Seattle converted its Bandag capacity to MRTI late last year.
Of the 37 MRTI plants now in operation, Michelin operates 14 of them itself through its Tire Centers Inc. subsidiary, and Bauer-Built Inc. of Durand, Wis., operates five.
All the new MRTI franchisees have been Michelin new tire dealers for some time, and each said this was a factor in their decisions to convert.
"Michelin is the quality leader in new truck tires, and we felt their retread program is an extension of this," said Dave Schoettler, co-owner of Schoettler Tire Inc. in Madera, Calif., which just happens to be Michelin´s largest truck tire dealership in California.
"We were impressed by Michelin´s commitment to excellence," Mr. Schoettler said, "and it provides us an opportunity for exclusivity."
MRTI´s gain in northern California is Bandag´s loss, since Schoettler Tire had been with Bandag/Vakuum Vulk since 1975 and had become the area´s largest Bandag retreader.
"We had no problems with Bandag," he said, "but we felt the Michelin program offered us more opportunity in the long-term.
"Profit margins in this business have gotten lousy," he said. "We´re hoping the Michelin program will allow us to `create value´ and regenerate some decent profit margins."
Schoettler Tire´s conversion to MRTI coincides with the company´s plan to expand its business coverage area, Mr. Schoettler said. The company recently opened a 30,000-sq.-ft. commercial service outlet in Hayward, marking its entry into the San Francisco bay area market.
The new 56,000-sq.-ft. MRTI plant in Fresno began operating in mid-February with an initial daily capacity of 200 units, Mr. Schoettler said, but can be expanded relatively easily to accommodate new business.
With 10 outlets throughout northern California and the new retread plant, Schoettler Tire expects sales to hit $35 million this year, Mr. Schoettler said.
For Highlands´ Tire in Carlisle, starting up MRTI production in January is the company´s second conversion in the past five years. The company switched to Bandag five years ago from Oliver, then opted for MRTI last year when its Bandag franchise was about to lapse, according to Zane Highlands, owner.
"We´ve had very good acceptance from our customers," Mr. Highlands said of the conversion. "The quality and appearance of the Michelin retread is excellent, and we´re finding the casing rejection rate is actually lower because now we know what´s wrong and can repair more casings with confidence."
Highlands´ spent about $300,000-$400,00 to convert the five-year-old, 30,000-sq.-ft. retreading plant to MRTI specifications, Mr. Highlands said. Start-up capacity of 280 tires a day is a one-quarter jump over the output of the Bandag unit which closed at the end of December.
Highlands´ Tire operates five combined commercial/retail outlets in central Pennsylvania, and has been a Michelin dealer since 1981, Mr. Highlands said. Jesse Keen of local trucking fleet Keen Trucking is a one-third partner in the retread unit, which until recently operated as Heavy Duty Tires.
Meekhof Tire´s switch to MRTI was based in part on frustration with Bandag, Owner Butch Meekhof said. "We were concerned about the lack of support from Bandag, as well as uncertain about the future direction of the company."
The dealership had been a Bandag retreader for the past five years, but had sold Bandag retreads since the early 1970s, he said.
On the plus side, Meekhof Tire has been a Michelin new tire distributor for more than 30 years, Mr. Meekhof said, and the MRTI program is a natural extension of that relationship. The company also sells BFGoodrich truck tires.
Meekhof Tire converted the 20,000-sq.-ft. building that had housed the Bandag operation in early January to MRTI production, losing only about a week of production in the process, Mr. Meekhof said.
Capacity at the plant, which operates as MTI Retreading Co., initially will be about 100 tires a day, he said—roughly the same as the Bandag plant—but output can be doubled relatively easily.
For Big L Tire, "the time had come for us to partner up with a major tire maker," said Terry Bowman, co-owner. "We´ve been a Michelin dealer for many years, and this has been a good partnership for us."
Mr. Bowman cited many aspects of the MRTI program for his decision, including the high-tech approach, the attention to casing inspection, and the ability to use new tire spec rubber and tread patterns.
Big L Tire converted its existing 15,000-sq.-ft. Oliver retread plant in mid-December to MRTI, losing only about a week of production. Capacity initially will be about 65 tires a day, roughly the same as before, he said.
"We had no real complaints with Oliver," Mr. Bowman said, "but we just felt the tie-in to a major was going to be necessary. The customer response has been overwhelming; we had 200 customers at our open house."
Big L Tire sells Michelin, BFG and Bridgestone new truck tires as well as Michelin, BFG and Uniroyal car tires through six stores—five in Virginia and one in West Virginia.
Mr. Bowman shares majority ownership of the company with Randy Nesselrodt; the "L" in Big L stood for Leroy Carr, one of three sons of Ray Carr Sr., who founded the company in the 1970s but sold his interest in 1988 to the present owners.
Superior Tire began MRTI production the first week of February at a new facility in Salem, where the company plans to consolidate its headquarters administration and truck service operations later this year, said Patrick Ryan, project administrator.
The plant is designed with a daily capacity of 260 tires a day, he said, which is an increase of nearly 20 percent over its Bandag operation.
The move to MRTI ended a 33-year relationship with Bandag, Mr. Ryan said, adding that the decision to change was based on the company´s belief it was better in the long run for its customers.