AKRON (March 29, 2000)—All tires sold in the commercial tire market may be round and black, but that´s where the similarity ends in the way the big three tire manufacturers and Bandag Inc. run their company-owned stores.
Goodyear, for example, has 145 company-owned commercial tire locations and 73 retread plants in the U.S. They serve as the company´s launch pad for programs that eventually become available to Goodyear´s independent commercial dealerships.
Bridgestone/Firestone Inc. operates a comparable number of outlets in the U.S., organized as four different commercial dealerships: GCR Truck Tire Centers (58 stores and 18 retread plants), Cobre Tire (28 locations), Bridgestone/Firestone Commercial & Farm Tire Centers (42 locations) and Webco Tire and Wheel (15 locations).
The product mix in each unit is focused on a distinct niche—truck tires, agricultural, forestry or off-the-road—but the outlets also provide sales and service in other product lines as needed in their market areas.
Michelin North America Inc. entered the business in a big way last year when it purchased Akron-based Tire Centers Inc., which had ranked as the No. 1 independent commercial dealership for most of the past decade. Now known as Tire Centers L.L.C., the company operates 159 commercial locations and 15 retread plants nationwide.
Bandag Inc., the nation´s largest retread systedms supplier, also has a big role in the commercial tire market with its Tire Distribution Systems Inc. dealership (97 commercial locations and 43 retread plants).
So, how effective were each of these operations in 1999, and what success will they have this year?
Goodyear´s company-owned stores are the "role model" for the company´s Truckwise commercial service network, said Rick Howell, general sales and operations manager for commercial tire service centers. Goodyear´s U.S. company-owned stores and retread plants generated $503 million in sales in 1999, and Mr. Howell projects a 5- to 8-percent increase for 2000.
The company has focused on a major facet of its business in its company-owned stores in each of the last three years, Mr. Howell said.
In 1998, powder-coated wheels were emphasized, and last year, "we spent a lot of money in our retread plants for productivity improvements (and) efficiency improvements," Mr. Howell said. Recently, Goodyear began to market its retreading system under the Next-Tred name.
Last year, the company also spent a lot of time "integrating and transitioning the Brad Ragan group into our company-owned locations," he said. Most of the 40-plus Brad Ragan sites continue to operate under that banner, but they eventually will adopt Goodyear signage, a spokesman said.
This year, Goodyear plans to upgrade all its commercial tire locations to the ISO 9002 quality standard. The program began in February, Mr. Howell said, and about 20 stores per month will go through the program, with all stores meeting the standard by November.
"We will be the first tire service organization to have that (ISO 9002) implemented across the country," he said.
National accounts represent about 45 percent of the stores´ sales, Mr. Howell said, and he expects that to increase to 50 to 55 percent of sales in the next year. "We plan on not only maintaining that business," he said, "but getting stronger at it through the efforts of Truckwise and Next-Tred."
Mr. Howell said recruiting and retaining employees have become more centralized, and Goodyear may seek help from outside consultants to deal with this industrywide problem.
There are no definite plans for Goodyear´s commercial stores to emulate the three-brand strategy—Goodyear, Dunlop and Kelly—put in place in the consumer retail stores following last year´s alliance between Goodyear and Sumitomo Rubber Industries Ltd., Mr. Howell said. "But, over time, we will be part of that integration and brand strategy," he said.
Last year, Goodyear´s subsidiary in Canada sold controlling interest in 10 commercial outlets and two retread plants to independent dealers in Ontario and Alberta.
However, Goodyear Canada Inc. plans on retaining 13 commercial centers and seven retread plants in Quebec, New Brunswick and Nova Scotia.
"We didn´t have the dealer base to transfer them to," said Rick Houle, vice president of Goodyear Canada´s eastern region.
In addition, Goodyear Canada is a minority partner in three leading players in Canada´s commercial tire business: Fountain Tire of Edmonton, Alberta; Beverly Group Ltd. of Oshawa, Ontario; and Coast Tire & Auto Service Ltd. of Saint Johns, New Brunswick. These three dealerships combined operate more than 90 outlets and account for more than $90 million in annual sales.
"When we talk about our commercial businesses, we really have four," said John Lampe, president of Bridgestone/Firestone Tire Sales Co. "All four report to different organizations."
Mr. Lampe explained that GCR´s main focus is medium truck tire sales, especially fleets, but GCR also sells farm and off-the-road tires. It reports to Bridgestone/Firestone Truck Tire Sales Co.
Cobre Tire, purchased by BFS in 1997, emphasizes OTR sales and is under Bridgestone/Firestone Off Road Tire Co.
Webco Tire and Wheel, based in Jacksonville, Fla., serves the forestry and agricultural markets and is part of Firestone Agricultural Tire Co.
The BFS Commercial & Farm Tire Centers (CFTC) focus on light truck and consumer tires and service in rural areas. They are part of BFS´ retail division.
"We took those retail stores (CFTC) and we changed their focus from strictly retail," Mr. Lampe said, charging them also with servicing commercial-type accounts in their area—farm, truck and off-the-highway.
Sales for Cobre Tire were $132 million in 1999, but BFS declined to provide sales figures for the other three units.
When asked to provide sales goals for 2000, Mr. Lampe didn´t provide any specific figures. "We have a target of 1 percent market share increase year-to-year in our businesses," he said, adding these units are expected to grow along those same lines.
Mr. Lampe acknowledged that there might be advantages to combining these outlets and putting them under a single name. "We think about it all the time," he said, "and we weigh the pluses and minuses.
"But our concern," Mr. Lampe added, "is that they might lose their individual focuses."
Mr. Lampe said a few of the Cobre and GCR locations have switched names to meet local market needs better, and the different units cross-promote each others´ 24-hour road services and assist servicing each others´ accounts when the geography calls for it.
Retreading is an important part of BFS´s commercial business, Mr. Lampe said, adding there is nothing "on the drawing board" as far as going to a single retreading system. "We have a great relationship with Bandag, we feel, and with Oliver (Retreading Systems Inc.)," he said, "and the relationships continue now that Oliver is part of Cooper (Tire & Rubber Co.)´´
In Canada, BFS operates 46 locations and nine retread plants under the Crown Tire, Pardy´s Tyre and CTR Tire Service Ltd. banners, primarily in Quebec, and the Atlantic Provinces.
In January, Michelin made its first addition to TCI with the purchase of Stringer Tire, with seven locations and a retread plant in Florida and Georgia.
TCI reported sales of $562 million in 1999 and projects a 15.7-percent increase to $650 million this year. Part of that increase will be due to the addition of Stringer Tire, which had sales of about $42 million.
Tire Business sought to interview TCI president Scott Snyder for additional information for this story, but Michelin declined the request.
Tire Distribution Systems posted sales of $393.1 million last year, an increase of 4.4 percent over 1998, but the Bandag unit fell $2.51 million into the red on a pre-tax basis after posting $2.52 million in earnings in 1998.
In a press release on the the company´s results, Bandag Chairman and CEO Martin G. Carver blamed the loss on costs associated with certain acquisitions, the consolidation of certain operations and the implementation of common operating systems throughout the TDS organization.
While these affected 1999 results negatively, he said, they "should provide a basis for future profitability improvements."
The growth in sales by TDS was due entirely to added business from acquired stores, Mr. Carver said. Without the additional locations—net growth of eight commercial outlets and one retread plant—TDS´ sales would have dropped 2 percent, Mr. Carver said, primarily due to the discontinued sale of certain OTR tires.
Growth included the purchases of Perdue Tire Inc. in Newark, Calif.—four outlets and one retread plant—Downey Tire Co. of Santa Rosa, Calif., and a White Tire Distributors Inc. location in Nashville, Tenn.
At year-end 1999, TDS counted 97 commercial tire outlets, 10 retail stores and 43 retread plants. Through Sept. 30, Bandag had spent $4.36 million during 1999 on dealer acquisitions, according to the company´s filings with the Securities and Exchange Commission.
"TDS continued to refine its focus on serving commercial fleet customers by expanding service capabilities and upgrading service facilities," Mr. Carver said in the press release.
TDS officials declined to comment further on the unit´s performance.
Tire Business Staff Reporter Bruce Davis contributed to this report. ©