SAN FRANCISCO—Pacific Gas & Electric Co., which provides electricity and natural gas service to northern and central California, is revamping and centralizing the tire program for its fleet of 11,000 vehicles.
PG&E's decision to move from a system of regional tire service contracts to a single companywide supplier could affect many independent tire dealerships—through lost sales of new and retreaded tires. One dealer already affected is Dixon and Son Inc. in Watsonville, Calif.
For each of the last three years, that dealership sold about 200 new tires and 20-30 retreads to three of PG&E's local garages under a regional contract, said owner Dave Dixon, but that contract was not renewed this year.
Dixon and Son opened in 1974, Mr. Dixon said, and the dealership started retreading in 1981. The shop currently is a Bandag Inc. franchised retreader and specializes in construction, agricultural and commercial tires. It has several small fleet accounts and sells Dunlop, Bridgestone and Goodyear tires.
When his contract was not renewed, Mr. Dixon said he called PG&E's corporate office in San Francisco and was told the company would no longer use retreads because "retreads don't save us any money."
PG&E had a real aggressive program to use retreads in 1999, said Kirk Kuzirian, director of fleet services for PG&E. In 1999, PG&E purchased 20,500 new tires and 1,100 retreads—275 more than in 1998—for replacement use on its vehicles.
But since the program to centralize tire service began in January, the company's activities in retreading have slowed, he said.
PG&E has been evaluating the national account services of two tire companies in trial arrangements, Mr. Kuzirian said, but he declined to identify them.
The firm also is converting to centralized billing and electronic processing of tire and other services and standardizing tire maintenance procedures at its 70 garages.
PG&E serves 4.5 million electricity customers and 3.7 million natural gas customers in a service area with a population of 13 million that stretches from Bakersfield, Calif., north to the Oregon border.
In the past, PG&E sought regional contracts for tire service in its seven bulk service areas, Mr. Kuzirian said. But suppliers were more interested in bidding on service contracts for populous areas and less so in more rural areas. This led to wide variations in pricing and the amount of services provided.
For example, PG&E personnel in some garages are responsible for monitoring air pressure on company vehicles, while other garages have outside service providers doing the same thing. Mr. Kuzirian said he would like to change that and have more consistent tire maintenance throughout the firm's service area.
"We're trying to make this (tire maintenance program) system-wide to make sense to suppliers and vendors," he said.