AKRON (Oct. 6, 2000) — Goodyear and Treadco Inc.´s plan to form a commercial tire joint venture has left Goodyear dealers asking a now common question in the tire industry: "Will I be competing with my supplier?"
That issue is still one of many details Goodyear will address after the joint-venture company—Wingfoot Commercial Tire Systems L.L.C.—receives Federal Trade Commission approval and begins operating Oct. 31, a company spokesman said.
Nevertheless, Wingfoot is on the mind of dealers—even though they´re not certain how the venture will impact their businesses. Many, like Lawnie Bailey, executive vice president of Daniels Tire Service in Santa Fe Springs, Calif., don´t know what to think and are waiting for more information from Goodyear.
"We´re disappointed in the Goodyear corporate strategy of going from a strategy of a partnership with a dealership to their newest strategy, which is taking product directly to an end user," Mr. Bailey said. "We had preferred to partner with them and try to develop the market jointly."
Daniels Tire is a Truckwise dealership with five commercial outlets, a retread plant and 11 retail outlets. Three Treadco outlets—in Ontario, San Diego and Walnut—compete with Daniels Tire for the Southern California market.
"We´re certainly concerned about how they´ll go to market, how they´ll take their product to market here in Southern California," Mr. Bailey said. "There are two ways of going: either by selling quality and the lowest cost per mile, or they´ll reduce their gross margin and wholesale the product. That´s a concern to us."
Mr. Bailey acknowledged he´d consider buying those Treadco locations if Goodyear gives him that option. For now, expansion plans for his dealership are on hold until he hears more from Goodyear.
Henry Cantrell of Moore´s Retread & Tire Co. operates a 21,000-sq.-ft. Goodyear retread plant in Springdale, Ark., with a Treadco outlet located only two miles away. But Mr. Cantrell, the dealership´s chairman and president, is confident Goodyear will arrange to close that outlet, since it doesn´t make sense to have two retreaders affiliated with the same company in a small town.
"Goodyear was built on its dealers," Mr. Cantrell told Tire Business. "It certainly wasn´t built on its company outlets. I just don´t think that the powers that be are going to do something that´s going to adversely affect dealers."
Shortly before Goodyear announced the joint venture with Treadco, John Polhemus, president of North American Tire, visited with Mr. Cantrell at his dealership´s Shreveport, La., headquarters.
Mr. Cantrell admitted that he had some reservations about the deal at first, but felt more at ease after talking with Mr. Polhemus, who pledged to discuss Moore´s interests further after Wingfoot is operating.
"I don´t think it´s going to do us any good to get up in arms about this thing," Mr. Cantrell said. "It´s to Goodyear´s advantage to work everything out on a comfortable basis rather than everybody getting all upset about it."
A Goodyear dealership since 1983, Moore´s—which posts annual sales of $25 million—operates Truckwise tire centers in Dallas and Houston, as well as in Springdale, and a retread shop in Dallas.
Treadco also has locations in the Dallas/Fort Worth area, but Mr. Cantrell isn´t concerned about Wingfoot in such a large market.
Another dealership whose outlets currently compete with Treadco´s in Missouri, Kentucky and Nevada is Potosi, Mo.-based Purcell Tire & Rubber Co.—Goodyear´s largest U.S. independent commercial dealership, based on 1999 commercial sales of $115 million.
Purcell isn´t certain at this point how Wingfoot will affect its business and will wait to see what happens, Executive Vice President Dennis Flynn said. He admitted the company was shocked by the news, but declined to comment further.
The Goodyear spokesman said the company will make arrangements for dealers who face direct competition from the new Wingfoot operation and "might have to work out a creative solution to make everyone happy," but he declined to elaborate.
"The key is that no one gets hurt and no one loses any market share because of this arrangement," the spokesman said.
Still, dealers like Amanda Heintschel, a co-owner of Heintschel Tire & Service Inc. in Texarkana, Ark., may not yet know how Wingfoot will impact them but are determined not to let it have a negative effect.
"We are giving our damnedest to let it affect us as little as possible financially," Ms. Heintschel said.
Heintschel Tire operates three locations in Texarkana—one commercial, one retail and a retread plant—and posts $15 million in annual sales. Ms. Heintschel said she thinks Goodyear is the best retread process and is proud to be a Goodyear commercial dealer, but she wouldn´t rule out the possibility of changing tire and retread suppliers if Wingfoot invaded her market.
"When it comes to survival, we have to make the same choices as Goodyear and anyone else. We have to do what it takes to pay the bills, survive and keep the company going," she said
Ms. Heintschel noted that Goodyear looked out for its bottom line when the tire maker placed its retail tire lines in Sears, Sam´s Club and Wal-Mart stores—much to the chagrin of most Goodyear retailers. She said the company is doing the same by combining with Treadco in the commercial business, and dealers should look out for themselves.
"What Goodyear does, they will do what will best benefit Goodyear. And dealers have to do what best benefits dealers, be it taking on additional lines or whatever," she said.