ERLANGER, Ky. (March 21, 2002)—Why beat on them when you can buy 'em?
That may be the unspoken philosophy of Bob Sumerel Tire Co. when it comes to dealing with some competitors. The Erlanger-based commercial dealership has been conducting what might be depicted as a quiet, unassuming “stealth” campaign to gain market share and improve services to its customers.
After working on putting together a deal since the first quarter of 2001, last fall Bob Sumerel Tire finally acquired Central Ohio Bandag, which operated a retreading plant and retail/commercial outlet in Zanesville, Ohio, and commercial locations in Delaware and Newark, Ohio.
Persistence apparently paid off.
“They were one of our biggest competitors in that area,” said Todd Sumerel, president of Bob Sumerel's Commercial Tire Group. “We're now working together, and it's helping us be a lot more efficient….”
As far as he knows, Central Ohio Bandag wasn't officially up for sale. But Bob Sumerel Tire “kind of explored the possibility of a sale with them” and eventually made an offer, he told Tire Business. “It was something we'd been strategically looking at for some time, so we proactively pursued it.” He described the purchase as “a shot in the dark that didn't happen overnight.”
Central Ohio's former owner, Dick Weaggley, had requested that, as part of the deal, Bob Sumerel Tire retain two longtime employees, Wayne Anderson and Steve Dickerson, who ran the firm for some 30 years. Mr. Sumerel said they now are minority partners in the dealership with what he called a “substantial” stake.
The Zanesville retread plant produces about 175-200 medium truck tires per day, but has a capacity of up to 300. Mr. Sumerel said that output might be reached sometime soon—“hopefully, if we do our job.”
He would not disclose a purchase price due to a confidentiality clause, but said the dealership was pulling down about $12 million in total annual sales.
Last June, while Bob Sumerel Tire was hammering out details for acquiring Central Ohio Bandag, it took a little side trip to Hamilton, Ohio, outside Cincinnati, to purchase Ken's Tire, a one-location commercial dealership that also does light mechanical work. Mr. Sumerel said the “extremely well-run” operation does mostly truck service work and was “a nice fit for us, bridging a gap we had from Cincinnati to Dayton.” Former owner Ken Herrington stayed on as the location's general manager.
Ken's Tire “really excels in service—and that's the kind of business we're trying to build for this company,” Mr. Sumerel said.
All told, Bob Sumerel Tire operates 10 commercial-only sites—three doing business as Central Ohio Bandag; five retail/commercial sites; five retread plants, and 28 retail-only outlets.
Mr. Sumerel wouldn't comment on whether the company had any other acquisitions pending, but said: “We're always looking for something that strategically makes the right fit. We've been growing a little bit the last few years and trying to take advantage of where things are a good fit for us.”
Meanwhile, the dealership is continuing to experiment with a program it has dubbed Partners in Tire Management (PTM). It's a cost-per-mile tire program for fleets—similar to but on a smaller scale than what's being offered by industry heavyweights such as Bandag Inc. and Michelin North America Inc.
In a typical tire management program, a dealership oversees the tire needs of a fleet, which normally pays for tires and services on a piecemeal, transactional basis. With PTM, Mr. Sumerel said, “we handle everything and charge the fleet a negotiated price per mile, rather than for each piece or product they have. So that way, their variable costs are going up and down in line with their business.”
Bob Sumerel Tire has signed on only one small fleet account for PTM, but continues to talk up the program to other customers. “I think it's a good concept, but right now it may be a little ahead of its time,” he said. “We haven't pushed it really hard, but are using it in certain instances.” Fleets have been slow to embrace it, he admitted.
Programs such as PTM can come with a downside for a dealership that doesn't have a handle on its operating expenses. “You need to continually keep on top of your game,” he said, “or you can get behind the eight ball real quick. If you don't really know the fleet and your customers well, you can get behind in costs.” Then, what initially looked good on paper can turn into a money-loser for the dealer.
Mr. Sumerel said his company would like to expand PTM “in baby steps,” and will continue to experiment with it.