You can't think of Pirelli without thinking flash.
The Italian tire maker prides itself on high- performance products and cutting-edge technology. But in a way, the company's also about art, heritage and history.
Tire dealers attending Pirelli Tire North America's (PTNA) Partner's Meeting May 14-15 in Milan experienced a bit of both cultures as the Rome, Ga.-based unit of Pirelli S.p.A. unveiled plans to double Pirelli brand sales in North America to $500 million over the next three years.
To announce its intentions, PTNA chose as a venue the 15th century restored villa, La Bicocca degli Arcimboldi, located on the grounds of Pirelli's Bicocca factory complex in Milan.
In a second-floor conference room adorned with classic frescos on the walls, company executives outlined to 50 current and prospective U.S. dealers their strategic plan to exploit Pirelli's high-performance strengths in a market that continues to move more toward that segment.
Then, as if to shock them away from their classical surroundings, dealers were whisked off to the nearby MIRS (Modular Integrated Roboticized System) test factory where they were shown one of the most sophisticated and highly technical tire manufacturing systems in the world.
No longer burdened by its failed 1988 acquisition of the former Armstrong Tire Co., PTNA is regrouping around its high performance roots at a time when ``the market is coming to Pirelli,'' company officials said.
Sales of ultra-high-performance tires are growing rapidly in the U.S.-up 23 percent in 2001 over 2000, they told dealers-leading right to the heart of the Pirelli tire lineup.
With 50 percent of its sales coming from this product category, Pirelli is positioned to take advantage of this trend, they said.
To reach its sales goals, PTNA is counting on securing its first original equipment contracts in the U.S. as well as signing new replacement market distribution.
The company, which resumes management of its North American tire sales and customer service July 1 after ending an arrangement with Cooper Tire & Rubber Co., also intends to increase its share of market with existing dealers, said Guy Mannino, PTNA president.
``This is not a very ambitious plan'' to double sales in the U.S., Canada and Mexico, said Francesco Gori, managing director of Pirelli's tire sector worldwide, considering the company is starting with a zero share of the OEM market.
Currently, PTNA has about 400 dealers and 5,000 points of sale in the U.S. and is focusing all of its replacement sales efforts through the dealer channel. ``We're too small to afford to be in different and conflicting channels of distribution in America,'' Mr. Gori said.
Mr. Mannino said dealers will see more Pirelli tires on vehicles imported to North America as well as from new OE contracts with U.S. auto makers. This will have a positive effect on replacement sales, he predicted.
That point sounded good to Carroll Perry, director of sales and marketing at Colony Tire Corp. who attended the meeting on behalf of his Edenton, N.C.-based dealership. ``We like the product and the technology they bring,'' Mr. Perry said of Pirelli, which his dealership currently sells in its metro stores. ``What we're looking for is more demand for it in our area.''
With many of Colony Tire's 35 retail outlets in rural areas, the company doesn't experience an overwhelming clamor for high-performance tires. ``The OE position Pirelli is trying to obtain will help increase the need for Pirelli tires in our area,'' he said.
And those vehicle contracts could come sooner rather than later, according to Mr. Mannino, who expects Pirelli to secure an OE deal with one of the Big 3 U.S. auto makers by the end of this year, satisfying a goal the tire manufacturer has had for years.
With an expanded retail base and more sales to auto makers, ``the combined effect of this should be an increase in market share,'' he said.
Gaining new OE business is a key part of Pirelli's growth strategy. But in recent years, the tire maker has had to make up for accounts it lost in the mid-1990s in Europe. At the time, it failed to keep up with a market shift by European vehicle makers which began using all-season tires on cars imported to the U.S. rather than summer tires. ``That left us behind, so we had to catch up,'' Mr. Mannino said.
Now with a half million Pirelli tires fitted on European cars coming to the U.S., ``we're pretty much back in volume to where we were in the mid-1990s,'' he said.
That number is likely to double, said Franco Carini, vice president of OE sales for Pirelli worldwide. By 2005, he aims to have 1 million Pirelli tires fitted on new cars imported into and produced in the U.S. annually.
To support the company's replacement and OE efforts, Pirelli is launching a worldwide print advertising campaign that will break in the U.S. in June. Targeted at affluent high-performance and ultra-high-performance customers, the ads will stress Pirelli's position as original equipment on some of the world's finest vehicles. In later versions, the ads may discuss the safety of the company's tires.
This emphasis on safety piqued the interest of tire dealer Dan Clark, who heads up the small Great Lakes Tire Group and owns two tire stores in Michigan-Spartan Tire in Brighton and Tire Warehouse in Orion.
``Safety is very understated'' in terms of tires sales, he said. ``At the retail level, that's the last thing (customers) think about,'' he said. ``We're just pushing tires out there getting the best deal and the best price.''
At Pirelli's test track in Vizzola, Italy, outside of Milan, Mr. Clark saw for himself how Pirelli has raised the bar in terms of high-speed tire safety and handling, getting the chance to test two new tires introduced at the meeting. He and other dealers drove on the new P6 Four Seasons, an all-season high-performance tire offered at both the OE and replacement levels, and the P Zero Nero, a high-performance tire targeted at the fast-growing tuner market. Testing included wet and dry handling as well as high-speed braking.
``Pirelli, as far as I could see, does a fabulous job in research and development in areas that contribute to vehicle safety,'' Mr. Clark said, adding he plans to take on the line in his own stores and will recommend it to the Great Lakes Tire Group.
To bolster Pirelli's quest for greater market share, the tire maker is installing its MIRS technology at a $100 million tire plant under construction at its headquarters in Rome, Ga.
Each MIRS module features six building robots and two transfer robots, which construct tires in a continuous operation. The robots handle the entire production cycle from compounding to finished-product, without human contact and with minimal storage requirements.
Besides automation, MIRS improves product quality, increases plant efficiency, uses less energy and is highly flexible, making the production of one tire per size a practical possibility, Pirelli said when it introduced the technology in July 2000.
It also allows for quicker mold changes, requiring only 20 minutes under MIRS compared with 375 minutes in the conventional Pirelli process.
By the end of the year, Pirelli expects to have three MIRS production modules, each capable of producing 125,000 tires annually, in operation at Rome, company officials said. The production run will consist of HP and UHP passenger and light truck tires as well as run-flat products, with the entire output dedicated to the North American market. The plant has room for 19 MIRS modules, Pirelli executives said, and could be expanded should additional capacity be needed.
``I was very impressed with the plant,'' Colony Tire's Mr. Perry said. ``I've been in a dozen other plants and they seem to have an edge in quality with this MIRS technology.''
Orland Wolford, president and CEO of TBC Corp.'s Tire Kingdom retail chain, based in Riviera Beach, Fla., also was intrigued with the new robotic manufacturing technology, noting ``it puts a lot of consistency in their product.''
PTNA, Mr. Wolford said, ``did a fine job of showing all of the new technology and also of presenting the facts that the V- and Z-rated business is growing rapidly.
``Pirelli has a good name in high performance,'' he continued. ``I'm anxious to talk with them in June about their programs.''