Despite their differences in membership, annual revenues and financial assets, the recent merger of the former Tire Association of North America (TANA) and International Tire & Rubber Association (ITRA) brought together two equally strong organizations, contends Ross Kogel, executive vice president of the Tire Industry Association (TIA).
The long-anticipated merger, which became official in July, ``absolutely was a marriage of equals,'' TIA's chief administrator and spokesperson insisted. Quantitative measures aside, he said, ``What we're really merging are the volunteer efforts of two (formerly) separate organizations. A tremendous amount of the assets of an association aren't included on the financial statement-it's volunteer expertise and labor.
``An active and talented volunteer base always is the most valuable asset of a non-profit group. And ITRA and TANA both had that in spades,'' said Mr. Kogel, who is responsible for integrating the groups' formerly separate operations.
Thanks to TIA's ``open books'' policy, Tire Business was given access to financial details of North America's two largest dealer groups prior to their merger. Comparisons of their respective strengths and weaknesses offer a glimpse into what they brought and are likely to contribute in the future to the newly combined organization.
By at least one quantitative measure, Reston, Va.-based TANA was the larger of the two. Going into the merger, TANA's membership numbered approximately 3,300 companies, whereas the membership of the Louisville, Ky.-based ITRA totaled about 1,800.
Considering that independent tire dealers represent the majority of the members of both groups, perhaps it is not surprising that about 300 companies held memberships in both organizations.
At first glance it might appear the new organization will collect less money now that these companies need pay only one annual membership fee rather than two.
However, the cost of the new organization's dues is higher than what most such companies might have paid in the past, particularly in the case of ITRA's dues. That increase should help offset any shortfall resulting from the former overlap in membership, TIA officials believe.
In an effort to encourage such companies to sign up, TIA this year is ``giving back'' an estimated $700,000 to those facing a cost increase for dues. The association is granting a one-time-only discount of 50 percent off the difference between the former and current annual dues rates.
Membership fees represented a substantial portion of both groups' annual revenues in 2001-35.8 percent in TANA's case and 13.5 percent for ITRA.
Thus it's vital that companies sign up for membership in the new association as soon as possible, Mr. Kogel said. Many of the association's services, such as its lobbying efforts on Capitol Hill, are totally dependent on revenues from dues and other such sources in order to operate.
Approximately 18 are employed at TIA's two facilities in Reston, Va., and Louisville.
To date, seven jobs have been eliminated due to the merger, Mr. Kogel acknowledged. And although unpleasant to carry out, staff reductions were inevitable, Mr. Kogel said.
``The whole point of merging was to create economies of scale,'' he said. No further cuts are planned, he added.
In dollars-and-cents terms, TANA's total revenues of $2.1 million in 2001 were the greater of the two, compared with $1.7 million in ITRA's case.
Operational expenses for the year were roughly the same for the two organizations-averaging out to $1.9 million apiece and leaving ITRA in the red for the second year in a row. ITRA's operational expenses exceeded revenues by $241,270 in 2001 and $317,543 the year before.
Interestingly, ITRA's net asset value at the end of the year still ended up higher-namely $1.96 million compared with $1.6 million in TANA's case. Nevertheless, measuring the two organizations on such a basis can become complicated.
In its last financial statement, for example, ITRA's cash reserves were adversely affected by the stock market's drastic downturn following the Sept. 11 terrorist attacks on New York and Washington.
ITRA's fiscal year, structured from Oct. 1 to Sept. 30 in order to accommodate the association's traditional spring conference schedule, had accountants closing the books on 2001 amid a drastic and costly stock market tumble that lowered the value of the group's investments by $689,506.
Partly as a result, ITRA wound up with net assets down 26.2 percent from those of the year 2000.
One of the most important assets the former ITRA brings to the new organization is its Louisville training and testing center, appraised at $800,000, but likely to be worth more, in Mr. Kogel's view.
Meanwhile, TANA, thanks to a bookkeeping change approved by the Internal Revenue Service, took $685,208 previously listed in a ``non-asset'' insurance trust and placed them in its ``unrestricted net assets'' column for 2001.
That move effectively increased the association's net assets a whopping 85 percent compared with those of the previous year. TANA turned an operating profit of $59,129 in 2001 and $187,337 the year before, according to its ``Consolidated Statements of Activities'' statement, from which all the above figures were derived.
Among the assets brought to the table by TANA was $1.2 million in cash reserves, funds derived from the 1983 sale of the former ``Tires'' building in Washington, D.C., as well as profits from past trade shows.
Conference revenues were the largest source of revenue for ITRA, amounting to $562,229 or 32.9 percent of the group's total revenue from operations in 2001.
In 2002, however, ITRA would be without the benefit of such show revenues, as the association went to an every-other-year schedule for its conference and trade show. The next World Tire Expo is slated for March 27-29, 2003, at the new Louisville Convention Center in the city's downtown area.
For TANA, revenues from its annual convention and trade show in Las Vegas amounted to $325,132 in 2001, while those derived from its mid-winter OTR conference and retread services added $152,868 to the bottom line. Together, funds generated by these two events contributed about 23 percent of the association's operational revenues.
The newly combined association should profit from at least two and possibly three such annual events.
These money-raising events include the International Tire Expo (ITE), traditionally held by TANA each fall in connection with the Specialty Equipment Market Association show in Las Vegas, the (former TANA) OTR Tire Conference in mid-winter and the (former ITRA) World Tire Expo, traditionally a spring event focused on commercial tire sales and service, retreading and scrap tire recycling.
TIA is hoping to generate revenue of $4.4 million for the fiscal year ending June 30, 2003. This amount should be sufficient to cover the group's planned progams and services, officials believe.
The group's membership targets are still under study. But over the long term, TIA would like to sign up every company doing business in the tire industry, according to Mr. Kogel.
Meanwhile, initial emphasis during coming months will be to sign up members of the two former associations.