CULLMAN, Ala. (Oct. 24, 2002) – McGriff Industries Inc., seeking to streamline its commercial tire operations and become more sales and marketing driven, will phase out all its current retreading activities and become a Bandag Inc. franchisee, according to Barry McGriff president and CEO.
Effective Nov. 11, McGriff will take over four Bandag-owned Tire Distribution Systems outlets and one TDS retread plant in Alabama. McGriff also plans to set up a new Bandag-franchised plant in Cullman, and recently added Bridgestone and Firestone to its product offerings.
Terms of the transaction were not disclosed.
As a prelude to the change, McGriff is parting company with Michelin Retread Technologies Inc. (MRTI). McGriff's MRTI franchise in Hartselle, Ala., will lapse Nov. 11 after the two firms were not able to agree on renewal terms and conditions, Michelin North America Inc. said.
McGriff also will phase out its Hawkinson and McGriff Segmented Radial mold cure and Marangoni precure capacity at plants in Cullman and Mobile, Ala., Mr. McGriff said, and eventually seek buyers for the equipment.
Commenting on the reasons for the change, Mr. McGriff said, “Bandag fits best for our company for the future. We realized we had become too manufacturing-driven. This change will streamline us down to one (retreading) process and allow us to become more sales and marketing driven.
“We're elated about the change,” he said. “It's good for us and the customers.” In particular, Mr. McGriff lauded Bandag's various dealer and fleet support programs as positive factors in the decision to make the change.
Mr. McGriff said it was too early to comment on what effect the change will have on sales or capacity, other than to say the capacity will be lower than it is now. In 2001, McGriff averaged 827 medium truck retreads a day at its four plants.
Phasing out the current production will affect about 40 employees' jobs, Mr. McGriff said. The company will assist them in finding new jobs. Some positions likely will be available at the new Bandag plant in Cullman.
McGriff Industries was the first franchisee for MRTI's retreading process, starting operations at the plant in Hartselle in October 1997, about 18 months after McGriff had pulled out of its Bandag franchise agreement. The Hartselle facility uses both MRTI's Pre-Mold (precure) and Custom-Mold (mold cure) retreading processes.
Mr. McGriff declined to elaborate on the reasons for the parting of ways with MRTI, although he said he hopes to be able to continue selling new Michelin truck tires.
For its part, Bandag called the decision to sell the Alabama locations—along with three TDS outlets in Georgia to Georgia Bandag franchisee Alan Snow—a “win-win for all parties.”
The TDS locations McGriff is buying are in Birmingham, Huntsville, Mobile and Thomasville. The Mobile location is a combination retread plant and commercial tire outlet, but McGriff plans to consolidate the retreading capacity there at its existing site in Mobile and convert the TDS location purely to commercial service, Mr. McGriff said.
The Birmingham and Huntsville sites originally were part of Universal Tire—acquired by Bandag in 1997—while the Mobile and Thomasville outlets belonged to Deas Tire Co. Inc. before being sold to Bandag in 1998.
Following the takeover Nov. 11 of the TDS outlets, McGriff will have 11 commercial tire locations in Alabama.