Goodyear's year-long running battle of wills over pricing policies with its largest wholesale distributors has thrust the normally publicity-shy wholesale industry to the fore more than in the past-and perhaps more than most wholesalers would wish.
Goodyear and a handful of its largest wholesale distributors have been facing off over prices and terms since late last year, when the Akron-based tire maker modified its distribution model to ``level the playing field'' among the various distribution channels. The changes, primarily those outlined in the company's G3 Xpress program, cut into a number of wholesalers' traditional profit generators.
The disagreement has resulted in reduced orders since January, when purchases by the group of wholesalers-which may account for up to 15 percent of Goodyear's brand sales-were down by 50 percent or more. Orders by the group still stood in September at only 75 percent of the year-earlier level, Goodyear said recently.
While none of the Goodyear distributors abandoned the Goodyear brand, most have complemented their product offerings with other brands.
Besides the Goodyear situation, a change in the tire manufacturers' distribution practices-namely the increased tendency to outsource distribution to third party logistics specialists-is paying dividends for independent wholesalers, according to Bill Berry, executive vice president and CFO for American Tire Distributors Inc. (ATD). ``For the tire makers,'' Mr. Berry said, ``it's a question of cost structure,...of how (distribution) employees are categorized.
``Our distribution costs are lower, and we are able to deliver various manufacturers' products-including wheels or other products in addition to tires-in the same shipment. It's more efficient.''
Tire manufacturers also have been active in recent years developing and expanding dealership support programs-Bridgestone/Firestone's TireStarz, Goodyear's G3 Xpress, Michelin North America Inc.'s MAST Alliance or TCI/T3-for the small dealer. Here too, Mr. Berry said he believes the independent wholesaler can get involved.
``These programs are generally a good thing for retailers,'' Mr. Berry said. ``We can go to market with their programs and enhance them.... We can add to the equation.''
One aspect a company like ATD (formerly Heafner Tire Group) can bring to the table is in program compliance, Mr. Berry said.
``We can help both the small dealer and the manufacturer track orders to ensure the dealer is complying with a program's purchasing requirements,'' he said.
Like the manufacturers, independent wholesalers have created dealership support programs to solidify their relationship with their dealers.
Some of the programs experienced considerable growth in the past year, including:
* American Tire Distributors added about 140 outlets to its AutoEdge affiliated dealer program, raising the total to more than 270;
* Bauer Built Inc. expanded its Tire Shop affiliate dealer program by 74 dealer outlets to 224;
* Am-Pac Tire Distributors' Tire Pros franchise program grew by 65 locations to 277;
* Big O Tires Inc.'s franchise network added 38 stores to hit 564 (including Canada); and
* American Car Care Centers (ACCC) Inc.'s network of affiliated dealers went up 35 sites to 1,050.
Other significant changes of the past year:
* Treadways Corp.'s Laramie Tire division evolved to a broader, multi-brand marketing program and changed its name to TreadXpress to reflect the change. The firm's evolution started in August when it agreed to become a Goodyear G3 Xpress wholesale distributor, taking on the Dunlop and Goodyear brands.
TreadXpress stocks Dunlop brand tires at all 14 of its distribution centers, while Goodyear brand distribution is limited for now to six of the centers. TreadXpress continues to feature Laramie brand tires as well as products from Sumitomo, Doral, Falken, Federal, Continental, Towmaster and other niche manufacturers.
Treadways, a subsidiary of Sumitomo Corp. of America, also moved its corporate headquarters to East Norriton, Pa.
* Target Tire Co., based in Jacksonville, N.C., is expanding its distribution reach beyond its existing footprint in Georgia, Tennessee, North and South Carolina and Virgina. The first step is a new warehouse in Savannah, Ga.-the company's 11th-due to open in the first quarter of 2003. Further details were not disclosed.
* Wholesale Tire Co. Inc. (WTC), considered for a long time one of the Northeast's largest wholesalers and retailers, went out of business in late 2001, selling its 18 retail stores to Somerset Tire Service Inc. and ceding its American Car Care Centers Inc. business to Englewood Tire Distributors of Lyndhurst, N.J.
Englewood took over responsibility for about 50 ACCC accounts in the greater New York metro area, Hudson Valley, Connecticut, and most of the Philadelphia metro area for American Car Care Centers.
Taking on the ACCC business prompted ETD to open a third distribution point, on Long Island. This was in addition to one it opened in March in Wallingford, Conn. WTC reported nearly $50 million in wholesale business at the time of its demise.
* Am-Pac Tire Distributors, purveyor of the Tire Pros dealer network, acquired Charlie Case Tire Co. of Phoenix, adding five wholesale warehouses-two in Arizona and one each in Nevada, New Mexico and Texas-and nearly $50 million in business. Both companies are members of ACCC.
Simi Valley, Calif.-based Am-Pac is subsidiary of the Japanese trading company Itochu International. More recently it closed a warehouse in Greenville, Ala., and moved distribution for that area to Pensacola, Fla. The company operates 22 wholesale centers.
* Tire Wholesalers Inc. (TWI) expanded its warehouse in Troy, Mich., by 44,000 square feet, in essence doubling the size of the company's distribution capacity and allowing it to speed up delivery in the Detroit area.
The warehouse expansion is part of a new business approach for TWI, according to President Ross Kogel, making deliveries within four hours to any business in the metropolitan Detroit area. TWI also has regional locations in Southfield and Cadillac, Mich.
* Dapper Tire Co. opened its ninth warehouse, a 15,000-sq.-ft. facility in July in Portland, Ore. The warehouse will supply about 300 dealers in the Portland, Salem, Eugene and Vancouver, Ore., areas. The company primarily distributes Goodyear, Dunlop and Republic brands. San Diego-based Dapper Tire, a Goodyear subsidiary, operates along the West Coast and has been in business for 55 years.
* Big State Tire Supply opened its 10th location, a 25,000-sq.-ft. warehouse in Oklahoma City to service Oklahoma. Lubbock, Texas-based Big State Tire is a Goodyear G3Xpress supplier. In addition to Goodyear, Kelly and Dunlop brand tires, it ships Hankook, GT Radial, Greenball, Titan and Monarch brands.
* Community Wholesale Tire set up its Independent Tire Dealers buying group for dealers in Missouri, Illinois and parts of Kansas and Iowa.