In a deal inked during Max-Trac Tire Co. Inc.'s 40th year in business, Cooper Tire & Rubber Co. bought the performance and specialty tire marketer for an undisclosed amount.
For Findlay-based Cooper, the deal-which includes both the Mickey Thompson and Dick Cepek brands-marks an equally significant point in its goals of strengthening its high- and ultra-high performance tire segments. The tire maker's ambitions are further punctuated by the recent arrangement for race driver Johnny Unser to act as technical consultant for Cooper's ultra-high performance and racing tire product lines.
``When we looked at our growth opportunities, we thought this was a segment we definitely could do a better job in, so that's the direction we're heading in,'' said Phil Caris, vice president of marketing for Cooper.
Cooper for now plans to keep operating Max-Trac as normal with its headquarters in Stow, Ohio, and Dick Cepek division in Temecula, Calif. After years of competing against each other in the marketplace, Max-Trac purchased the assets of 42-year-old Dick Cepek Inc. in early 2000 after the specialty tire and accessories marketer went bankrupt, closed 11 retail stores and was liquidated.
Mr. Caris said Max-Trac's arrangements with its suppliers will remain intact and Cooper is continuing to look at integration details, though specifics are not yet set in stone.
The transaction isn't considered major in financial terms, nor will it affect Cooper's credit rating of BBB, said Nancy Messer, a credit analyst for Standard & Poor's Corp. Still, the deal is significant for Cooper's high-performance plans-a path that could lead to healthy margins and better name recognition in the segment, she said.
``Anytime you're got a product that is value-added...that gives you the opportunity to sell that product at a slightly better margin,'' she said.
Since its founding in 1963, Max-Trac-which does business as Mickey Thompson Performance Tires & Wheels-has designed, developed and distributed specialty tires for the street, drag strip, track and off-road racing arenas. Its founders, Mickey Thompson and Gene McMannis, were well known in the racing world.
Mr. Thompson held 485 national and international speed and endurance records, and Mr. McMannis designed tires for the Pan American Road Race, Daytona, LeMans, Indy 500 and Bonneville Salt Flats racing series.
Mr. Caris said the company has special expertise in performance areas that are yet largely untapped by Cooper, including extreme light trucks, motorsports and wheels.
``We see it not only as an opportunity to get into some areas we're not in, but it will strengthen our overall position as a performance tire company,'' he said.
Lee McMannis, Gene McMannis' son, became Max-Trac president and CEO in 1983 then bought the company after Mr. Thompson's death in 1988. He said he will remain as part of the integration team. On March 16, 1988, Mr. Thompson and his wife, Trudy, were murdered in the driveway of their Bradbury, Calif., home.
Mr. McMannis said some of the first tires sold by Max-Trac were manufactured by Cooper. After a hiatus, the tire maker again supplied tires for roughly the past 10 years. Specialty Tires of America Inc. also makes tires for Max-Trac, Mr. McMannis said, and Max-Trac also distributed Cooper's Avon racing tires.
``We've had continued growth and profitability every year since 1983, and as Max-Trac continued to grow it became apparent to me sometime in the future it was going to be necessary to become part of a world-class tire manufacturer such as Cooper,'' Mr. McMannis told Tire Business.
Part of the benefit, he added, is Cooper's available resources, especially in technology for developing new products.
New products are exactly what Cooper has its eyes on.
The tire maker is testing new products at its San Antonio test track, and those tires-the new Zeon line-will be launched officially in the coming weeks. Cooper plans to introduce five new performance tire lines in the next 12 months, Mr. Caris said.
``We want to be able to have a representative market share in all of the segments we participate in,'' he said. ``One segment (in which) we have not been strong in the past is in ultra-high performance.''
Anne Thomas, president and owner of Seco Performance Centers, said the Mickey Thompson brand has been updated with new products pretty well in the past. Her Birmingham, Ala.-based dealership sells only Mickey Thompson brand tires in addition to other performance accessories in its five retail outlets.
``We've had a good relationship with them,'' she said. ``I just hope that will continue.''
Mr. Caris said Cooper plans to keep the Mickey Thompson and Dick Cepek brands pure in their markets. A combination of marketing and product expansions is expected to increase Cooper's sales and its recognition, he added.
``We're going to be careful not to just make them general, mass market brands,'' he said.
One of the details yet to be worked out is which Cooper dealers will sell the Mickey Thompson and Dick Cepek brands.
Mr. Caris said the tire maker doesn't plan to distribute only through its network of dealers at the cost of Max-Trac's network, nor will it automatically make them available to all of Cooper's dealers.