PEARSALL, Texas (May 2, 2003)—A warm, dry, dusty wind blew across the scrub grass and wide-open flat expanses, giving some dealers their first taste of a version of the Texas two-step: shield yourself from swirling dirt while taking a swig of water.
But for most, it wasn't their first sampling of Cooper Tire & Rubber Co. products and hospitality. As they tooled around the Tire and Vehicle Test Center track in Pearsall giving the tire maker's new Zeon 2XS tires some seat-of-the-pants evaluations, dealers from across the country bordered on effusiveness in describing their relationships with the company.
Two common threads wove through their comments about the tire maker: value-packed products and ease of doing business.
Barry Steinberg, president and CEO of Direct Tire & Auto Service in Watertown, Mass., told Tire Business his two biggest suppliers are Cooper and Toyo Tire (U.S.A.) Corp., and he's increasing his Cooper purchases “because it's such a pleasure to do business with them. They never say no, their systems work, the products are great and you can make money on them.”
He described Cooper's chairman, Tom Dattilo, as very accessible, noting, “If I want to talk with Tom, I just call and talk with him. I have his direct line. And when you need something, they get it for you.” What Mr. Steinberg called the “Wall Street effect”—Cooper's continued acquisitions in the tire and automotive sectors, and its growth as a large automotive industry supplier—“has not affected them and their day-to-day operations. If nothing, it's made them better.”
Performance products comprise 25-30 percent of Direct Tire's annual sales of “a hair under $14 million” in its four outlets in Boston and surrounding areas. Mr. Steinberg, who has 28 years in the business, said he plans to open more stores—“the magic number is 10”—and at least one within the year. He has his eye on several potential locations.
Business this year for the dealership has, in fact, been “great. We've had our best-ever first quarter in the tire business. I don't do $11 oil changes, or sell four tires for $99. I got rid of the bottom feeders,” he explained. “Although sales were somewhat flat, I made more money, had fewer people, a lower overhead and sold more higher-priced tires.
“The economy is bad, sure,” he continued. “But one of the reasons we've done well is the higher-income customers we're going after are still spending money. If you drive into our dealership, it looks like a Mercedes dealership.”
Ray Singler, general manager of Action Gator Tire, with 25 retail locations in and around the Orlando, Fla., area, has been a Cooper customer for 15-plus years. Climbing out of a Mini-Cooper after a run on the new Zeons, he said the dealership “sells a lot of Cooper tires. It's a good profit product for us. And their people are the absolute very best to deal with. Very dependable.
“I'm glad to see them offer dealers a few more tools like these to compete with in the retail market.”
With about a quarter of Action Gator's business in high-performance tires, the dealership also is direct with Falken, Toyo and Nankang, and is a large Goodyear dealer.
Last year was a record-setter for the company and, Mr. Singler noted, “this year is starting off even better. It's all about aligning yourself with the right supplier.” Action Gator has seen double-digit growth the last few years. The secret: “We retain our customers and they tell others,” he said. “I personally handle every complaint with the end-user customer and, if at all humanly possible, make it right.”
At age 43, Mr. Singler has been “running tires since I was 16—it's the only business I've ever had.” Like Mr. Steinberg, he was impressed to see Mr. Dattilo out on the test track, taking his turn behind the wheel, rubbing elbows with dealers. “What other company would have their CEO out in the field with dealers driving and spending time?” he asked.
Cooper tire lines have provided nice margins for Western Tire Centers in Tucson, Ariz., which began offering Cooper products only a couple months ago, according to Rick Furrier, general manager. “We were looking for something we can make money on,” he said of the dealership with 20 retail locations.
A member of Michelin's Alliance program, Western Tire also handles Michelin, BFGoodrich, Uniroyal, Continental, General, Yokohama, Kumho and Hankook lines. Because some locations specialize in servicing light trucks, Mr. Furrier said the addition of Mickey Thompson and Dick Cepek products to Cooper's stable is welcome, as has been the support the family-owned dealership has received from the tire maker. “They've done what they've said—we've received lots of support from Cooper. It's been a refreshing change.”
Phil Caris, Cooper's vice president of marketing, said the company is planning ride-and-drive events for dealers regionally and at specific dealerships. “By and large, dealers are pretty excited—they've been asking us to get into this (ultra-high performance) segment for a while. It's not a niche market anymore.”
Over a year ago, the tire maker put a team together to focus on nothing but UHP, he added.
“We'd like to have the same percentage of that (performance) market as we have (in other segments), which is 10 to 15 percent of the replacement market—even 15 to 20 percent,” Mr. Dattilo told Tire Business.
Asked about dealers' comments that he is so approachable, he said “part of it is my personal style. But also it's the kind of company we are—we're a customer-driven company where the customer is king.
“The only absolute thing you need in this business is a customer. You can't do without that.”
Cooper's still-growing automotive business—and here Mr. Dattilo questions those making a distinction between tires and “automotive,” saying “it's all automotive”—has helped the company remain competitive. “We've been in the automotive parts business for years, and I said back in 1999 that we either needed to grow the business globally or sell it.”
The company decided growth was the way to go.
Its acquisitions in the past four years have included Standard Products Co., Siebe Automotive, the tread rubber operations of Teknor Apex and Hercules Tire & Rubber Co. and, within the last few months, private brand marketer Max-Trac Tire Co., which does business as Mickey Thompson Performance Tires & Wheels.
They all “help the tire side, too,” Mr. Dattilo said, because “a good automotive supplier shares information with the tire side,” and both make some common materials purchases.
Cooper has, in the last couple years, begun moving personnel throughout the various disciplines within the company to give them broader exposure. It makes for a “better-run company” and employees who are more well-rounded and well-versed in overall operations, he said.
When asked if the company was getting too big, Mr. Dattilo at first laughed, pointed to a group of smiling dealers and shot back: “Why don't you ask them that question?” But moments later he admitted he gets “passionate” talking about the company and the industry.
“I spend a lot of time with all our customers, and I love it,” he said. “We don't think we're too big. We want to continue to grow both sides of the business. We're customer-focused, customer-centric, and always have been.”
Mr. Dattilo, who also currently serves as chairman of the Rubber Manufacturers Association, insisted “our products are not commodities and will not be obsoleted. They'll be making cars in 10 years, and if we make good products, they'll be on those vehicles.
“We've really got opportunities in the automotive business to do things for Americans, for our customers, the industry, shareholders.”
He then went down a list of reasons why he believes dealers like Cooper: “We're easy to do business with; we deliver products on time, every time; we have great-quality products at price-point value that allows dealers to make money.”
And, he added laughing: “We're a very nice group of people. Really.”
One gentle criticism Mr. Dattilo hears from dealers is, “You guys just don't talk about yourselves enough.”
As the company begins pushing its technology more, especially with the launch of the Zeon line, he sees that changing. “A lot of companies try to survive on yesterday's strategies,” he said, noting a high failure rate among Fortune 500 firms. “You've always got to be innovative, energetic and never forget the customer. And we're all really passionate about what we do.”
Within five years he sees Cooper attaining its goals of compounded growth of 7 percent per year, noting “some growth is organic, the rest by acquisition.” And there could likely be more acquisitions, depending on how they fit the firm's business profile.
“We will make sure we promote our company's products on both sides of the business,” Mr. Dattilo said, “and will continue to focus on our tire side in North America.”
Market conditions—and the continuing issue of overcapacity—“have made segments of this industry unprofitable…and increasing capacity in China should be a concern to all of us,” he added.
He said he also is “very concerned about the value of the tire. The technological aspect of it is so under-appreciated. We have to in-crease consumer appreciation for the value of the product. It's up to dealers and the media to do that, to focus on why tires are undervalued—and shouldn't be.”