If wishing hard enough for something makes it come true, 2004 could be a banner year.
``I really expect next year to be a good year,'' said Wendel Burt, co-owner of five-outlet Burt Brothers Tire & Service Inc. in Utah. ``I think we've been down enough and up and down that people's attitudes (are they) want to be positive.''
Many dealers contacted by Tire Business said they are hopeful for 2004-mostly because some positive signs hint at a long-awaited economic recovery. But increased competition and rising insurance costs still cause some unease.
Nationally, a degree of uncertainty remains in the economy despite some recent positive indicators. The U.S. economy grew at a blistering 8.2 percent pace in 2003's third quarter, though only 57,000 new jobs were created. The stock market flirted with and surpassed the symbolic 10,000 mark, but some economists remain unsure of the economic picture for 2004 while others are calling for fantastic growth.
``I wouldn't bet on very strong growth, so I would be a cautious planner for retail dealers,'' said George Dagnino, chairman of Akron-based Peter Dag Strategic Money Management and former chief economist for Goodyear.
On the other hand, the non-profit business research group The Conference Board anticipates a GDP of 5.7 percent next year plus a 4.7-percent spike in real consumer spending on unemployment of 5.6 percent.
But Mr. Dagnino said many factors in the seeming recovery continue to worry him, including wage increases slowing down-from 6 percent to 2 percent with inflation at about 2 percent-and already overborrowed consumers and businesses unwilling to borrow even more despite rock bottom interest rates.
``The Fed can lower interest rates as much as they want, but if people don't borrow because they don't have money to spend, there's nothing you can do,'' Mr. Dagnino told Tire Business.
Referring to his sentiments as caution instead of pessimism, Mr. Dagnino said factors at work in the national economy-which still is trying to unravel itself from its unnatural run in the late 1990s-could even lead to yet another recession by 2005. For 2004, his advice for tire dealers is to watch inventory and other cash-absorbing plans carefully to avoid becoming over-extended ``because this thing is not over,'' he warned.
``We may have a slowdown coming in the second half of 2004 that can catch you with your pants down.''
Philip ``Flip'' Smith, owner of Flip's Tire Center in Van Nuys, Calif., said he's already watching inventory closely and resisting end-of-the-year deals. He said business in December was fairly in line with year-ago levels, though November was about 20 percent off. Still, his biggest concern is rising health insurance and workers' compensation costs. He narrowly escaped a 100-percent increase in his liability insurance-to $10,000 a month-though he had to remove his employees' families from his health insurance plan to help manage costs.
``Insurance is just killing us,'' he said. ``...When those kinds of things are happening, if business stays the same I'm going to be lucky...so I'm not going to overstock.''
Mark McCoy, owner of Autco Tire Inc. in Amarillo, Texas, said he's in between feeling cautious and optimistic for 2004. Calling 2003 a flat year, Mr. McCoy said the economic picture locally seems to be regaining lost ground as companies recently have announced more jobs. Still, he said competition and the proliferation of sizes will make effective inventory control difficult.
``In our community now, everyone on every corner is selling tires,'' he told Tire Business.
The concern with competition is especially a factor for Direct Tire & Auto Service in Watertown, Mass., and Mr. Tire Auto Service Centers in Baltimore. Both are watching TBC Corp.'s integration of National Tire & Battery stores in their markets into its Tire Kingdom Inc. subsidiary following a $260 million buyout of the NTB retail chain from Sears, Roebuck and Co. in December.
``You always lose business when someone comes to the market, but the more (competition) the merrier,'' said Barry Steinberg, owner of four-outlet Direct Tire.
He said he won't try to compete with Tire Kingdom's NTB stores or any other chains on price because a price war can always go lower.
``I think the dealers who are competing for that low price market-that really low price, low profit, I think non-profitable customer-are going to have a hard time because they don't seem to have a bottom,'' he said.
Joe Tomarchio, executive vice president of Mr. Tire, said he has an underlying concern about effects on margins from competition including Pep Boys-Manny, Moe & Jack, which in 2003 said it wanted to add flag-brand tires though it did not provide a timetable.
``That is a concern, the margin us tire dealers work on,'' he said. ``We're our own worst enemies sometimes.''
Regardless, both said they are very optimistic about their dealerships' prospects in 2004.
``I'm expecting a sensational year,'' Mr. Steinberg said, noting improved traction abilities in cars that eat up tires, more service business including an expansion of Direct Tire's offerings and performance tires for high-end cars.
Mr. Tomarchio said the local job market is tightening up and homebuilding is good, though his dealership's proximity to various military installations give him some apprehension about the possibility of terrorist strikes.
``Other than that, I think 2004 will be a good year,'' he said.
Conrad's Total Car Care and Tire Centers in Cleveland plans to open its 25th outlet in January in Macedonia, Ohio, with perhaps more to come throughout the year.
``We're looking for modest increases in 2004 in terms of store-to-store sales,'' President John Turk said.
Jeff Lecklider, owner and president of Gem City Tire Inc. in Cincinnati, said he's ``anxiously optimistic'' that 2004 will be a brighter day after recent tough years.
``I feel we've hung right in there for the last two to three years, and (through) all that we've done a pretty good job in the toughest of times, so we're excited about new times and maybe getting a little easier to make things happen every day,'' he said.