To solve a longstanding problem of customer demand outstripping supply, Jeff Barlow plans to open his own facility in January to produce passenger tire retreads-yes, retreads.
While many in the tire industry have all but written off passenger retreading, the Elmira tire dealer has high expectations for his products-because they are not your typical retread.
The fledgling Green Diamond Tires of New York Inc. has a license to produce Green Diamond treads, which are embedded with carbide granules for gripping icy roads. The company claims the tread is easier on roadwear than studded tires, for the same price. And as the tread wears, new carbide granules are exposed on the surface, offering continual gripping features.
For the past five years Mr. Barlow's family business, Twin Tier Tire of Elmira, has been selling the tire line, which has been popular for some time in Iceland and Sweden. His holding company, Green Diamond North America, holds the U.S. distribution rights from New Industries Ltd. of Reykjav¡k, Iceland, which invented the tread concept in 1995.
Mr. Barlow estimated his company has sold about 60,000 Green Diamond tires over the past four years. But, he complained, the supply from Canada and Sweden would usually run out halfway through the winter selling seasons. So he decided he needed a supply source of his own and founded Green Diamond of New York in January.
He plans to begin full production at his new retreading plant in Elmira in February, with a planned output of 30,000 to 50,000 tires in 32 passenger and light truck sizes next year.
The new company will operate independently of Twin Tier Tire, where Mr. Barlow runs a Bandag truck tire retread shop, two retail stores and a distributorship.
The new $2.5 million plant, inside a building the company acquired, currently has half the equipment in place. The company received a state grant for the recycling aspect of the operation that will be used to buy equipment, including computerized buffers, computerized builders with a camera system to direct rubber placement and shearography inspection stations.
``The product that comes out...will be very comparable to new tires,'' Mr. Barlow claimed. The company will employ 12 initially and plans to double its staff within a year.
The plant will be very selective on the casings it uses, he added. The company will use only high speed-rated and high-mileage tire casings. ``It makes it hard finding casings,'' Mr. Barlow said. ``But we can pay more for them because we're making a profit (from the Green Diamond retail sales). We have more room to be selective.''
The plant will have the ability to expand in following years to keep up with demand. ``This year we had to import 12,000 tires. We tried to take the 12,000 and seed a small number among 20 dealers, rather than supply a larger number to three or four dealers,'' he said. ``We want to get them to try it and next year we can supply their needs.''
He said the selling part is very easy. Besides the unique look of the tire itself-which is embedded with visible chips of carbide during the retreading process-dealers are interested in the exclusive territories and profit margins.
Unlike typical passenger retreads that usually compete as a cheap alternative to new tires, the Green Diamond tires are positioned about $15 more than a low-end new tire, but $20 to $30 less than the high-end ``ice'' tires. ``We make more money in our stores with Green Diamond than other tires,'' Mr. Barlow said. ``The bad part is telling people we don't have any left.''
Green Diamond hopes to establish a dealer network in two or three years. For now the company is building up a customer base among mid-sized dealerships in New York and the surrounding area. His company provides a starter package with counter displays, signs and an in-store video, as well as a co-op program for dealers to advertise in their own markets. He said his company had to create all the signage and materials because everything available was for the European market.
For now, national advertising is not an option because the company can't produce enough tires to handle the potential demand, he said, adding: ``Word of mouth really has been surprisingly strong with us.''
Mr. Barlow said he has sold more than 1,000 tires through the company's Web site alone without really trying. And the orders come from all over the country, such as from a customer in Hawaii who has to drive up the side of a volcano to work at an observatory, to drivers in Alabama who experience icy roads. He even sold a set to a customer in Florida who thought the tires would do well on wet roads.
Mr. Barlow noted that even though there has not been any testing done on the tire's wet traction features, he has received testimonials from customers about how well the tires perform on wet roads. ``Here is a remolded tire-or a retread, if you will-that's the safest tire on a car. It's not usually a moniker retreads have,'' he said.
The tires usually last 45,000 miles and while the tread looks inherently made for winter driving use, it is designed for year-round conditions.
``We hope to be making in-roads into the all-season market. It's more obvious as a winter tire,'' he said. ``It's surprising some of the markets. But the Snowbelt is where it's easiest to sell,'' he said. ``It's insurance if you need it. It works just fine on dry roads.''
He said he has witnessed consumers become ``maniacal'' about the tires. He related an incident at a hockey game where he overheard a woman behind him raving to her friend about the Green Diamond tires she just bought and encouraging her friend to buy some. ``Boy, if you can get women to talk about their tires-that's pretty exciting,'' Mr. Barlow said.
``We don't hide the fact the tire is remolded or remanufactured. It's so different from passenger retreads people remember years ago,'' he said.
Generally, people are surprised by the low price-and the fact the tires are retreads. But he said the latter fact has never deterred anyone he has dealt with.
However, the birth of his passenger retreading plant isn't necessarily a sign of the market's revival. The Elmira plant will be dedicated to producing only Green Diamond tires.
``We don't see doing regular passenger tire retreads as workable,'' he said. ``If you produce a (passenger) retread, all you have is price and you have to be $10 to $15 below the cheapest new tire. The quality would be better than what's made in China. But you can't sell that. You have to be cheaper and that's difficult to market.''