Bandag Inc.'s Speedco Inc. subsidiary has budgeted $50 million to $60 million this year to upgrade and expand its network of truck service stations, a project that includes adding high-speed tire lanes to all Speedco locations.
Speedco, which operates 40 locations in 22 states, planned to open four outlets in May and June along with tire lane upgrades to four existing outlets.
By year-end, the company expects to have five to six more locations open and have tire lanes at all of the outlets, a company spokesman said. The short-term strategy is to have 50-plus outlets in operation.
During 2005, Speedco increased sales 50 percent to $82.7 million-representing 9 percent of Bandag's sales. Speedco, still 12.5-percent owned by Equilon Enterprises L.L.C., spent $39.6 million upgrading and expanding, according to Bandag's financial reports.
Speedco, which was started 13 years ago by Equilon predecessor Shell Oil Products, offers Goodyear, Michelin and Yokohama new tires and Bandag retreads. Bandag paid $53.7 million in February 2004 for its share of the Cayuga, Ind.-based company.
Speedco advertises itself as offering 30-minute oil changes and most tire services accomplished in 30 minutes as well. As such, the chain appeals especially to owner-operators who otherwise might have to wait hours at a truck stop to get their rigs serviced. Speedco notes that the No. 1 reason for tractor and trailer breakdowns is tire problems.
Each Speedco location is at least 8,500 square feet with three lube bays.
The costs associated with expanding the business ate into profits-pre-tax earnings fell to $581,000 last year from $6.25 million in 2004-and may continue to result in declining margins, Bandag said.
The company made a big promotional pitch at the recent Mid-America Trucking Show in Louisville, Ky., unveiling a custom-built Speedco Chopper-built by Orange County Choppers, the motorcycle fabricators featured on Discovery Channel-and highlighting its racing and other events planned in 2006.
The event also raised $100,000 for Make-A-Wish Foundation, Speedco's ``adopted'' charity. The firm has pledged to raise $500,000 this year for Make-A-Wish.
Speedco is a sponsor of teams racing in the National Hot Rod Association and United Speed Alliance Hooters Pro Cup Series.