BETHLEHEM, Pa. (Feb. 2, 2010) — Service Tire Truck Centers Inc.'s (STTC) acquistion of 16 Tire Centers L.L.C. (TCI) commercial outlets will boost the dealership's annual sales by about 50 percent initially and lays the foundation for even more growth longer term, according to STTC President Ron Bennett.
The deal, which closed Jan. 29, expands STTC's reach into New England for the first time and solidifies STTC's service coverage up and down the Eastern Seaboard, Mr. Bennett said.
“Road service is our (STTC's) strength,” he said, “and this allows us to service truckers in the Eastern Corridor from New England to Virginia.”
The acquisition increases STTC's employee base by about 150, but Mr. Bennett said his company already is looking to hire additional service personnel and enhance training for all personnel. The deal increased the dealership's service truck count by about 90.
The deal also adds mold-cure retreading capacity to STTC's retread business, Mr. Bennett said, opening up a new revenue stream for the Bethlehem-based commercial dealership.
The retread plant included in the deal, in Millbury, Mass., has both Michelin Retread Technologies (MRT) Custom Mold and Pre-Mold capacities, Mr. Bennett said. STTC plans to operate the unit at about 400 to 500 units a day, he said, but that can be ramped up fairly easily, depending on demand.
Having mold cure capabilities will allow STTC to call on fleets it couldn't before, because some fleets spec mold cure retreading.
Mr. Bennett said it's possible STTC eventually could consolidate a couple of locations where the TCI outlet is too close to an existing STTC location, but he declined to say where that may happen.
Besides the outlets in Massachusetts and New Hampshire, the other TCI locations being taken over are in Maryland, Virginia, New York and New Jersey. STTC's existing locations are in Pennsylvania, Delaware, New Jersey, Maryland, Virginia and New York.
STTC and TCI have been discussing a deal for nearly a year, Mr. Bennett said. Initially the scope wasn't this large, but all the locations acquired were part of TCI's eastern zone, so eventually it was deemed natural to keep them together.
The acquisition will enlarge STTC sufficiently to make it one of the U.S.'s 10 largest commercial delearships, according to Tire Business research.
STTC is financing the deal through its own reserves and existing lines of credit, Mr. Bennett said.
The dealership expects the stores to be converted to STTC signage within 30 days.
TCI is a subsidiary of Michelin North America Inc., operating both in the commercial/retreading business and consumer tire distribution.
STTC converted its retread business in 2006 to MRT after 39 years as a Bandag Inc. franchisee.
To reach Bruce Davis: [email protected]; 330-865-6145.