Partnership paying off for Route 66, Speedways

ALEDO, Texas — "The top five in the world in ag."

A seemingly lofty prognosis, perhaps, but Brian Hubbard, owner of tire importer/distributor Route 66 Tire and Rubber L.L.C., was very clear about where he sees India's Speedways Rubber Co. Ltd. — Route 66's key supply partner since 2010 — two years from now.

His company markets Speedways-brand farm and industrial tires in North America. And so far he sees the deal paying off.

"We will be in the top four or five (distributors) in the world in ag within the next year or two, without a doubt," he said.

His confidence in the Jalandhar, India-based tire maker might seem lofty, but Mr. Hubbard said he believes the numbers back up his claims.

"When Speedways came and asked me to help them with the American market, their total sales were $28 million," Mr. Hubbard told Tire Business. "This year we're going to surpass $100 million, and probably about 80 percent of that is in the U.S. market."

As it stands, Mr. Hubbard's biggest task in terms of the Speedways collaboration is building the distribution network. One of the initial goals the two entities established was to sell products to all six of the "biggest tire distributors in the world," which Mr. Hubbard said has been accomplished.

He declined to specify which companies made up his list of distributors, but he said there are about 60 distributors for tires made by Speedways.

The company initially began shipping irrigation tires made by Speedways to U.S. customers in May 2010, and since then the line has grown to 17 different SKUs, Mr. Hubbard said, with four sizes offered in both tube-type and tubeless designs and multiple plies.

He noted that irrigation equipment is becoming increasingly important as farming becomes more and more commercialized and specialized.

The larger farms have the bigger equipment and have to have irrigation, he said. "It's becoming a science. (The farmer's) got to water the product. If he doesn't have rain, the government doesn't give the same amount on federal crop insurance.

"The guy who doesn't have irrigation out there, he doesn't get the same amount as the guy who did have irrigation," he continued. "That guy gets more money. It's forcing them to get irrigation equipment to survive and to compete."

Mr. Hubbard said many U.S. farmers learned that lesson the hard way during last year's drought, and sales for irrigation equipment have since picked up.

"If they had 36-inch rows instead of 30-inch rows, they probably would've gotten by a little better, but when you do 30-inch rows and it doesn't rain, nothing grows," he said.

Tilling the OEM sector

In addition to its irrigation offerings, Route 66 sells five Speedways-made radial tractor tire sizes in North America, with the largest being 380/85R34. But Mr. Hubbard said he expects to begin selling 42- and 46-inch ag tires by spring.

"It's awesome that we have that much growth," he said.

"We're doubling to tripling every year in size. I think with (rear) radials in the next two years, we could double again. We'd like to be in the quarter-billion-dollar range in ag…. That all depends on launching the rear radials."

In addition to its ag tire offerings, Route 66 also imports multi-position, bias-ply tires and R4 tires manufactured by Speedways for front and rear backhoe fitments, respectively. The company also offers four sizes of industrial skid-steer tires, but Mr. Hubbard said the company is in the process of bringing out a complete OEM line of 13 to 14 sizes.

Mr. Hubbard said the company is working toward establishing OEM tractor and irrigation fitments in the U.S. market.

"We're working toward OEM — we don't consider ourselves a third-tier company," he said. "They consider tier one somebody who's selling OEM. Well, we're selling OEM in other countries. We just haven't entered OEM in the U.S. market yet, which we will. It just takes time. You've got to build the network first."

Part of Route 66 Tire's strategy with Speedways includes the development of private brands for a number of large tire distributors. The company's four private brands are Farm Boy, Pay Dirt, Agro Land and Payload.

Mr. Hubbard declined to say which distributors have the rights to which brand, but he noted that one of the four recently was picked up by "a multi-billion dollar company with warehouses in 23 states."

Tires entering the U.S. branded under the Speedways banner are typically marketed to smaller dealers and distributors, he said.

"It sorts the brands out," he said. "We know who it's going to, and it creates a price structure. A lot of times when companies come into the United States they sell to anybody and everybody…and all of a sudden the dealer's profit margins are smaller."

Mr. Hubbard said one his primary concerns for products he markets in the U.S. was that they be able to compete both in terms of quality and warranty coverage.

"There's no regrind or remix in any of our products, including our ag products, which can reduce the cost up to 25 percent," he said. "And I've seen it done by some other manufacturers, but we want to be at the upper end of the scale of product quality, not the low end.

"We're building the higher-quality stuff (and) our ag warranty is as good as anybody's in the business."

Other deals pending

While the partnership with Speedways accounts for much of Route 66 Tire's business, the company has or is in the process of setting up partnerships with other manufacturers for a variety of tire lines, Mr. Hubbard said.

Liaoning Tyres Group Co. Ltd., based in Chaoyang City in China's Liaoning Province, produces five specialty trailer tire sizes for Route 66, offered under its Payload brand name. Route 66 also markets two light truck tires produced by the company in size 235/85R16 — one in 10-ply and one in 14-ply — which are M+S rated and feature an asymmetrical tread pattern.

In addition, the company is working toward an agreement with an undisclosed manufacturer to produce ultra-high-performance tires, which it plans to sell under the Route 66 brand.

Mr. Hubbard and his brother Gregg launched Route 66 Tire in 2009 with the goal of importing and marketing Chinese ultra-high-performance passenger and light truck tires in the U.S., but the tariffs on Chinese tires "killed that plan," he acknowledged.

Four years later, the company is revisiting those plans. Mr. Hubbard said UHP tire molds already are being built.

"It's taken me a little while to get back into that," he said.

"I kind of got engulfed in getting Speedways and us working as partners to go forward. We had a five-year plan, and at the end of year three, we accomplished every goal we set out to do on paper, which was pretty amazing."

______________________________________________

To reach this reporter: wschertz@ crain.com; 330-865-6148