AKRON—For industry veteran Manny Cicero, the decision to join Triangle Tyre Group Ltd. was easy.
China's second largest tire maker and largest privately held one offered him an opportunity to build a relatively unknown brand in the U.S. while also fighting the negative perception associated with Chinese-made tires. The prospect is daunting—made more so by existing import duties on Chinese consumer tires and potential future ones impacting commercial tires—but Mr. Cicero said he's ready for one more challenge.
After leaving his position in 2014 as president of Alliance Tire USA, the U.S. subsidiary of Alliance Tire Co. Ltd., to become an industry consultant, Mr. Cicero said he was presented with a variety of opportunities but he kept coming back to Triangle.
“The potential is just too tempting,” he told Tire Business. “To see this company that has everything in place, all the right stuff, except the marketing strategy—it was tempting for sure.”
Triangle, which celebrates its 40th anniversary in 2016, operates five tire plants along with a research and development (R&D) center in China. The firm also employs more than 10,000 and ranked as the 15th largest tire maker globally in 2014 with sales of about $2.9 billion, according to Tire Business' global tire rankings report.
In mid-March, the company began producing high-performance car tires at its newest factory in Weihai, China, which has capacity for 4 million tires per year—a figure that eventually is expected to double—most of which are exported to North Amer-ica and elsewhere.
Mr. Cicero joined Triangle Tyre Group officially in January as CEO of Triangle Tire USA, its U.S. marketing and sales arm, which was established last November in Franklin, Tenn. He told Tire Business he opted to join the company following a visit to its headquarters in China.
“When I saw the investments being made, not because the state bought the equipment, but because an individual invested in it to improve quality and productivity, I was really impressed,” he said. “It was like, 'Wow, this is different.' And it was impressive.
“I saw this 33 years ago on my first trip to Japan,” he continued. “It may not be in my lifetime, but I see the possibility of Triangle Arena and Triangle Stadium. I see a brand building that could be one of the first Chinese brands to really grow in this country, and I'd like to be part of that.”
The new company will serve as a vehicle for Triangle's goals to build its brand in the U.S. in a variety of segments, including medium/heavy truck tires, light truck, passenger, UHP, winter and specialty trailer tires.
“Triangle had the right combination of broad product line, and I don't think you can say that of everyone,” Mr. Cicero said. “There are very few that have passenger and light truck.... There are very few that have a full line, and there are fewer that have a tech center.”
Triangle first established a U.S. presence in 2011 by opening a technical center in Akron, A3T L.L.C., which it plans to use to develop tires specifically for the U.S. market. For Mr. Cicero, this was a sign of commitment.
“Tech centers don't make money—they just spend money,” he said. “When you put a tech center in for five years and just feed it, it's a commitment. Even sales offices are commitments, but they're expected to pay for themselves.”
Since coming on board with Triangle, Mr. Cicero is wasting little time in getting the word out on the company, how serious it is about creating a significant presence in the U.S.
He was selected for the top post at the subsidiary because of his “considerable experience in all segments of the tire industry and proven management skills,” Ding Yuhua, chairman of Triangle Tyre Group, said when Mr. Cicero was named CEO.
Mr. Cicero began his career at Michelin Tire North America in 1978, where he worked in sales and marketing before joining Bridgestone USA Inc. in 1984 as a territory manager.
He moved up the ladder and in 1999 was named president of Bridgestone Firestone North American Tire L.L.C.'s Off-the-Road Tires Sales Group, a position he held until 2005 when he left Bridgestone to become president and CEO of Denman Tire Corp.
Mr. Cicero headed Denman until 2007, resigning in May. In October of that year he was named president of Alliance Tire USA, a position he held until 2014.
With Triangle, Mr. Cicero is working to build his U.S. team. The company added two members to its U.S. staff in March, hiring tire industry sales veterans Sidney “Sid” Parr and D. Tunney Vandevender to lead its commercial and consumer tire sales efforts, respectively.
Bringing warehousing to the U.S. is one of the next big projects for Triangle and something that the company would like to have up and running by the second half of 2016, Mr. Cicero said, adding it's necessary for a number of reasons.
“One, it's another differentiator,” he said. “You look at the container-only models and there's countless players in that space.
“Two, especially now in terms of price volatility—and we could have a downward spiral in prices—very few people want to make a huge stock acquisition, so we have to kind of de-risk it. (A distributor) doesn't want to buy half-a-million-dollars worth of tires, and in three months it's worth less because the price went down.
“Third, if you want to do anything with OEMs—and we do, we're a global player with OE relationships and we want to grow those relationships in the U.S.—you have to have a product here,” he added.
“Four, we have a tech center here that we could share for adjustments, for analysis, for test tires, so we really need some place to hold tires.”
But that doesn't mean the company will do away with container sales, either. Mr. Cicero said he thinks there's room for both, as container loads are still the most economical way to do business for those who can and will buy them.
A location for the company's first warehouse hasn't been selected, but Mr. Cicero said Memphis and Nashville make sense as those areas have emerged as tire distribution hubs. However, the company will look at where the majority of its business is projected to be before deciding.
“We'll start with public warehousing and then dial it in until we know what we're doing better,” Mr. Cicero said. “Initially we'll start with space that can expand as we grow. We did that at Alliance and it was a good model.”
The company has no plans to build a tire plant in the U.S., but Mr. Cicero said Triangle doesn't believe it needs local production to be successful here.
“U.S. manufacturing is not the sole criterion for success,” he said. “U.S. manufacturers without the right market strategies have sometimes failed versus offshore tire producers that approach the market from a customer centric per-spective. That's what we intend to do.”
However, he said the addition of a tire factory in the U.S. is a possibility.
Perhaps one of the biggest challenges facing Triangle in the U.S.—and a key battle in its brand-building strategy—is relaying to tire dealers/distributors and convincing them that it is not just “another Chinese tire.”
“As in any industry you have premier players and you have secondary players,” Mr. Cicero said. “Triangle is a premier player in China. If you look at the equipment, if you look at the investment, if you look at the R&D center, clearly there's a differentiation between them and a state-owned company that's just producing even though there's no market for the tires.”
As a privately held company, Triangle is forced to do things “a little bit more market-oriented” than state-owned enterprises that produce tires for the sake of it, Mr. Cicero said.
And as a different kind of Chinese manufacturer, Triangle is seeking a different kind of buyer.
The firm had good existing relationships already in the U.S., but did away with those primarily because of their transactional nature and they didn't fit a sustainable growth model.
“It was price more than anything,” Mr. Cicero noted. “There was no support behind it.... If one week or one month Triangle was cheaper, then Triangle got the business, but it was all based on price and that's very common in this space. It's just not a good way to build your brand.”
Moving forward the company is trying to resist the temptation of signing the first dealer who offers to take on the brand.
“That's the tempting part, and we've had people who called and said, 'I want them,' and some of them I know and they're not the right people,” he said. “Some of them I don't know, and as we look at it further we say, 'We'd love to do business with you, but maybe through a distributor that we sign in the area at some point.'”
What Triangle is looking for are brand partners, and with that comes a commitment to the brand.
“With the (dealers) who care, I think it resonates that we have to act a little bit differently because we're the largest privately held tire manufacturer in China,” he said. “Things that we do we're doing because there should be an expected return, not because we're being subsidized.”
One potential hang-up as Triangle forges ahead with its plan to grow its brand in the U.S. is the result of the U.S. Department of Commerce's ongoing investigation into antidumping and countervailing duties on truck and bus tires imported from China.
The announcement of the investigation has made signing distributors a difficult task, Mr. Cicero said.
“It raises uncertainty, and uncertainty in anything is disconcerting,” Mr. Cicero said. “We did have people we've talked to that were interested in the line, interested in truck (tires) who now said, 'Why don't we just wait until after we know what the tariffs are.'”
Because no one yet knows the impact of any potential TBR duties, Mr. Cicero said it's hard for companies to plan. However, that's not stopping Triangle.
“We still make plans, we still make truck tires, there are no duties on it today (and) we can ship today,” he said. “But for people looking for a long-term solution, they're curious as to what the impact is going to be, and I couldn't begin to guess myself.”
One possible bright spot is the firm's status as a privately held company, he said, as duties are primarily levied against unfair competition and state-owned enterprises in China “generally are looked upon unfavorably.”
“We're not a state-owned enterprise, so I like our chances vs. state-owned enterprises, but I have no idea what's going to happen, and I don't like it,” he said. “No one likes it. It's a reality, and we'll work around it when we have to.
“We were able to overcome OTR duties fairly well, and the PCR, you do it because you pick your areas where you have higher value,” he added. “Truck may be the same.”
Mike McNulty, senior reporter for Tire Business' sister publication Rubber & Plastics News in Akron, contributed to this report.