That includes $8 million in financing, mostly loans, from the city and Cuyahoga County, undisclosed incentives from JobsOhio and more than $11 million in federal and state historic preservation tax credits.
Hence the need for the new 166,000-square-foot headquarters and the parking garage, which will contain 650 spaces. The company also is in the processing of buying the vacant Triangle Stamping Building, which is on the other side of East 70th Street.
The company's radio silence has in some ways made recruiting difficult, which is a big reason why Dealer Tire is coming out of its shell, according to CEO Scott Mueller. Even people who know Scott and Dean from their former Mueller Tire & Brake — the retail tire business their grandfather started in 1918 — don't always know what they're up to these days, he added.
“People ask us, ‘How's retirement?' Or ‘Do you still have the retail stores?' They don't really know what Dealer Tire is,” he said.
Thank you, Mercedes
OK, so what is Dealer Tire? In short, it's one of the largest distributors of tires and light vehicle maintenance products — think brake pads and wiper blades — in the U.S. It serves more than 10,000 auto dealerships from 43 distribution centers in the U.S. and Canada.
Granted, calling the company a “distributor” is a little simplistic. In some ways, Dealer Tire is like a software company, developing tools that help its customers inspect, select and sell more tires.
Its marketing department often operates like a marketing agency that serves car dealers. And Scott Mueller noted that the company sometimes resembles a consulting firm that helps dealers figure out how to act more like retailers.
The idea of dealers selling tires wasn't all that big in this country back in the 1980s, when the Mueller brothers started working for their family's retail tire business.
That started to change toward the end of the decade, when Japanese auto makers launched Lexus, Acura and Infiniti — luxury brands that “had a different attitude” toward retaining customers at the dealership, Dean Mueller said.
Thus, Mueller Tire & Brake saw an opportunity to expand sales to car dealerships, which had been a small part of the business. Its big break came in 1998, when the Mueller brothers visited the headquarters of Mercedes-Benz USA in Montvale, N.J.
The Mercedes executives didn't even bring business cards, so Dean figured it would be a short meeting. It wasn't.
A month later, they had a national contract with Mercedes. Then “doors started opening,” he said.
“Toyota, BMW, all these different guys were looking at what we were doing,” he said.
If you can't beat 'em …
Mueller Tire formed the Dealer Tire brand in 1999. It became an independent business when the Muellers sold the retail business, which consisted of 19 stores in Ohio, to TBC Corp.'s Tire Kingdom in 2002.
Why focus on the auto dealership business? For one, the Muellers realized that those dealers had a few strengths, such as a built-in customer base and technicians with deeper knowledge about the vehicles on which they work. If they learned the retail business, Mueller Tire could be in trouble.
“If you applied what we knew as a retailer to the service drive of a car dealership, they could sell tires. It was pretty simple,” Dean Mueller said.
And sell tires they did. Dealer Tire spent its first six years in business adding new warehouses and building new partnerships with automakers — deals that allowed them to sell to individual dealerships.
Things got “a little dicey” for a brief period during the recent "Great Recession," he said, but the company never had to lay off employees. And through most of the downturn, it continued to hire, add warehouses and invest in technology.
It proved to be a turning point for the business. Car dealers needed revenue, so Dealer Tire started coming up with new ways to help them find it, Scott Mueller said.
“They knew if they couldn't sell cars, they had to service customers better,” he said.
That's what pushed Dealer Tire to develop RightTurn.com, a website that helps drivers find tires that match both their vehicle and their driving style. The site then pairs them with dealers who can install those tires. After testing RightTurn.com in Cleveland and Dallas, the company is now beginning to market the site nationally.
The future and the past
The company is experimenting with other technologies that could help dealers compete in a changing world. It's currently trying to figure out how to harness data from cars. It's also starting to think about how it could help dealers get an edge as electric cars — and even autonomous cars — become more prevalent, Dean Mueller said.
“We have to figure out where we're going to be in that world before it's here,” he said.
It also has a handful of employees in China working to determine whether Dealer Tire should work to expand in that country.
As far as the past is concerned, the company is OK with leaving some parts of it behind. Namely, its current headquarters — a series of attached warehouses that Scott Mueller described as a “bomb shelter” because of its lack of windows.
By contrast, natural light floods the new building, which has windows on almost every wall. The space also is much more open, which will allow Dealer Tire to build a more efficient, collaborative layout.
The art that covers the walls of the current headquarters will move to the new building. And the Muellers are adamant about holding on to the company's culture as well, Scott Mueller said.
“When you grow so rapidly, it's easy to lose site of where you came from,” he said.
Though Dealer Tire has had private equity investors since it spun off from Mueller Tire — today, New York-based Lindsey Goldberg currently owns an undisclosed portion of the business — it's still a family company. Their father, Walter D. Mueller, still works for the company at age 88.
The brothers want to ensure that Dealer Tire doesn't lose that family atmosphere. Thus, the company shares its financials with employees, measures employee engagement regularly and participates in community events like the Cleveland Corporate Challenge.
Plus, the first floor of the new building is being designed with employees in mind: It will include a fitness center, a cafeteria and classrooms for the hundreds of training programs that Dealer Tire hosts each year.
Those kinds of efforts have helped the company retain employees for decades, Dean Mueller said.
“We've got employees from our retail days who've been here 25, 30 years,” he added.
Scott Soder is a reporter with Crain's Cleveland Business, a sister publication of Tire Business.