As another year ends and I find myself in the holiday spirit, I think about the past, present and future.
Last year when I sat down to write this article, it was one of the driest Novembers on record. My warehouses were still full of winter tires, and frustration was the overwhelming mood, mainly my frustration with manufacturers' insistence on requiring dealers to order their entire winter stock seven months before having an opportunity to sell them.
Fast forward to this year where we have had a snowy November. I sit satisfied with a successful winter tire season and my overall inventory low. My frustration with the manufacturers has dropped to only an annoyance. There are even sizes that we are "done for the year"—tires I could sell readily if I could get them.
Other than some turmoil with import tariffs, 2016 has been good overall for the tire industry. A Tire Business readers' poll lists 38 percent of dealers are up in both sales and revenue. Tire manufacturers' efforts to diversify where tires are made has reduced the burden of the passenger tire tariff, which has had little effect on the price and availability of entry level tires (although some manufacturers are no long available).
Gas is still inexpensive, and as of November, auto sales were up 3.9 percent. (Auto sales finished the year up 0.03 percent, according to Automotive News.) In addition, incomes have risen, and jobless rates are down, all of which are good signs for us.
As an industry, we saw some shifts. The average consumer is becoming more Internet savvy and continues to explore buying tires online. So many customers I've talked to gave me the smug, "I'd like to keep it local, but…" threat this year, only to be deflated when I reminded them about shipping and installation costs.
Fortunately, our prices were comparable to the online discounters when all things were added up. This gave our business new credibility and new opportunities with many customers that gave us a chance.
The downside: customers who didn't do their research bought tires online and then thought they were circumventing the system and saving a ton. These customers inevitably felt slighted in the end when the addition of shipping and installation charges made their savings evaporate.
One development that helped is that many online retailers now must charge sales tax, at least in Vermont. Manufacturers such as Michelin and Goodyear also got into the online ordering game. This, in our experience, has caused more confusion and customer dissatisfaction than anything else.
On the marketing front, I am finding the trend of traditional marketing continuing to be less effective and most of my advertising efforts is spent online. I am putting the highest priority on getting customers reviews. Call-to-action advertising on Facebook and Google is more effective than ever. And like every year lately, I have learned a lot about online marketing.
In my retail stores, retention and reliability of tire techs during our busiest times of year hit a breaking point. Many days this busy season, our shops were taking only in two-thirds of the cars that they could have if they were staffed fully.
The winter tire season is brief, and the staffing tensions were a clear reminder of how our income is so closely tied to the shop staff—staff who were not motivated to rise to the challenge or have the loyalty to stay during the toughest part of the year.
The bright side of this is that it drove me to act. Working with my managers and salesmen, we created an employee end of the season bonus plan that is based on meeting performance and tardiness/attendance minimums. We are early in the program, but so far it has been a resounding success.
The future is harder to predict than ever before. A new administration will mean changes. Vermont, being in the extreme northeast and mostly rural, isn't impacted by the benefits or the burdens of the U.S. immigrant population.
The last time Vermont had an influx of immigrants is when my grandparents and great grandparents migrated down from Quebec in the beginning of the last century. Hiring immigrant vs. non-immigrant labor has never been an option for me, but for many parts of the country, this will be a major factor.
Finally, to my knowledge, protectionism hasn't been a theme of a U.S. presidency since before I was born. Add to this, the new model of tire supply. Manufacturers are embracing globalization and using multi-national strategies to build tires for the U.S.
It's hard to predict how more global tariffs or a trade war would affect the supply and cost of product that we sell. Lack of product availability and price hikes always do damage to our image with our customers. We are fortunate that tires are more resilient to adverse market conditions.
Forced price hikes on TVs could dry up sales almost completely, but people will need to keep buying tires. Thankfully they are a wonderful disposable necessity.
Once again, I am left with feeling grateful to be in the industry my father and I chose to rely on for our livelihood. Good times, bad times, uncertain times—the tire industry perseveres.
Mark Rochefort is vice president of Vermont Tire & Service Inc., which operates retail stores and wholesale centers in Montpelier and South Burlington, Vt. His column first appeared in the winter 2016 magazine of the New England Tire & Service Association, of which Mr. Rochefort is president. This is reprinted with his permission.