Atlas Tire to add Ontario warehouse to help with seasonal swings

MISSISSAUGA, Ontario — Looking to deal with the "extreme seasonality" of the Canadian market, Atlas Tire Wholesale Inc. is opening a 182,000-sq.-ft. "inventory support center" in Toronto to help improve deliveries to its existing wholesale distribution network.

The facility, which has 24 loading docks and 30-foot high ceilings, will not replace any of Atlas' six existing distribution centers (D/Cs), in Alberta, British Columbia and Ontario, Atlas Tire President Peter-James Gregory said.

Instead, the center will allow Atlas Tire to take in and store winter tires and wheels when they're shipped from the manufacturer — primarily in the second and third quarters — and then re-ship them to the outlying D/Cs in the fourth quarter, when retail orders ramp up.

Atlas Tire is pitching this move under its "Power of Inventory" strategy, Mr. Gregory said, which is designed to help Atlas manage SKU proliferation more effectively while also reducing congestion in the existing D/Cs, facilitating faster receiving of bulk shipments and improving the replenishment rate for D/Cs.

Mr. Gregory explained that major wholesalers such as Atlas Tire have to place their winter tire orders with manufacturers in February/March and be prepared to start accepting deliveries as early as April, resulting in higher levels of inventory for up to six months.

Atlas Tire is in the process of converting the leased facility in Vaughn, Ontario, just north of Toronto, to tire storage specifications, Mr. Gregory said. It is scheduled to be operational during the first quarter of 2019, starting with two shifts of 20 employees or so per shift, he added, with additional temporary seasonal staffing in peak periods.

Mr. Gregory put the investment at "many millions of dollars."

Atlas Tire concentrates on Tier 1 manufacturer brands — Bridgestone, Goodyear, Michelin, Hankook and Pirelli, for example— which means accepting shipments from Asia and Europe in addition to the U.S. and Canada, especially in the winter tire sector.

Helping the regional D/Cs operate more efficiently is a key goal of this investment, Mr. Gregory said, because the regional centers are under increasing pressure to offer multiple deliveries per day — in some cases up to four times daily.

The addition of the inventory support center also helps Atlas Tire deal with the industry's shift to larger rim-diameter tires, Mr. Gregory said, noting that any given warehouse's unit capacity is only about 80 percent of its targeted storage of just 10 years ago.

SKU and size proliferation is being driven by OE, he said, particularly in the "prestige" and premium sectors. Since Atlas Tire has a strong "OE first" strategy, the complexity of SKU proliferation is part of the company's daily reality.

In addition, the demand for winter tires in Canada is growing steadily, in part due to legislation but also due to more consumer awareness thanks to both industry and government information campaigns.

Nearly two-thirds of Canadian motorists claim they drive on winter tires, according to data from a 2017 Tire and Rubber Association of Canada (TRAC) study. TRAC also said from that study winter tire shipments throughout the country were growing at an annualized rate of 4 percent, making them the fastest-growing tire category in the country.

The growing demand for winter tires also affects demand for wheels, Mr. Gregory said, as many consumers choose to mount their winter tires on winter wheels — both steel and alloy — and then store them throughout the summer months.

Founded in 1990, Atlas Tire Wholesale serves both tire retailers and car dealers across Canada. It has 230,000 square feet of warehousing space under roof at its D/Cs in Mississauga, Scarborough and Vaughan, Ontario; Delta, British Columbia; and Calgary and Edmonton, Alberta.

The company employs more than 190 and has a fleet of 60-plus delivery vans and trucks.