AKRON — The last 12 months seemed like an alphabet soup full of changes in the wholesale tire business.
NTW. TBC. TCi. ATD.
From January, when Michelin North America Inc. (MNA) and Sumitomo Corp. of Americas (SCOA) announced the formation of National Tire Wholesale (NTW) — a 50-50 joint venture that combines Michelin's TCi wholesale business with the Carroll Tire wholesale assets of TBC Corp. (an SCOA company) — 2018 was off and running.
In the deal, valued at $1.52 billion, Michelin acquired a 50-percent stake in TBC with a $630 million cash payment along with its TCi assets. NTW now ranks as the second-largest player in the U.S. wholesale tire market, combining Michelin's 85 TCi and TBC's 59 Carroll Tire wholesale distribution locations. Don Byrd, president and COO of TCi since 2014, was named president and COO of NTW.
The wholesale news didn't stop until the days right before Christmas. First, American Tire Distributors Inc.'s voting stakeholders "overwhelmingly" approved of the company's reorganization plan. Then, two days later, the U.S. Bankruptcy Court for the District of Delaware approved its plan, paving the way for ATD to emerge from Chapter 11 bankruptcy protection.
It's been that kind of year. Those changes, and numerous others in the wholesale business, rank collectively as Tire Business' Top Story of the Year.
Within that, the story of ATD dominated. Soon after Michelin and Sumitomo launched NTW, two other Tier 1 tire makers and competitors, Bridgestone Americans Inc. and Goodyear, announced the formation of their own 50/50 JV, TireHub L.L.C., to distribute Bridgestone, Goodyear and their respective associate brand tires through 80-plus distribution centers nationwide.
TireHub, a $600 million stand-alone company based in Atlanta, began operations on July 3. CEO Peter Gibbons, a veteran business and supply chain executive, was named to lead the new JV.
"It's critical for U.S. tire dealers and retailers to be able to get the right tires on time to meet the needs and expectations of their customers," said TJ Higgins, president, integrated consumer tire group, U.S. and Canada, Bridgestone Americas.
"With the ability to deliver the full portfolio of Goodyear products and a dedicated focus on driving logistics and customer service excellence, TireHub creates a winning proposition for us, our customers, Goodyear's company-owned retail outlets and consumers ... ," Goodyear Americas President Steve McClellan said.
It wasn't long afterward when Bridgestone and Goodyear said they would be ending supply ties with ATD, eliminating two of the wholesaler's largest suppliers. Goodyear accounted for 12 percent of ATD sales, according to ATD CEO Stuart Schuette.
The moves jolted the Huntersville, N.C.-based tire distributor, which had estimated sales of $5.2 billion in 2017. In a matter of weeks, Moody's Investor Services delivered another blow to ATD, downgrading the company's ratings and telling investors "the magnitude of the associated earnings and cash flow decline will compound an already levered financial risk profile, rendering a pre-emptive debt restructuring increasingly likely."
With the year just beyond its halfway point, ATD announced a major reorganization plan. About 100 positions were eliminated, 40 others were added, and a renewed emphasis was made on increasing the number of franchises that are part of ATD's Tire Pros program. ATD said the moves would save $20 million annually.