AKRON — A year and change removed from the frenetic restructuring of 2018, the U.S. wholesale industry returned to a more "traditional" path of progressive growth while the industry's new "Big 3" wholesalers sorted out their newly (re)configured structures.
TireHub L.L.C. — the U.S. tire distribution joint venture set up by Bridgestone Americas Inc. and Goodyear in April 2018 — retrenched slightly initially, reducing its network of distribution centers to 68 from 83, but opened three logistics centers in the past year to extend the venture's reach to 71 D/Cs in 36 states.
The new centers are in Columbia, S.C., Lakeville, Minn., and Fort Myers, Fla. It also relocated centers in Austin, Texas; Knoxville, Tenn.; Mobile, Ala.; Oakland, Calif.; and Las Vegas to meet product demand in each respective market.
- This story appears in the March 16 print edition of Tire Business.
TireHub said opening a D/C in Columbia allows it to increase the frequency of deliveries to customers in that area to up to four times a day within a 20-mile radius and described Lakeville as a "significant opportunity" to service customers across the broader Minneapolis area more effectively.
In its fiscal 2019 financial accounts, Goodyear reported TireHub-related equity losses of $33 million and $15 million in 2019 and 2018, respectively, losses that reflect higher-than-expected start-up expenses and additional costs incurred to build out the distribution footprint for growth.
Goodyear said it expects these losses "to moderate" in 2020.
National Tire Wholesale (NTW) — the entity that comprises the wholesale distribution assets of TBC Corp.'s Carroll Tire and Michelin North America Inc.'s TCi Tire Centers business — has endured its own teething problems, as reflected in recent financial statements of Sumitomo Corp. of Americas, the parent of TBC Corp., which runs NTW.
In comments made during a conference call with financial analysts, Sumitomo Executive Vice President Koichi Takahata said the "integration process has not gone smoothly" and referenced the need to integrate "extremely large warehouses" in a relatively short time span in order to effect the merger.
Further, Mr. Takahata said: "The initial struggle resulting from the merger with secondary wholesaler Michelin has continued. It is thus difficult to expect the merger benefits in the current fiscal year, and these benefits have been pushed back to the next fiscal year."
For its part, American Tire Distributors Inc. has reduced its network of D/Cs to 116 from 130 in late 2018 and carried out a series of restructuring moves that included "some realignment within the sales force" and some minimal reductions in work force.
The company also invested in enhancements to its technology platforms — including ATD Online, ATD Mobile and ATD Connect — in order to help customers differentiate and grow their business.
Among the executive changes was the promotion of Greg Bell, an ATD executive since 2007, to president of its Tire Pros franchise business, replacing Ron Sinclair, who retired in mid-2019 after a 15-year career with ATD.
Other changes included the appointments of Owen Schiano to chief operating officer and Keith Calcagno to chief merchant and strategy office, both newly created positions, and the expansion of duties for Ivy Chin, chief digital and technology officer, to include efforts to unify the firm's technology and digital ecosystems.
Other distributors that expanded in the past year include Black's Tire/BTS Wholesale; Parrish Tire Co.; Tire Distributors Xperts/TDX; and Tire Group International (TGI).
Black's Tire/BTS opened a 60,000-sq.-ft D/C in Columbia, S.C., and is in the process of expanding the D/C at its central distribution site in Whiteville, N.C.
The new site in Columbia, the company's fifth wholesale D/C, is central to BTS' distribution footprint throughout the Carolinas.
In Whiteville, Black's Tire — which celebrated its 90th year in business in 2019 — budgeted $2.7 million for the expansion project, which will double the size of the D/C there, which prior to the expansion had capacity for 175,000 tires.
"This expansion project will … allow us to continue to serve our customers, stay competitive and create much needed job opportunities for new BTS team members throughout southeastern North Carolina," Black's Tire Vice President Rick Benton II said last July at a ceremony marking the start of the project.
North Carolina backed the project with a $75,000 performance-based grant from the state's One North Carolina Fund. Such grants require a matching grant from local governments.
BTS, which services over 4,000 wholesale customers in addition to 46 Black's Tire retail stores throughout North and South Carolina, pledged the project would create 26 new jobs.
"The Black's Tire Service decision to expand its operations in rural North Carolina speaks to the power of the state's workforce, strong economy and great quality of life," North Carolina Gov. Roy Cooper III said.
Black's Tire did not comment on the sales implications of the expansions. Wholesale represents 70% of the company's annual sales.
Winston-Salem, N.C. -based Parrish Tire opened a D/C in Conway, S.C., in April 2019 — taking over a vacant 110,000-sq.-ft. facility — and is looking to add more locations to improve service within its existing footprint.
The new center expands Parrish's reach to five D/Cs. The others are in Lyndhurst, Va., Carrollton, Ga.; Mogadore, Ohio; and Winston-Salem.
Gardena, Calif.-based Tire Distributors Xperts/TDX — the wholesale arm of private- and import-brand distributor Tireco Inc. — added D/Cs in Dallas and Houston via the acquisition of Tire Universe to support growth in the Southwest.
The new D/Cs are TDX's 14th and 15th. The company sells to dealers up and down the Pacific Coast and the Rocky Mountains and into Texas, plus Illinois.
Miami-based TGI added a warehouse in Tampa, Fla., to help support its launch of the Cosmo brand in the U.S.
In addition, Zurcher Tire / BestOne Tire bought the wholesale business of Linder Tire of Iowa City, Iowa, a 90-year-old family-owned dealership that continues to operate three retail tire and auto service outlets in the Iowa City area.
The D/Cs are Zurcher Tire's first in the Hawkeye State, extending the Monroe, Ind.-based dealership's reach further west. Zurcher's nine other D/Cs are in Illinois, Indiana, Michigan and Missouri.
Macon, Ga.-based Tire Distributors of Georgia is planning to open a fifth D/C in Georgia this year or next to help it serve customers in its targeted area of middle/south Georgia, South Carolina, western Alabama and northern Florida.
Also, Friend Tire Co. is considering adding up to three D/Cs before year-end 2021 to its existing network of seven warehouses, which allows the Monett, Mo.-based Yokohama Tire Corp. subsidiary to service customers in 22 states throughout the U.S. Heartland and into the Southwest/Rocky Mountains.
Dealer Tire L.L.C., the Cleveland, Ohio-based wholesaler that specializes in servicing new-car dealerships, is buying Dent Wizard International, a national provider of automotive reconditioning services and vehicle protection products, to augment the range of aftersales services it offers.
Dealer Tire said it intends to offer $350 million in senior notes, due 2028, to finance the acquisition. Dent Wizard claims in excess of 7,000 customers — including more than 5,000 car dealership accounts — in 97 of the top 100 U.S. markets.
• Distribution Stox Inc. acquired the distribution division of fellow Quebec wholesaler Les Pneus R. Guay Ltée.
• Pneus Unimax Ltd. is in the process of consolidating its quiver of retail branding programs; and
• OK Tire Stores Inc. embarked on a $75 million, 5-year growth initiative that includes adding over 500,000 square feet to the company's network of 11 regional distribution centers and opening a 12th warehouse, near Mississauga, Ontario, in 2021.