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March 17, 2021 12:30 PM

Wholesalers held their own in 2020

Bruce Davis
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    Capital Tire CEO Tom Geiger (center) shakes hands with Ed Harmon, CEO of NAI Harmon Group, at the groundbreaking ceremony in February 2020 of his company’s new headquarters in Rossford, Ohio. Rossford Mayor Neil McKinnon stands next to Mr. Geiger. They are surrounded by other Capital Tire employees, local politicians and representatives of the construction company. 

    AKRON — During a year dominated by COVID-19 and the economic chaos that ensued, major tire wholesalers throughout the U.S. and Canada held their own.

    According to comments gleaned from surveys submitted to Tire Business, major wholesalers dealt with a variety of issues throughout 2020, including supply shortages, shipping delays/interruptions, employee health, etc., in weathering the economic chaos brought on by the COVID-19 pandemic.

    The majority of the wholesalers that responded noted that the elevated import duties the U.S. has imposed on tires from various Asian nations have contributed to the ongoing supply shortages and are contributing to rising prices in many sectors.

    Business activity on the mergers/acquisitions front last year was relatively quiet, with just two deals of note:

    • K&M Tire's mid-August acquisition of Safemark, a division of Pennsylvania Farm Bureau, located in Middletown, Pa.; and
    • Distribution Stox Inc.'s purchase of the distribution division of fellow Quebec wholesaler Les Pneus R. Guay Ltée.

    According to information provided by the Small Business Administration (SBA) and analyzed by Tire Business, roughly 800 companies that identified themselves as "tire wholesalers" took advantage of the federal government's Paycheck Protection Program (PPP) last year.

    These companies received between $145 million and $269 million, the SBA data showed, which yielded an average loan value of between $181,000 and $334,994.

    The top companies in this category — Treadmaxx Tire Distributors Inc. of Ellenwood, Ga.; and Reliable Tire Distributors of Blackwood, N.J. — were shown as having received emergency small-business loans in the $2 million to $5 million range.

    The tire wholesalers category included a number of tire importers as well, including Vogue Tyre & Rubber Co., China Manufacturers Alliance L.L.C., Greenball Corp., etc.

    Wholesalers that responded to a question about the PPP were nearly unanimous in saying they used the funding to keep employees and/or pay rent.

    Among the concerns many companies listed for 2021 were:

    • Threat of supply shortages, fill rates;
    • Finding and retaining qualified personnel;
    • Rising cost of materials and logistics;
    • Coming to grips with consumers' new buying habits; and
    • keeping employees safe/healthy amid concerns about COVID variants emerging.

    Other noteworthy moves in the past year by leading wholesalers include:

    • Capital Tire Inc. moved in November to a purpose-built headquarters and distribution center spanning 80,000 square feet in Rossford, Ohio, after 98 years in nearby Toledo.

    The new facility is in the Harmon Business Park in Rossford, a community of about 6,000 roughly nine miles south of Toledo in close proximity to both I-75 and I-90. The structure represents an investment of $7 million.

    In an interview last year with ABC-TV 13 News, Capital Tire CEO Tom Geiger said: "We have the good fortune of having growth in our industry, … and we needed more space. We were a bit landlocked at the old space. ... This is a great place for us to transit product."

    Capital serves customers in Indiana, Michigan and Ohio from eight distribution centers in the three states. The former Capital Tire warehouse in Toledo was sold in late 2020.

    The new facility provides 45 jobs.

    • U.S. AutoForce opened a D/C in West Salt Lake City in August 2020 to service customers throughout central Utah, a "greenfield" market for the Combined Locks, Wis.-based company.

    The new warehouse expanded AutoForce's network to 34 locations nationwide. Customers in the area are able to participate in a number of tire manufacturer marketing programs as well as U.S. AutoForce's exclusive Tire One, Tread Pros and Dealer Force marketing programs.

    Nine of U.S. AutoForce's 34 warehouses — those in Arizona, California and Nevada — are operated by Tire's Warehouse, the Corona, Calif.-based wholesaler acquired by AutoForce in June 2018. Among these are D/Cs that opened in 2019 in San Diego and Las Vegas.

    • K&M Tire Inc.'s deal for Safemark helped the Delphos, Ohio-based wholesaler expand the eastern wing of its distribution footprint.

    "We've had a growing interest in expanding our distribution footprint within the Pennsylvania market," K&M Tire President Cheryl Gossard said at the time. "We feel that the team at Safemark fits our company culture and values and will be a wonderful addition to our team."

    K&M Tire had expanded eastward three years earlier with the acquisition of MotoStar Tire & Auto Products of Merrimack, N.H., which added distribution centers in Albany, N.Y., Lisbon Falls, Maine, and Merrimack to K&M's network.

    The Safemark deal expanded K&M's network to 32 distribution centers located in 17 states throughout the Great Lakes, Great Plains, Mississippi Valley and New England regions.

    • TireHub L.L.C. opened a 40,000-sq.-ft. distribution center in West Palm Beach, Fla., a new market for the Goodyear-Bridgestone Americas Inc. distribution joint venture.

    Prior to this opening, the West Palm Beach community was being serviced from Fort Lauderdale and Miami, Sylvia Wilks, vice president of operations, TireHub, said.

    The new center is TireHub's seventh D/C in Florida and 70th nationwide.

    TireHub relocated three D/Cs in 2020 in established markets, including Arlington and Houston, Texas and Sacramento, to support TireHub's growth and meet the needs of customers more effectively.

    • American Tire Distributors (ATD) opened D/Cs in south Atlanta, and Malvern, Pa., expanding the network to 113 wholesale locations plus four mixing warehouses.

    • JWT Wholesale, the wholesale arm of Scranton, Pa.'s Jack Williams Tire, opened a D/C in Logan, N.J., expanding its network of wholesale distribution points to 13 in a six-state area — Connecticut, Delaware, Maryland, New Jersey, New York and Pennsylvania.

    • Mid-States Tire Dist. Inc. of Columbia, S.C., is planning to add a pair of D/Cs in 2021, extending its network to four locations throughout the Palmetto State.

    • Penn Tires is planning to open additional D/Cs in Texas.

    • Steve Shannon Tire Co. Inc. added a pair of D/Cs in 2020, expanding to five the number of wholesale warehouses it operates. The Bloomsburg, Pa.-based dealership also operates 22 retail stores in central Pennsylvania. Revenue is split equally between the two segments.

    • Tire Solutions Inc. of Clearwater, Minn., expanded distribution into Iowa.

    • Zurcher Group/Best-One Tire expanded its network of wholesale D/Cs to 10 with the acquisition of Statewide Tire Distributors of Vandalia, Ill., and its five warehouses in Illinois and Missouri, and brought four other Zurcher Group affiliates under the Zurcher Tire Inc. Wholesale banner.

    Statewide Tire continues for now to operate under that name, owing to its name recognition among its customers.

    Among the others now operating under the Zurcher banner are Linder Tire in Cedar Rapids, Iowa; Boland's Best-One Tire in Sturgis, Mich.; and Southern Indiana Tire in Princeton, Ind.

    • Modern Tire Co., the specialty tire distribution arm of Raben Tire, has stopped trading under that name after Raben was acquired by Goodyear at year-end 2019.

    • Goodyear and Bridgestone Corp. booked "non-cash impairment" charges in their fiscal 2020 accounting to account for a drop in the estimated fair value of the investment in TireHub.

    Goodyear booked a charge of $148 million in the second quarter of 2020 to reflect the drop in the joint venture's estimated value to $77 million from $262 million in 2019.

    Bridgestone put the value of its impairment charge for TireHub at $170.5 million.

    Goodyear, which states in quarterly financial reports that it "regularly reviews" its investment in TireHub for potential impairment, said in its second-quarter 10-Q filing with the Securities and Exchange Commission that TireHub had suffered "higher-than-expected" net losses in the first half of 2020, driven by the impacts of the COVID-19 pandemic.

    These losses, which came on top of similar losses in fiscal 2019, caused Goodyear to conclude that there had been an "other-than-temporary decline in the fair value" of the investment, which led to an impairment assessment and the eventual decision to take the impairment charge.

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