Hercules Tire & Rubber Co.'s decision to sell its retread assets to Cooper Tire & Rubber Co. was necessary because of increasing competition, according to Hercules CEO and President Craig Anderson (pictured). "The majors are having a war, and sometimes ricochets kill."
Hercules will produce retreads through the end of June to keep inventory levels up for its 250 retread customers throughout the United States and Canada.
"We're looking to protect our retread dealer base," says Anderson, who expects Cooper officials to start calling on Hercules customers within a week. "We'll be working with them during the transition."
Hercules will retain its two retread production facilities, which will house its custom mixing business. Anderson says the company's custom mixing business has grown substantially over the last few years.
Paul Rinauro, vice president and general manager of the company's Manufacturing Division -- which included the Hercules retread operation -- has elected to stay with the company. However, an estimated 80 production and administrative jobs will be slashed when the sale goes through, says Anderson.
The deal with Cooper Tire is tentatively scheduled to be finalized by June 30, according to Cooper officials. The purchase includes certain Hercules molds, a press and the company's finished goods retread inventory. Both companies are based in Findlay, Ohio.
As reported yesterday, Cooper will merge all of Hercules' retread customers into its Oliver Retreading Systems unit when the deal closes. Cooper will replace the Hercules brand name in time.
The Hercules acquisition will give Cooper 16% of the domestic retread market, according to Modern Tire Dealer statistics.
Since acquiring Oliver Rubber through its acquisition of Standard Products Co. in late 1999, Cooper Tire & Rubber Co. has made fully integrating the renamed Oliver Retreading Systems into its corporate structure a top priority. But it hasn't been a painless process.
Several Oliver facilities have been closed since the start of 2000 as part of Cooper's reorganization that ultimately resulted in the manufacturer's creation of three tire group divisions later that year: North American Tire, International Tire and Commercial Products, which is captained by former Oliver Rubber President Larry Enders.
Buying Hercules' retread assets has helped offset the loss of longtime Oliver customer Treadco Inc., which was purchased by Goodyear Tire & Rubber Co. last September.
In an exclusive interview, Enders took time to speak with MTD at last month's World ITRA Expo in Nashville, Tenn., about the company's plans. He said Cooper's commercial business will not be de-emphasized.
"The integrations to convert all of Oliver's systems over to Cooper took a significant amount of manpower, and there was some cost involved. We want to grow our commercial side; that's why we put together the Commercial Division. We've made some investments in our Albany, Ga., plant for the production of radial medium truck tires.
"When you put all those together, it shows our commitment. Our international plans also include commercial tires and retreads as we look for opportunities around the globe."
Enders said the biggest challenge he is facing is "to meet the objective of growth in soft market."
Modern Tire Dealer's in-depth interview with Enders will appear in its May issue.
