Dealers made investments during the downturn to prepare for the upturn
The companies on the Modern Tire Dealer 2013 Top 25 United States Commercial Tire Dealers list are making a post-recession comeback. Fourteen of them recently opened or are planning to add outlets in 2013. In addition, nearly all of the top dealers are experiencing year-over-year increases in commercial sales.
Dealers also are reporting that the expiration of Tariff 421 (the nickname for the 25% tariff on consumer tire imports from China) in September 2012 is creating new challenges for their retreading operations.
Little change at the top
The top five spots for 2013 are held by the same dealers in the same order as in 2012. Southern Tire Mart LLC, based in Columbia, Miss., is first with 50 commercial-only outlets, 12 combination commercial-retail outlets and 17 retread plants.
Best-One Tire & Service of Monroe, Ind., came in at number two. The dealership has 67 commercial-only outlets, 119 combination outlets and 17 retread plants. Pomp’s Tire Service, based in Green Bay, Wis., ranked third with 29 commercial-only outlets, 45 combination outlets and 12 retread plants.
Snider Tire Inc. of Greensboro, N.C., holds the number four spot. It has 44 commercial-only outlets and six retread plants.
Fifth in the ranking is Les Schwab Tire Centers of Bend, Ore., which has 445 combination outlets and three retread plants.
New to this year’s list is Royal Tire Inc. with 16 commercial-only outlets and three retread plants. The purchase of two commercial service locations and a Bandag franchise helped push Royal Tire to 21 in this year’s rankings. The St. Cloud, Minn.-based company purchased St. Paul Tire in Newport, Minn., and acquired Midstates Retreading & Wholesale and a commercial service location from Northwestern Tire Co. Inc.
Royal Tire opened its newest outlet in May 2013 in Williston, N.D. “We are continuing to look for opportunities to expand our service area through acquisition,” said Mick Pickens, Royal Tire president.
Dealerships are ranked according to MTD’s exclusive formula, which determines a point total for each company. The list is made up of the companies with the highest 25 point totals, and the final rankings are based on estimated commercial sales.
Where are the casings?
With the exception of Royal Tire, the dealers on the list are identical to last year. However, their retreading operations are facing new challenges from the increase in new truck tire imports. Instead of expanding the pool of available casings in the retread market, sales of import tires are putting pressure on supply and prices of casings because of a quality issue.
“Market adoption of import commercial tires that are difficult to retread is driving the demand and pricing for quality casings higher,” said a top retreader who declined to be named.
A percentage of import tires are difficult to retread, which may limit the growth of the retread market, according to the retreader. “If a customer buys a Tier One or Tier Two commercial tire, it can be retreaded three or four times. If the same customer puts 18 imports on a truck, a retreader may not be able to accept the tires for retreading. For every import tire sold, that’s potentially one less tire in the pool for casings for the stock retread market.”
The warranty provides a clue to a casing’s integrity for fleets trying to minimize a tire’s life-cycle costs through a retreading program. “The Tier 4 product grouping has a very limited casing warranty on it,” said Tom Bowman, vice president, commercial division, for Belle Tire Distributors Inc., which is No. 15 on the commercial tire dealer list. “You have to look at the value, and the value is in the casing. You have customers in niche areas where all they look for is price but the value is not there, especially for cradle-to-grave programs for fleets.”
The Tier One and Tier Two companies offer a complete menu of support services with their products, says Bowman. “In Tier Four, it’s a la carte, and you get a tire with a limited warranty.” Bowman says the Chinese plants are running at 70% capacity. “They still have 30%. As we move forward, the Big 3 and the Tier Two companies really need to get their arms around this.”
Scott Bennett, vice president of sales for Service Tire Truck Centers Inc., says the ability to retread casings of import tires remains in question despite improvements in quality. “Overall, their products are improving, and that is putting a lot of pressure on Tier Two companies to prove out their value. The question of the sustainability of their product will remain with Tier Three and Four companies.”
Bennett says Tier Two products are challenging Tier One on value. “We’re seeing faster growth with Tier Two products because of good sustainability, good casings and good performance on tread life. The value of some Tier Two compared to Tier One proves out.” Bethlehem, Pa.-based Service Tire is No. 6 on the commercial tire dealer list.
Investments are paying off
Although the pressures on the supply and price of casings are affecting their retread operations, many of the nation’s top dealers are seeing their investments in expanded capabilities and geographic coverage over the last few years pay off in growing sales.
The economic downturn challenged all commercial tire dealers to find ways to be stronger competitors, enter new markets, and position themselves to serve their customers as the economy recovers.
Bennett calls the years 2009 and 2010 “the right-sizing era” of the economy. “We saw many of our customers sell off equipment and go out of business. There was less wheel position for us to sell due to the reduction in commercial fleet sizes.” The company focused on growing business with existing customers and developing new offerings aimed at different business segments.
In 2010, Service Tire expanded its mechanical offerings in response to its customers’ changing business models. Companies wanted common carriers that could move their freight on dedicated routes outside the transportation provider’s established distribution network.
“The for-hire carriers have equipment outside of their normal network, and they need someone to maintain that equipment. We put together a network of locations for companies looking to outsource their mechanical services. Our customers are used to dealing with our billing, personnel, procedures and culture on the tire side, so it is easy to roll more mechanical services into a benefit for them,” said Bennett.
By the end of 2013, Service Tire will have 11 mechanical locations operating under the “Service Tech” brand name. The company introduced the Service Tech brand earlier this year to help differentiate tire services from the mechanical side of the business.
Service Tire added large mining tires and solid tires to its earthmover offering, a market segment they had served since the early 1980s. In August 2013, Service Tire was certified into the Michelin Earthmover Repair Accreditation program.
The company branded its 24-hour emergency road service “Road Assist” in 2010 and recently improved the offering. In addition, Service Tire has opened three outlets since May 2013. A new location in Aberdeen, Md., provides mechanical and tire services. Commercial-only outlets were opened in Syracuse, N.Y., and Winchester, Va.
The investments are paying dividends for Service Tire. “Earthmover sales will increase for us in 2013. For mechanical, our goal for 2013 is a double-digit percent of our overall business. We diversified every part of our business. Diversifying allows us to better control our own destiny and have sustainability as a company,” said Bennett.
Like Service Tire, Allen Park, Mich.-based Belle Tire continued to invest in its business and expand service offerings during the global recession. The company’s more recent investments include replacing all shearography equipment at its three retread plants in the last six months. Four of the latest model Bandag Insight casing analyzer machines were installed. “It’s new technology that was introduced a year ago. The equipment is expensive but worth its weight in gold,” said Bowman.
The new equipment is helping Belle Tire meet the demand for retreaded tires. “A lot of fleets are buying retreads now that weren’t a few years ago. Large fleets generate their own casings. We try to get two, three or four retreads on them, depending on how long the customer wants to keep the tire and its position,” said Bowman.
In addition to its retreading operations, Belle Tire offers Tier One, Two and Three portfolios of services to its fleet customers. The company has expanded its offerings to become a one-stop provider for fleet customers. New offerings include a windshield repair and replacement service introduced in 2012 and heavily promoted in 2013. Belle Tire also expanded its trailer readiness program. “We dabbled in it before; we are more involved now. It’s another service offering that ties us to our customers. All trailer technicians are ASE- and TIA-certified,” said Bowman.
The company recently installed a heavy-duty truck alignment machine at its Toledo location and is considering installing one at its Cleveland facility. Belle Tire already provides heavy-duty truck alignment at its Allen Park operation. “We always look at new technology to see what we can do to serve our customers.”
Dealers change with the market
MTD surveyed 45 commercial tire dealers to develop this year’s list of the top 25 dealerships.
We asked dealers how marketplace changes were affecting their business and what they were doing to adapt. Here’s what they told us.
Best-One Tire & Service, No. 2, Pete Glesing, director of commercial development: “We are continuously looking for additional sales opportunities. We continue to offer large fleet customers a one-stop shop.”
Boulevard Tire Center, No. 10, Earl Colvard, president: “Expanding retread capacity, adding new equipment and adding truck alignment in some locations.”
Commercial Tire Inc., No. 18, Bob Schwenkfelder, CEO: “We are moving one Bandag retread facility into a new, larger building to keep up with our growth in retreading. The Tier Three import truck products are definitely growing and taking a larger percentage of the medium truck market.”
Jack’s Tire and Oil Management Co. Inc., Bob Feldbauer, CEO/president: “Casing supply is still an issue in the marketplace.”
McCarthy Tire Service Inc., No. 7, Neil Horn, vice president: “We are always investing in new retread equipment to update our plants and adding capacity. We have increased our capacity on truck mechanical to help offset the increasing national account business.”
Nebraskaland/Kansasland/Coloradoland Tire Group, No. 25, Nick Phillippi, general manager: “We will be looking at retread equipment in Q3 to increase capacity and possibly to do superwide retreading.”
Piedmont Truck Tires Inc., Mitch Glover, vice president: “The industry is going more and more to big buying groups and national accounts. We are methodically growing so our ability to service a broader area is enhanced. We are continuing to offer niche products such as earthmover repair, tire fill and rim refurbishing. Service is the key to getting and keeping customers. We are offering 24-hour, seven-day-a-week service with certified employees who will do an excellent job.”
Purcell Tire & Rubber Co., No. 8, Paul Long, vice president of purchasing: “Spending more time and money on training our associates.”
Sullivan Tire Co. Inc., No. 20, John Donovan, vice president: “Growing mechanical services, increasing OTR service fleet and driver training on safety and compliance.”
Valley Tire Co. Inc., No. 22, Jim Stankiewicz, president: “Valley Tire now is doing heavy-duty truck repair under the name of TruxTex.”
Ziegler Tire & Supply Co., William Ziegler, president: “Adding light mechanical to our truck offering.” ■
To see the Top 25 U.S. Commercial Tire Dealers chart, click here.
How our rankings are determined
To make the MTD Top 25 U.S. Commercial Tire Dealers list, a dealer has to: 1) sell truck tires, 2) have at least one retreading plant, and 3) offer 24/7 road service. Point totals are tabulated based on number of outlets. Each commercial-only outlet received two points and each retread plant received one point. The number of combination commercial/retail stores is multiplied by the estimated percentage of commercial sales, and then multiplied by two. The highest 25 point totals make up the list, and then the dealers are ranked based on estimated commercial sales.
Which 18 dealers plan to add stores in 2013?
Modern Tire Dealer gathered information from 45 dealerships to compile this year’s list of the top 25 commercial dealers. We asked if they would be increasing their store count in 2013. Eighteen dealers said yes. They are:
Belle Tire Distributors, Inc.
Best-One Tire & Service
Boulevard Tire Center
Callaghan Tire Inc.
Commercial Tire Inc.
Donald B. Rice Tire Co.
Graham Tire Co.
Les Schwab Tire Centers
McCarthy Tire Service Inc.
Pete’s Tire Barns Inc.
Piedmont Truck Tires Inc.
Raben Tire Co. Inc.
Royal Tire Inc.
Service Tire Truck Centers Inc.
Snider Tire Inc.
Stratham Tire Inc.
Sullivan Tire Co. Inc.
Valley Tire Co. Inc.