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Hispanic inquisition

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Hispanic inquisition

You know the metro Miami area is a different animales when a retailer offers "all brands all sizes," is an authorized Goodyear and Michelin dealer, claims to have the lowest prices -- and the shingle says Mr. Kool Radiator Service.

Miami's average temperature hovers close to 98 degrees Fahrenheit, not enough to melt tires but certainly enough to make them run hotter and maybe wear out just a little faster. In the summer, it is not uncommon for the temperature to be 83 degrees at 1 a.m.

Located in southern Florida, Miami has cultural and linguistic links to a number of Hispanic nations. Spanish-speaking employees are a must for retailers, but there are many dialects among the population, a melting pot made up of people from the Caribbean, Dominican Republic, Venezuela, Panama, Columbia, Cuba, Jamaica, Mexico, Puerto Rico and other countries. Even among the Spanish-speaking population, not all words mean the same thing.

Haitians may speak French or Creole, Brazilians Portuguese. Being multi-lingual doesn't hurt.

"Miami is made up of pieces of the Americas," says Menalco Solis, general manager of Martino Tire Co.'s retail division. "From Canada to Argentina there are a lot of pieces."

These close ties to the world market explain the number of companies, including tire dealerships, that export tires. "Come to any of our stores," says Home Depot, "and we will gladly process your export orders."

Welcome to Miami, where the reading material you find in a tire dealer's showroom is just as likely to include the Libertad News, a Cuban newspaper ("Libertad" means "liberty"), as USA Today.

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Metro Miami profile

Metropolitan Miami is part of Dade County in southern Florida. For statistical purposes, the metro area often extends throughout the county; sometimes the southern part of neighboring Broward County also is included.

Miami-Dade County has a population of 1.78 million adults. Almost 1.1 million -- 61% -- are Hispanic, according to The Miami Herald and its Spanish sister publication, el Nuevo Herald.

(Based on the most recent figures from the U.S. Census Bureau, the percentage of Hispanics versus the total population in the city of Miami is a little higher than it is in Dade County as a whole.)

Roughly half of the Hispanics in Dade County are of Cuban descent. White non-Hispanics make up 21% of the population, followed by African Americans (14%) and "other" non-Hispanics (3%).

"It's a multi-cultural city," says Solis. "There are cultures within cultures."

He estimates the percentage of Hispanic customers in his nine Miami retail stores is close to 80%. However, in Broward County, where Martino Tire has eight stores, the mix is closer to 40% Hispanic, 60% Anglo-Saxon.

Miami-Dade is one of the fastest growing areas in the country. Between April 2000 and July 2004, the population increased almost 5%, from 2.25 million to 2.36 million, according to the U.S. Census Bureau. That made it the eighth largest county in the United States.

There are 370 independent tire dealers in Dade County, which represents about 19% of the dealers in Florida. Modern Tire Dealer estimates that at least 250 of them are located in Miami proper, which is bordered by North Miami, West Miami and South Miami.

Based on MTD's circulation list, 52% of the independent dealers in Dade County sell Goodyear, followed by Firestone (46%), General (44%) and Bridgestone (43%). Continental, Cooper and Michelin are sold by 40% of the dealers.

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Hispanic Americans accounted for 6% of the U.S. automotive market in 2003, a growing trend, according to R.L. Polk & Co. "Over a five-year period, the Hispanic American automotive market has significantly outperformed the general market in several major metropolitan areas, including Los Angeles, New York, Miami and Dallas-Fort Worth," said Lonnie Miller, director of analytical solutions for R.L. Polk, in 2004.

Following Hurricane Katrina's assault on the Gulf Coast, gasoline prices in Miami reached new highs. WEXIndex research indicates the average price of unleaded gas rose to $2.56, 30% higher than a year earlier. The average price of diesel fuel was $2.62, up 42%.

The players

In addition to the aforementioned radiator service shop, tire retailers in Miami include car accessory shops (like Accessory Zone, High Tech Car Accessories), mail order companies (www.gotwheelsandtires.com) and exporters (Lucy's Tire Inc.). Some businesses will install new tires at your location (At Home Tire Sales Inc., Mobile Tire Connection) or rent them to you (Rent & Roll Wheels & Tires, Rent 'N Go).

Real estate has more than doubled in price the last seven years. "It's harder to get commercial real estate in some areas (of Miami)," says Solis.

Still, the large players in the market continue to add stores. Tire Kingdom Inc. is the largest tire retailer in metro Miami with 17 outlets (37 if you count its stores in Broward County). A number of others are within a few stores each: Tires Plus Total Car Care (15), Goodyear company-owned stores (13, including a Wingfoot Commercial Tire Systems LLC outlet), Firestone Tire & Service Centers (12 plus another eight in Broward County) and Sears Auto Centers (10).

Martino Tire has nine outlets in the Miami area, with another 14 in southern Broward County. Pep Boys-Manny, Moe and Jack has six outlets. There are four Costco Wholesale and BJ's Wholesale clubs, and one Wal-Mart.

The two largest independent dealers in metro Miami are Tire Kingdom and Martino Tire.

Tire Kingdom, a subsidiary of TBC Corp., is the largest independent tire dealer in the United States with 625 outlets. With such dynamic growth, you might think finding good people to man the stores is especially difficult. "I wouldn't say it's hard," said Tire Kingdom's Quentin Kubala, formerly area vice president and now special projects manager. "It's the same challenge you face everywhere."

Kubala said Tire Kingdom has a "pay back" program for training. "We try to grow our own."

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Tire Kingdom's featured tire brands are Michelin, BFGoodrich, Uniroyal and Sigma, although it also offers Pirelli, Goodyear, Continental and General. The company also is expanding into the air conditioning business in the Miami area.

Its most direct competitor is Tires Plus, "and the second largest competitor is car dealerships," according to Kubala.

In addition to its nine stores in Miami, six in Fort Lauderdale and eight extending north along the east coast, Martino Tire also has six warehouses in Florida. The company sells the Goodyear, Dunlop, Kelly, Republic, Falken, Continental, General and GT Radial brands.

Solis spent the last year restructuring the company's retail operation. He created three market managers to oversee the stores. As the operation expands -- he says he would not be surprised to see the company grow to 40 stores within two years -- he might create a district manager tier. "I want to create that upper mobility opportunity."

The retail division accounts for close to 30% of the company's revenues versus the wholesale division. Solis compares Martino's retail stores to Firestone and Tires Plus outlets, which derive most of their sales from automotive service, unlike Tire Kingdom and Sears.

"As long as you give (customers) service, you've got them for life."

Martino Tire also sells tires and wheels over the Internet through its Wheel Discount subsidiary (www.wheeldiscount.com). The less-than-two-year-old business is headed by Brian Martino.

Here's a list of some of the competition in Miami, including mass merchandisers and warehouse clubs, and what they sell.

* Sears: Guardsman, BFGoodrich, Kumho, Bridgestone, Sumitomo, Yokohama, Dunlop, Michelin and Goodyear.

* Pep Boys: General, Goodyear, BFGoodrich, Michelin, Futura and Continental.

* Costco: BFGoodrich, Michelin and Bridgestone (which the company is phasing out).

* BJ's Wholesale: Uniroyal, BFGoodrich and Michelin.

* Wal-Mart: Goodyear, Michelin, Douglas (made by Goodyear), BFGoodrich, Continental and Uniroyal.

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U.S. or bust

Manuel Balado Sr. already was a success story in Cuba. He ran four stores under the name Gomera Nacional Balado S.A. ("Gomera" is "tire store" in Cuban) and had been a Firestone distributor since 1949. But all that changed when Fidel Castro came to power.

"Fidel Castro started taking over businesses, so American companies left," says Balado. After losing his four stores, he followed his family to Miami, where he quickly set up shop again. With only three sets of clothes and no "el dinero" in his pocket, he started Balado National Tire Inc.

The two-store dealership is one of the top Hispanic-owned companies in the United States.

Orlando Hidalgo Sr. is the company's president. He joined Balado Tire in 1965. "At that time, we only sold used tires," he says. "The market in Miami was very poor... very few people could afford new tires.

"Our main customers were Cuban immigrants. A passenger retread sold for $6.95 plus tax. Now, there are no retreads."

Balado Tire has sold Pirelli tires since 1972. It also stocks Cooper and Kumho passenger, light truck and medium truck tires.

"You have to have a good relationship with your suppliers," says Orlando Hidalgo Jr., vice president of sales. "It's a price-driven market. That's why we try to distribute only three major brands -- to get the deepest discount we can." (American Tire Distributors Inc. also is a large Pirelli and Kumho distributor in the area.)

In addition to fleet customers, Balado Tire sells to more than 400 wholesale customers. "We supply most every small tire company on the corner," says Orlando Jr. That includes car dealerships and gas stations. The company also bids on city vehicle work, and has been supplying the Miami police department for 16 years.

Balado says no one had any money or credit when he first started in Miami, so he offered them "hand-shake credit." Orlando Jr. says that's where the tire industry has changed a little bit: "You have to be more selective in your credit."

Another change is the proliferation of sizes. "In the 1960s, three or four sizes covered 90% of vehicles -- 6.70-15, 7.10-15, maybe 9.00-15 for the big Cadillacs," says Orlando Sr. "Now, you need maybe 300 sizes for 90% (coverage)."

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Balado Tire's employees speak different dialects of Spanish. For example, Store Manager Pedro Orozco is from Nicaragua, "so the Nicaraguan customers go to him," says Orlando Jr.

Balado is semi-retired. He continues to come into the main store once or twice a week in a spiffy suit, "making sure we're keeping our costs down!" says Orlando Jr. He has no plans to sell his business. "When you retire, you die," he says.

Diverse in nature

There are many non-Hispanic tire dealers in Miami. Take the Ginsbergs, for example.

Henry Ginsberg is president of City Tire Kendall Falls, a retail establishment in a Miami suburb. His brothers run Ace Tire, a tire wholesale company based in Miami; Richard fronts the company as president, while Alan controls the purse strings as vice president. An uncle, Daniel Ginsberg, runs Intercity Export.

"I wanted (to work) retail," says Henry. "I like the service business. I like the idea of doing the business and being paid. I don't like the idea of terms and credit."

Working on slim margins isn't the only competitive problem faced by area wholesalers. "The gray market is the biggest problem, especially in Miami," says Roger Martinez, distribution manager for the Martino Tire Dade Wholesale Division. "People are always dumping high performance tires and wheels in the Miami territory. It makes it hard for us to wholesale here."

When you hear talk about the tough competition and gray market tires, you start to think maybe the Miami aftermarket isn't so different after all. When Cliff Martino, manager of the Martino Miami Wholesale Division, says "Wheels are where it's at in Miami, baby!" he could be talking about Los Angeles or Las Vegas just as easily.

Then you find out the first automated bank teller machine designed for rollerbladers was installed in Miami. Whether they are based on race or youth, cultural revolutions continue there.

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One store, $2 million in sales. How does he do it?: Nuts and bolts with Henry Ginsberg of City Tire

In the Miami suburb of Kendall Falls, Fla., sits a one-store tire dealership that guarantees its customers the following: excellent customer service, expert auto care, competitive prices and friendly employees.

Henry Ginsberg, the man behind City Tire Kendall Falls, believes his philosophy will result in $2 million in sales this year – a 25% increase over 2004’s results.

“We have to become more efficient with the vehicles that come through our shop and try to maximize the opportunities that exist,” he says. “And I don't think we really need a lot more flow. I think we need to become more efficient."

Experience has taught him well. He was part of a group that lost money running a previous dealership, and says they tried to do too much.

"If you get your fingers in too many areas, you're going to get burned. I did lose money while I was there, but it was better that I realized sooner rather than later, and have been able to make the adjustments necessary to continue in business.

“We dabble in a little bit of everything here. But this is more of a fast, in-and-out-type of operation.”

City Tire sells Goodyear, Michelin, Dunlop, Republic, Bridgestone, Yokohama, Pirelli, Toyo and other major brands. “You name it, we sell it,” he says.

In an exclusive interview with Modern Tire Dealer, Ginsberg shared some of his secrets about running a successful business.

MTD: What do you do to compete?

Ginsberg: I do some wholesale, take care of some car dealers and I get some delivery commission from Goodyear through their programs. And I'm starting to get involved a little bit in national accounts, which brings us some tire and service business. At this time it's not the much, but I really hope to grow it. I was just approached by an insurance company that is looking for somebody to do some work, so there are different avenues as far as generating dollars. The insurance company is on a national account with Goodyear. It purchases on a national account basis. We're also working right now with Enterprise Rent-A-Car to try to get their business as well.

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MTD: What are your tire margins?

Ginsberg: “About 5% on some of the leader sizes. On a wholesale level I try to work at 12%.

MTD: What is your percentage of automotive service business vs. tires?

Ginsberg: "I would say with mounting and balancing figured in, tires represent between 35% and 40% of our business. I would say our auto service business accounts for close to 60%. We've been in business 18 years, the last four at this location. At the beginning it was tires 80% to 20%.

MTD: Why the change in mix?

Ginsberg: When you developed a lot of relationships with people, you realize they don't need tires every time they come in. But they'll change their oil, and if they like you they'll come back and get their brakes done. There's more opportunity as far as seeing the car and seeing the customer, and that's how the business switches.

MTD: Are your technicians certified?

Ginsberg: We have two ASE-certified techs. We try to encourage our people to be ASE-certified. I will pay for their training. If they pass the tests on their own, I will definitely pay them back -- and I will raise their flat-rate hour based upon additional certifications.

It's something I think people here are going to work toward in the future, but right now, some people are just status quo. The Goodyear Gemini program has training dollars that accrue, so hopefully I can get some training for some of my people.

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MTD: Is it hard to find good people?

Ginsberg: Very. Finding skilled technicians who have a good work ethic is very, very tough in this market. In general, that’s the biggest complaint with dealers across the country because the young people today don't look up to what an auto mechanic does. Auto mechanics need to have computer skills and electronic skills. It's a wonderful field and people can make a lot of money if they're trained and they're skilled.

MTD: If a qualified person showed up on your doorstep today, would you hire him, even if you didn’t have an opening?

Ginsberg: Absolutely, because I look at it from a coaching standpoint. I'm trying to put the best team together that I can on the field. I think you have to assess what you have on hand. You can never be close-minded about the opportunity to improve your team.

MTD: Your business is growing. Are you looking at moving to a larger location or adding a second store?

Ginsberg: It would be very tough to find a location in this area that I could purchase. Land is so scarce that probably my best shot is to expand on my existing site. I may have to add up to four bays on my site.

I'd have to make a commitment and I'd have to either add on a canopy or something, but certainly when I bought the building there was definitely talk of expansion, and it may happen someday.

I think the only way I would be interested in a second store is if I could find somebody who had very good experience and was looking to be as active in the running of a second location as I would be.

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