Commercial tire investment continues: Dealers make improvements despite fuel costs, staffing problems and other obstacles
Rising fuel costs. Lack of experienced people. The cost of keeping existing employees trained. How to pass on manufacturers' price increases to customers.
These are just a few of the obstacles facing today's independent commercial tire dealer, according to respondents to Modern Tire Dealer's Top 25 U.S. Independent Commercial Tire Dealers list questionnaire.
But commercial tire dealers are a resilient breed. They're also forward-thinking. When it's time to invest in the future of their businesses, they don't hold back.
Several respondents to this year's questionnaire made significant investments -- and in some cases, big changes -- over the last 12 months.
Consolidation also remained part of the market. In early September, White Tire Distributors Inc. of Roanoke, Va. -- MTD's 17th largest commercial dealership last year -- was acquired by Bridgestone Firestone North America Inc.
In the months leading up to the deal, White Tire Distributors had added a Bandag retread plant in Newport News, Va., and also updated some retreading equipment. The company has 20 commercial-only outlets, three combined commercial/retail outlets and five retread plants. It also operates 55 service trucks. In 2005, its sales topped $62 million.
Here's a look at moves made by other commercial dealerships during the last 12 months.
* Allied Oil & Supply Inc., Omaha, Neb.: opened new commercial outlets in Springfield, Mo., and Wichita, Kan.
* Bauer Built Inc., Durand, Wis.: opened a new location in Dubuque, Iowa.
* Belle Tire Distributors, Allen Park, Mich.: installed new extruders at retread plants in Redford, Mich., and Toledo, Ohio. "All of our plants are pretty much updated," says Tom Bowman, vice president of Belle's commercial division.
* Bergey's Tire Service, Franconia, Pa.: consolidated two retread plants into a single shop.
* Brahler's Truckers Supply Inc., Jacksonville, Ill.: added "a significant amount" of equipment at its OTR/specialty tire retread plant, says company owner Richard Brahler II.
* Commercial Tire Inc., Boise, Idaho: opened a new store in Mountain Home, Idaho.
* Free Service Tire Co. Inc., Johnson City, Tenn.: purchased new equipment, including an OTR tire tread cutter, and expanded its service truck fleet.
* Great Western Tire, Rapid City, S.D.: added new equipment.
* Maine Commercial Tire Inc., Bangor, Maine: opened a new outlet in Portland, Maine. Co-owner Jim McCurdy says the company is on track for an 18% revenue increase this year.
* Maness Tire & Recapping, Rockingham, N.C.: added an extruder to its retread shop and switched to a more efficient inventory system.
* McCarthy Tire Service, Wilkes-Barre, Pa.: acquired 151 Tire Systems Inc. of Federalsburg, Md. The deal gives McCarthy its first store on the eastern shore of Maryland, plus another retread plant.
* Piedmont Truck Tires Inc., Greensboro, N.C.: closed its Asheboro, N.C., store due to its proximity to the dealership's three other stores.
* Purcell Tire & Rubber Co., Potosi, Mo.: built a new office/warehouse facility in Phoenix, Ariz.
* Raben Tire Co. Inc., Evansville, Ind.: brought a new retread plant in Haubstadt, Ind., on line. It also added two warehouses. Also, in December 2005, Raben Tire finalized its acquisition of Louisville, Ky.-based Disney Tire Co., which had four distribution centers.
* Royal Tire Inc., St. Cloud, Minn.: began the process of boosting its warehouse space in its hometown by 25,000 square feet.
* Service Tire Truck Centers, Bethlehem, Pa.: converted its three retread shops from Bandag Inc. to Michelin Retread Technologies Inc.
* Ziegler Tire & Oil Co., Massillon, Ohio: opened a new Michelin retread plant and commercial tire center in the Cincinnati, Ohio, area.
Dealers expect the business climate to remain challenging. One of the biggest problems, in general, will be "the difficulty of earning satisfactory return on investment due to the investment required for today's commercial business," says Lewis Wexler Sr., chairman and CEO of Free Service Tire.