Cooper Joined Forces with Pirelli 22 Years Ago
As the industry waits for the next steps in the Goodyear-Cooper deal to be revealed, it’s interesting to note that Cooper Tire & Rubber Co. joined forces with another competitor, Pirelli Tire North America Inc., more than two decades ago.
In March 1999, Cooper and Pirelli established what was then billed as a “strategic alliance.” The agreement was intended to help Pirelli gain distribution and market share in the U.S., while giving Cooper access to Pirelli’s technology.
“We pledge to you here and now to make this alliance a success for everyone involved,” John Fahl, then-president of Cooper’s tire division, was quoted as saying in my May 1999 MTD report.
“A company with 1.5% to 2% share in the United States market is a company that has no future,” said Giovanni Ferrario, CEO of Pirelli Worldwide Tyre Sector, who traveled from Milan, Italy, to meet with Pirelli and Cooper dealers in Rancho Mirage, Calif.
“We need to grow.”
Referring to Cooper’s distribution capabilities, Ferrario said, “They are strong in this area. We are strong in product technology. It’s a perfect fit. At the end of the day, wider distribution of our product in the U.S. will provide better opportunities for profit.”
Dealers shared their thoughts with me after Pirelli and Cooper executives finished their presentations.
Steve Rogers of Durango (Colo.) Small Car Inc. said he expected the deal to yield “a better fill rate and better pricing on several lines.”
Ray Hamel of Hamel’s Tire Co. in Cumberland, R.I., echoed Rogers’ sentiment. “I like Cooper’s delivery and distribution system.”
Other dealers liked the idea of having access to Cooper’s private label portfolio, which included the Avon, Dean and Dominator lines at the time.
“What I stand to gain from their private label stuff is tremendous,” Mick Pupillo of Grand Premier Tire in Albany, N.Y., told me.
Jack McNabb of JM Tire Inc. in Mallsonberry, Colo., believed that Cooper’s U.S. marketing expertise would benefit Pirelli.
And Pirelli could deliver benefits to Cooper, as well, according to John Kamlowski, who represented Tire Kingdom Inc. at the event.
“Cooper needed a top brand since they only play in the mid-range on down,” he said. “The way they’re positioning the brands is very complementary.”
Kamlowski also was one of several individuals who told me that they would take a “wait-and-see” approach regarding the trickle-down benefits of the Cooper-Pirelli alliance.
“I’ve dealt with both companies for a long time,” he explained. “How they come together and how dealers will benefit remains to be seen.”
Pirelli’s then-vice president of sales told me that his company's main focus would center "on the dealer channel.” (Pirelli had stopped selling tires through Sam’s Club a few months before the Rancho Mirage meeting.)
“Margins today are being squeezed tremendously,” he said. “If we can increase them, everything else should fall into place.”
Long-term, the Cooper-Pirelli alliance - which did not include an exchange of equity or ownership - did not last and has probably been forgotten by many. But it was an inventive - and visionary - attempt by the two companies to capitalize on each other’s strengths.