Searching for Tires and People: Commercial Tire Dealers Persevere
What’s more scarce at your tire dealership — tires or people? If you can’t pick one, you’re not alone. The nation’s largest commercial tire dealerships have been grappling with shortages on both fronts.
On the tire side, dealers are doing everything they can to secure the tires their customers need. They’re working closely with tire manufacturers to communicate needs, sourcing new brands to fill in gaps and paying sky-high shipping rates to secure orders.
At the same time, tire dealers are educating their customers on these supply chain challenges.
As for the shortage of people, the tire industry is part of a universal call for help.
Dealers are searching for workers in any number of ways and are offering sign-on bonuses, higher wages and more benefits to attract workers. They’re dedicating cash to retain workers, too.
It sets up a challenging backdrop, to be sure — sell tires, which aren’t readily available, with people, who aren’t readily available. Not to mention, the costs of tires and people have both accelerated.
But dealers have found a way.
Commercial tire dealers are facing supply issues at every step of the process.
Brian Chase, regional sales manager at Frederick, Md.-based Rice Tire Co., says, “We rely heavily on our purchasing team to keep the tires we move in stock. While they do a tremendous job, several tires and sizes are out of our control.
“We’ve had to sit down with customers and make them aware of what’s happening in the tire world and let them know even if we don’t have the specific tire they like to run, we will make sure to always have a way to keep their fleet up and running.”
Kevin Good, vice president of Good Tire Services, says his Kittanning, Pa.-based dealership has been forced “to stock some products we haven’t before and/or stock slightly heavier on some items.”
Don Mead, CEO of Bradenton, Fla.-based Callaghan Tire Inc., says supply is tight across the board.
“Fill rates run in the 25% to 35% range, with the remainder on back order.
“The majority of back orders are filled within two to three weeks in most critical sizes and applications, but overall, it’s hand to mouth.”
Rick Benton, who runs the wholesale division of Whiteville, N.C.-based Black’s Tire Service Inc., calls the lack of top-brand medium truck tires a “major issue,” which has been compounded by multiple price hikes. (Some tiremakers have raised prices four times in 2021.)
“It costs dealers so much more now to stock and carry the inventory. A $300 truck tire now costs 25% more. Imagine all the cash flow it ties up.”
And on top of that, import tire prices have gone up, too, due to freight and container surcharges. Those imports — and the still-rising fees associated with them — continue to be a pain point.
John Ziegler Jr., vice president of Ziegler Tire & Supply Co., which is based in Massillon, Ohio, says pricing and supply issues have forced his company to adapt its inventory strategy.
“We have hedged our orders more aggressively to try to keep product coming in the pipeline.”
Looking on the bright side
The inventory situation has revealed a few silver linings. At Callaghan Tire, Mead has identified at least three.
The first is that tiremakers have been good about sharing what’s coming down the pipeline, “giving us line of sight to their expectations for the next four or five months.”
That gives the dealership the time to talk to customers about switching to another option if their preferred product isn’t immediately available.
And at times, says Mead, “we have used our retreading capability to ease their pain.”
With fewer tires available, inventory also is turning faster. “Our inventory levels are understandably lower. To a certain extent, this has been good, as our turns have gone up and we have been able to move some excess and slower-moving stock.”
Walter Dealtrey, CEO and president of Bethlehem, Pa.-based Service Tire Truck Centers Inc. says inventory levels are helping his company’s financials.
“The good news is we have less inventory to carry, which helps the balance sheet. While it’s difficult to obtain everything we need, our sales are still up a lot over both 2019 and 2020.”
A strategy for recruiting
Tire dealers are no strangers to working hard to find good employees.
Historically, there’s been a shortage of automotive technicians and other mechanically-minded workers entering the industry. And the skill set for the commercial business is even more pronounced.
But the search has been exacerbated by the larger condition of the U.S. workforce as the economy rebounds from the pandemic.
Dealtrey boils down the long-term effect at STTC.
“If we had more people we could grow even more,” he says. “We are doing more with less people, but we are paying more for the ones we have.”
As for recruiting, Dealtrey says the company is offering a bonus to employees who recommend a new worker, plus signing bonuses for new employees.
The search spans social media, physical signs and personal offers to people his team encounters at other businesses.
Callaghan Tire has a similar approach. Mead says wages for service technicians and retread technicians have increased up to 25%.
“Recruiting efforts have been a struggle,” he reveals. “We have concentrated our search on people who are currently employed, as they have already made the decision to work. Being the employer of the unemployed is a futile strategy.”
Earl Colvard, president of Deland, Fla.-based Boulevard Tire Center, says he’s still having trouble finding and retaining workers, “despite the fact we have increased wages.”
On top of higher pay, Good Tire and Rice Tire have both expanded their offerings of benefits for employees.
The cost of not just wages — but also those benefits — has increased. Benton at Black’s Tire points out that “the opportunity for careers in the commercial service business are tremendous.”
John McCarthy Jr., president of Wilkes-Barre, Pa.-based McCarthy Tire Service Co. Inc., says his dealership is doubling down on its motto that “McCarthy Tire is a great place to work.
“Our focus has been to get ahead of losing a great teammate and to take care of them before they consider leaving us.
“Although we regularly review wages to ensure consistency and competitiveness, we were more focused on this task during the past year. We increased wages of many teammates and rolled our bonus incentives for their dedication to McCarthy Tire.”
Adding mechanical services
One area that several dealers are tackling is the expansion of truck mechanical services. St. Cloud, Minn.-based Royal Tire is doing mobile mechanical repair in several locations and mobile alignments at each of its locations, says President Mick Pickens.
Elk Grove Village, Ill.-based Tredroc Tire Service Inc., Ziegler Tire and Boulevard Tire are expanding their service options.
Updating tools and equipment is a regular part of the process for most dealers and on the commercial side, that, too, has been affected by the nation’s resurgence from the pandemic.
Dealers report that service trucks and other pieces of equipment are on backorder.
Even though Bauer Built Tire & Service says its biggest investments in the last year were in its people, the company also purchased a robotic wheel painter for its home base in Durand, Wis.
Mike Weber, Bauer Built’s vice president of operations and manufacturing, says the device “allows us to produce 50% more wheels with the same labor force.”