Wholesale Distribution

MTD's 2022 Tire Dealer of the Year Is Bob Dunlap

Dunlap & Kyle Chairman Says With the Best People, 'You'll Never Lose'

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Bob Dunlap of Dunlap & Kyle web.jpg

At age 92, Bob Dunlap has no plans to retire. He says he's seen too many of his friends die after they retired because they didn't remain active. Dunlap & Kyle's wholesale operation hit $1.2 billion in sales in 2021. "I'm going to stick around until we get to $2 billion in wholesale — if the damn coffee doesn't wear out."

| Photo Credit: Joey Brent

A few months shy of his 93rd birthday, Bob Dunlap has no plans to retire.

He says he’d be happy to spend his final moments on this Earth behind his wooden desk, gnawing on a cigar, crunching numbers and serving as chairman and CEO of Dunlap & Kyle Co. Inc.

You could almost say he’s been there since the company’s beginning.

His father, John “Jack” Dunlap, and a cousin, S.H. “Hudson” Kyle, started their namesake business in 1929 — the same year Bob Dunlap was born. 

Batesville, Miss., has always been the company’s home. In those early years, the men sold automobiles and later, farm equipment. They distributed oil, managed a junkyard and even had a mule barn. And on the side, they sold a few tires.

In the last 60 years, Bob Dunlap has transformed that sideline business into a whopper of a regional wholesale operation. In 2021, Dunlap & Kyle surpassed $1 billion in sales.

He and his team work without desire or expectation of fanfare. They prefer to hustle under the radar.

Dunlap & Kyle’s goal is to be the most dependable company in America. A dependable company requires a dependable leader and there may be no better word to describe Bob Dunlap. But let’s give him one more title anyway: MTD’s Tire Dealer of the Year.


See the full September issue of MTD, including all the photos and coverage of Bob Dunlap and Dunlap & Kyle, in our digital edition.


Keeping an eye on inventory

Bob Dunlap’s work days begin in the accounts payable department. Even with 18 warehouses and a retail footprint of 41 stores, every bill is paid in Batesville. And Dunlap likes to keep tabs on the checkbook.

Three women spend all day, every day, processing invoices and issuing checks to pay the bills. And while many vendors have offered — and even urged — the company to pay electronically, Dunlap says no. Every bill is paid with a paper check, which is then stuffed into an envelope and sent through the U.S. Postal Service. 

When presented with the suggestion that he could save money by issuing electronic payments, Dunlap raises an eyebrow. “That’s selfish,” he says. “The post office has got to survive, too.”

Each day, Sherry Williams presents Dunlap with a notecard-sized, hand-written report that summarizes the previous day. It provides a look at Dunlap & Kyle’s net bank balance and accounts for payments received, checks written and how much money was transferred from the warehouse accounts into the dealership’s primary account, where bills are paid.

While others are tracking computerized reports, Dunlap prefers paper and pen. “I can read it better. If it works, there ain’t no need to change it.”

Some might mistake this analog approach as a simplification of things for an older man accustomed to another era. But that should not suggest Dunlap is off his game.

Darrell Hill has known Dunlap for almost 60 years and has worked with him for the last 43 years. He says Dunlap has always had a sharp, mathematical mind.

Decades ago, Dunlap’s sales team would gather in the office for a meeting on Saturday mornings. Hill is president of the company’s North Gateway Tire Co. Inc. division in northern Ohio and was sometimes in town for those meetings. He remembers sitting in the corner drinking coffee when a woman would walk in and present Dunlap with a stack of checks. The payments from customers were sometimes five inches thick. 

Without a calculator, Dunlap would flip through every check at a steady pace and add them up in his head. Everyone else in the room placed a bet of how close he’d be to the real total. 

“When he finished he wouldn’t be off more than a buck,” says Hill. “It’s amazing how smart he is.”

Dunlap’s keen eye and daily trek to the finance office delivered a startling realization recently. As he was reviewing invoices, the order dates were grabbing his attention. Even in the beginning of August, many of the tires arriving at Dunlap & Kyle warehouses were from orders placed in September and October of 2021 — nearly 12 months earlier.

It’s a lingering effect of the pandemic and supply chain upheaval that followed. Last year, consumer demand outpaced tiremakers’ ability to manufacture and ship tires. Shipping containers were in short supply, so imports of everything, including tires, were backlogged. Many dealers realized the key to success was beefing up inventories. Dealers who had tires in stock were outperforming those who didn’t. So when one tire manufacturer couldn’t deliver a product, there was a mad shuffle to find a replacement from another vendor. When popular tires and sizes were available, dealers invested in extra stock. Now, just as demand is sliding downward, backorders from months ago are arriving.

It was a precarious situation for dealers with a single store trying to keep a couple thousand units of the most popular consumer fitments on the rack. 

It was a real gamble for wholesale distributors who fill warehouses with not just passenger and light truck tires, but with medium truck, industrial and ag tires, too.

The situation was compounded at Dunlap & Kyle by the fact the company doesn’t have a centralized purchasing department. There are no mixing warehouses. Every warehouse manager buys for his facility and sends the bill to headquarters.

In a 12-month span, the value of Dunlap & Kyle’s tire inventory shot up 85%. As backorders have come due in the last few months, monthly payables have quadrupled.

“That could put somebody out of business,” says Dunlap.

For the first time in 20 years, the company borrowed money to pay its bills.

Dunlap keeps a memo from June 1 on his desk that shows the eye-popping figures. It lists every warehouse and the value of its inventory on that date in 2021 and one year later. 

Every warehouse manager received a copy, which included this handwritten note from the boss in the corner: “B.S.” Before reordering, managers also were told to check the inventory of their fellow warehouses.

“We told them if they start running out of things, pull it from another warehouse,” he says. “We’ve got more (in) freight that way, but at least they’re paid for.”

The strategy is working. Dunlap expects inventory levels to normalize in the next month or so. The bank note will be paid by then, too.

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“We have a lot of charities,” says Bob Dunlap, who has been recognized for his generosity. “The more of them you help and the more money you pay employees, the more money you’re going to make. People miss out on that.” Photo Credit: Joey Brent


 

Poised to grow

Having a large inventory isn’t a new strategy. “If you don’t have them, you can’t sell ‘em.” 

Dunlap prefers to invest in bigger warehouses and to stock more tires than his competitors. That — combined with top-notch service — provides a winning combination for the company’s 18,000 customers.

The largest of Dunlap & Kyle’s warehouses is in Jackson, Miss. It spans 600,000 square feet. Construction soon will be underway to expand two other facilities, adding 100,000 square feet to each of them.

On a wall of Dunlap’s office is a huge U.S. map. Red push pins indicate the locations of existing Dunlap & Kyle warehouses. The newest red pin was planted in Waco, Texas. The 250,000- square-foot warehouse opened this past March.

Green pins point to potential expansion markets around the country. There are a lot of green pins on the map.

However, President Dennis King says he doesn’t foresee Dunlap & Kyle becoming a coast-to-coast wholesaler.

“I don’t expect us to ever be a national player,” explains King. “We don’t buy other wholesalers and we don’t plan to buy other wholesalers. And if you’re going to grow organically and not borrow money, which we don’t like to do, it would take us 50 years to spread out. I don’t see us expanding like that.

“I see us filling in gaps like we have done in Waco. We were able to figure out a way to service people better than we could from (existing warehouses in) San Antonio and Dallas. We needed something in the middle.”

King says the company will continue to grow along its edges. He has a contract on his desk to purchase land for what would be the dealership’s easternmost location. There’s no set timetable of when a building would be constructed there.

“We want to continue to grow. Without inflation, we would have probably tried to do one (new warehouse) a year, but inflation has tied up so much money in inventory.”

King says consolidation in the market and moves by other wholesalers don’t steer where Dunlap & Kyle goes next.

“We don’t model what we do around what others do. We operate a little differently.”

Warehouse size is one differentiator. Another is stocking a full breadth of product, from passenger and light truck tires all the way up to ag and OTR tires.

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Dunlap & Kyle prefers to own the real estate and buildings where it does business and invests in concrete, tilt-up construction. Dennis King, left, shows Bob Dunlap the construction drawings for one of two warehouse expansions that soon will be underway. Photo Credit: Joey Brent
 

An eye for talent

King has worked for Dunlap & Kyle since 1987 and was named president two years ago. He’s the third generation of the King family to work here. His grandfather was the service manager for one of the car dealerships that Dunlap’s father owned.

“I had no plans of coming into the business,” says King.

 He graduated from college with a degree in computer science and had a job offer from the federal court system. The courts were just starting to use computers and he was going to help computerize their filing process in Oxford, Miss., which is near Batesville.

“Dad said, ‘Before you do that, go and talk to Bob.’”

His father, Denny King, oversees Dunlap & Kyle’s wholesale operation in Jackson.

The younger King agreed to the meeting. It only took 30 minutes for Dunlap to convince him to join the business.

Not only is Dunlap persuasive, but King says he’s “a great visionary. I think he’s built a great team of people. I think it’s one of his real skills — to pick good people. He’s filled the company with good folks. He picks a good person and lets them do what they’re supposed to do.”

Those who know Dunlap define this as his greatest talent.

Darrell Hill at North Gateway Tire believes that to be the case.

“He’s a good reader of people. When he sees somebody, he can immediately say, ‘Hey, that guy is good.’ He doesn’t have to interview him or talk to him for two or three weeks. He knows. It’s just instinct. When he hires one, they’re on their own, because he knows they’re good enough or he wouldn’t have hired him. He’ll say, ‘Go get it.’”

“If you have the best people, you’ll never lose,” says Dunlap. “That’s why I’ve enjoyed it. There have been so many good people.”

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A digital dashboard tracks the daily and month-to-date sales and profitability of Dunlap & Kyle’s 18 warehouses, as well as the company’s top salespeople. Dunlap watches it from his desk and sometimes calls a warehouse manager to harass him about being too low on the list. Here Dunlap is pictured with the internal sales team at the company’s Batesville warehouse. Photo Credit: Joey Brent


 

An opportunity in Ohio

Hill remembers the day he met Dunlap. He was working in sales for Mohawk Rubber Co. and came to Batesville. They were in Dunlap’s office, both of them smoking cigars, and he walked around Dunlap’s desk to show him something. He placed his cigar in the ashtray. A few minutes later, he accidentally picked up the wrong cigar and put it in his mouth.

“And from that point on, we were good friends,” he says with a laugh.

About 10 years later, Hill left Mohawk and called Dunlap with a business proposition. At the time, Dunlap held the exclusive rights to sell Multi-Mile brand tires in Ohio out of a warehouse in the Cincinnati area. 

Hill asked Dunlap to sell him the Multi-Mile territory in northern Ohio. He wanted to start his own wholesale operation.

Dunlap said he’d think about it. Two weeks later, Dunlap suggested they go into business together. And that was the start of North Gateway Tire Co. Inc. in Medina, Ohio. 

They started the operation in 1979 with 36,000 square feet of space to service both retail and wholesale customers. That original location in Medina is now a 70,000-square-foot retail store. In 2007, the company built a 170,000-square-foot warehouse in nearby Seville, Ohio. An expansion added 82,000 square feet in 2016. The distribution center serves customers in Ohio, Michigan, Pennsylvania, Indiana and some of West Virginia.

Mike Hill was a senior in high school when his father and Dunlap opened North Gateway. He had earned enough credits to graduate, so after his school days ended at 10:30 a.m. he reported to work. He changed — and then delivered — tires. He now manages the wholesale operation and is its vice president of sales. Two of his brothers, Jeff and Pat, manage North Gateway’s retail business.

When the family first started North Gateway, Mike Hill remembers his father telling him that they’d have to hustle for the first five years, but then it would get easier. 

“I’m still waiting for it to get easier.”

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Darrell Hill, right, president of North Gateway Tire Co. Inc., has spent his career in the tire industry and introduced his sons to the business. His son Mike Hill, left, is vice president of sales for the Ohio-based operation. Photo Credit: MTD

 

Paving his own way

Dunlap graduated from high school in 1947. He went to college and joined the U.S. Navy. He had to hitchhike his way to college, because even though his father owned a car dealership, he wouldn’t let him have a car until he earned his degree. Dunlap looks back fondly at his time in the Navy. “I didn’t have any money then, but if I did, I should have been paying them.” 

He served aboard the USS Everglades and says the ship was the first to dock at Barcelona, Spain, after World War II. He remembers a crowd of thousands of people cheering from the shore.

He spent a Christmas on the French Riviera and skied in the Alps. He didn’t dare admit that the closest he had ever come to snow skiing was roller skating and water skiing.

By 1953, he was back home in Batesville. He might have stayed in the Navy if he didn’t miss home so much. He joined his father at work. 

He wasn’t too excited about car dealerships, but was intrigued by the tire business. Dunlap & Kyle also had a retread shop at the time.

A tragedy paved the way for Dunlap to make his mark and transform the family business. In 1960, his father suffered a debilitating stroke.

“He was in a wheelchair,” Dunlap said. “He was really messed up. He couldn’t work anymore.”

The Dunlap and Kyle families split up the businesses. 

“We got the junkyard and the mule barn.” His brother took ownership of one of the company’s car dealerships.

Dunlap points to previous generations of family members who had to work hard to survive. His great-grandfather was held in a prison camp during the Civil War and had to walk home from Illinois after the war ended. He never made it all the way back to Alabama and instead settled in northern Mississippi.

Dunlap respects that kind of tenacity. He’s not averse to hard work and has told his grandchildren, several of whom are working in the business, that they shouldn’t expect a free ride. He has no tolerance for drug use or shortcuts.

“If you hit it straight, you’ve got a chance. That’s the way it’s got to be.”

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For the last 46 years, Cheri Downs has worked as Bob Dunlap’s administrative assistant. Photo Credit: Joey Brent


 

Playing it fair

Being fair is the name of the game for Dunlap. It’s how he conducts business and it’s what he expects from suppliers, customers and every other partner.

He remembers a time when he was reviewing invoices after purchasing Diamond brand tires from BF Goodrich. The tiremaker wasn’t billing Dunlap & Kyle enough for the tires the company was purchasing. So Dunlap made a copy of the invoice, fixed the tiremaker’s error and submitted the corrected version, along with a check. Eventually, the company sent a representative to his office to try to straighten things out. “I pulled the file out and they wanted to hire me.”

There was another instance with a wheel vendor. Dunlap had grown to be pretty good friends with the company’s leaders and saw them at an event in Las Vegas. He told them they hadn’t billed him for an entire shipment of wheels.

One of the men didn’t believe him and bet him $100 that he was wrong. Dunlap took the bet — and cashed the $100 check when it arrived in the mail.

“We’ve always kept it straight with them, but they better not try to mess us up.”

No matter who it is, the same philosophy applies. He expects a good product at a fair price.

The company has repeatedly hired some of the same general contractors to build and expand its facilities. “I don’t want them to build me a building and lose money,” he says. “I’ve always been fair. I want them to build it, make a fair profit and then nobody loses.”

Learning from the greats

A key to Dunlap & Kyle’s profitability has been the company’s inventory of private label brands.

“I don’t care what brand you put on it, I want a good tire at a fair price,” says Dunlap.

He was the first wholesale dealer involved in Cordovan Associates, a small buying group of retail dealers that grew over the years and eventually blossomed into TBC Corp. When the Multi-Mile brand was created in 1960, Dunlap was among its original buyers and became a founding member of the board of directors. He served on the TBC board until 2000 and Dunlap & Kyle still stocks TBC’s Sumitomo brand.

In its early days, the original buying group was looking for more members. Dunlap and a TBC executive flew to Oregon to meet with Les Schwab. At the time, Dunlap had never heard of him, but was told Schwab had a lot of retail stores. His job was to entice Schwab into joining the buying group.

Schwab was interested, but it turns out he didn’t qualify. At the time, Dunlap says Schwab didn’t have a warehouse. Tires were shipped directly to each of his retail stores and none of his stores could handle an entire trailer load of tires.

The meeting was the start of a friendship that lasted for decades. To this day, Dunlap utilizes things he learned from Schwab in his own business — most notably, the legendary tire dealer’s compensation plan that splits company profits with employees.

“If Schwab said, ‘Do it,’ I’d be an idiot to argue against him. He was extremely successful. He’s one of the best of the best.”

Another trick he learned from Schwab: pop fresh popcorn in your retail stores. Schwab did it to mask the rubber smell in his showrooms. Dunlap & Kyle does it, too. There’s even a popcorn machine set up at company headquarters.

It was a different buying group that led Dunlap to meet another tire industry legend, Bruce Halle, the late founder of Discount Tire and America’s Tire. The two men got to know each other on trips sponsored by General Tire & Rubber Co. when General was producing some private label products. Dunlap told Halle to keep his stores out of Dunlap & Kyle’s territory and for a long time Halle did. Halle called Dunlap when his company was planning to open a store in one of the Texas markets where Dunlap did business. Dunlap told him to go ahead. 

“That was a foolish thing to say. They started to put them everywhere!” (There are now more than 1,100 Discount Tire and America’s Tire stores throughout the U.S.)

“We operate our retail businesses differently. I was more like Les Schwab. I thought it worked better for us. But Bruce was good people. 

“There’s been two great retailers in this country — Les Schwab and Bruce Halle — and I was fortunate to know both of them well.”

(Both men were recognized as MTD Tire Dealer of the Year. Schwab won the honor in 2000. Halle won it in 2014.)

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Dunlap & Kyle opened its 18th warehouse in Waco, Texas, this year and is preparing to buy land to build its 19th location. The company’s North Gateway Tire warehouse in Seville, Ohio is pictured. Photo: MTD

 

 A wholesale behemoth

Dunlap & Kyle primarily is known as a tire wholesaler. (In some regions, it operates under different names: Gateway Tire Co. Inc., Hesselbein Tire Co. Inc., North Gateway Tire Co. Inc. and South Gateway Tire Co. Inc.) 

But the company also has a retail presence that includes 41 stores in four states. 

Most of those retail stores operate under the Gateway Tire & Service Center banner.

Operating as both a wholesaler and retailer can be a slippery slope and Dunlap acknowledges that. 

He says Dunlap & Kyle is keeping its eyes focused on wholesale and isn’t looking to expand its retail footprint because “it interferes with wholesale.”

At the same time, he’s not interested in exiting the retail business. “The stores do well,” says Dunlap. “And because of the people involved with them, we’d never get rid of them.”

Over the years, there have been wholesale customers who wanted or needed to exit. Rather than potentially lose those tire sales to a competitor, he added the stores to the company’s arsenal.

But sometimes it goes the other way. Dunlap & Kyle recently sold a dozen of its retail locations in the Shreveport, La., market  The buyer was none other than the nation’s largest independent retailer: Mavis Tire Express Services Corp.

Importantly, Dennis King notes those stores “remain a (wholesale) customer. They’re buying a whole lot from us, so it worked out real well.”

Up until now, the two companies’ geographic territories haven’t overlapped much, so there hadn’t been many opportunities to have Mavis as a customer. But King hopes “this will be a catalyst” for more wholesale business in the future as Mavis continues to acquire businesses and expand.


9 Things to Know About Bob Dunlap


Both new and existing wholesale customers are benefiting from the investments Dunlap & Kyle makes inside its warehouses.

King says nearly every warehouse has been updated with narrow aisle racking, which “averages about a 20% pick-up in storage capability.”

Squeezing those racks closer together reduces aisle widths from around 13 feet to about seven feet, says King. This has also eliminated any stacking and balancing of pallets on four corner supports.

The narrower aisles require an investment in turret trucks, which can navigate the smaller space and pivot to pull products from shelves. Operators can select tires more quickly compared to using a traditional forklift.

To move products from its warehouses to customers’ doorsteps, the company has around 450 power units in its fleet — most of which are long box trucks — plus a good number of pickup trucks. King says the company owns virtually every vehicle it operates.

“We run dedicated routes. We ship a very, very small percentage of our stuff. Almost exclusively we deliver on our own vehicles.”

Dunlap & Kyle has considered route optimization software, which looks for the fastest and most efficient path for deliveries, and King concedes “there are more efficient ways for us to get around. But one of the services that our customers seem to really like is a consistent (delivery) time.”

With route optimization, the first scheduled delivery one day could be the last delivery the next day. King says the company tries “to optimize those routes for a consistent use. We try to pick the best way to use it the same way every single day.” 

Changes typically only come if shuffling is required because a new route has been added. “You can certainly save money, but if it’s at the expense of the service that your customer expects, then you probably won’t be better off in the long run.”

That doesn’t mean the company eschews all technology. King is of the mindset that “going forward, every company is going to be a technology company. They’re just going to happen to distribute tires or sell home goods or sell groceries. There’s just too much benefit from all the tech that’s available out there.”

Dunlap & Kyle’s warehouse team in Dallas is now looking at scanners, he says. The problem is there’s no uniform barcode on tires, so the company would need to create its own barcode for every tire or every pallet of tires. King says he knows other wholesalers already have figured this out, “but we’re going to get there.”

This side of the tire business has been a bit painful for King, who 35 years ago expected to start his career bringing the federal court system into the digital age. Instead he landed in an industry known for its slow adoption of technology.

“If we could get RFID chips (in tires), that would be great. We could get the reader on there and if you rolled the wrong tire on the truck, it would flash red lights and buzz just like you walked out of Dick’s Sporting Goods with something” with the security tag attached. 

“You’d never load a wrong tire. You wouldn’t get a green light until everything that’s supposed to be on (the truck) is there. It would be very helpful, but we haven’t gotten there yet. Maybe one day.”

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Nearly every Dunlap & Kyle warehouse has been updated with narrow aisle racking to maximize inventory capacity. Most facilities have tires stacked four shelves high — or as high as the eaves of the building allow. Photo Credit: MTD

 

Investing in people

Dunlap doesn’t understand all the talk and stress involved with keeping good employees. He thinks most are making it more complicated than necessary. There are job vacancies at the company, but he says Dunlap & Kyle does not have a people problem. How? 

 “We take care of them. We’ve got a Cadillac plan for hospitalization and insurance, a retirement plan and then they’re paid a lot of money on top of that.”

Dunlap & Kyle has 1,600 people on its payroll. Many have been there for decades. Second-generation employees aren’t uncommon. The fourth generation of the Dunlap family is working in the business. The same goes for the King family.

Dunlap says a larger wholesaler recently tried to hire one of his salespeople. The salesman laughed at the other company’s compensation offer.

Dunlap will not get in the way of an aggressive and driven salesperson. He doesn’t believe in carving up a successful salesperson’s territory and has interfered when a manager has tried to make that move. If a salesperson builds it up, he gets to keep it — even if realistically there’s enough business to split the area in two.

“I respect it and protect it. I’m sitting here drinking coffee and they’re out there working.

“I’m not going to mess with it. I’d be stupid to do that.”

Over the years, Dunlap has rewarded some employees with a share of the business — often 5% of a specific warehouse. When a successful salesman said he wanted to retire, Dunlap didn’t want to lose him. He rewarded him with a share. The man has said he’ll work as long as he lives. This generous spirit applies to more than the company’s sales team.

“As long as I’ve got money, it’s theirs, too,” says Dunlap. “If they work hard, they’re entitled to compensation. I think to not do that you only hurt yourself.”

He believes in helping all kinds of people, but his employees get extra attention.

“I’ll take care of their problems. They come to me with everything. I spend half my time dealing with people’s problems.”

Most recently it was an employee whose house was destroyed by a fire. ”You’ve got to help them out. It’s why I make a living.”

The flipside is that the employees he helps are fiercely loyal. They hustle. Those who see the value of their benefits plans work even harder, he says.

“Take care of them and they’ll take care of you,” he says. “If you’re doing well, why do you want to be tight with the money? What are you going to do with it? We couldn’t operate without good people.”


Special thanks to the following companies that supported the 2022 MTD Tire Dealer of the Year award program: American Omni Trading; BKT USA Inc.; Bridgestone Americas Inc.; Carlstar Group; Deestone; Hunter Engineering Co.; Kenda Tires USA; Kumho Tire USA Inc.; Maxxis Tires; Michelin North America Inc.; Myers Tire Supply; NetDriven; Nexen Tire America Inc.; Prinx Tire North America Inc.; Schrader TPMS Solutions; Sentury Tire USA; Sutong Resources Inc.; TBC Corp.; Titan International Inc.; Yokohama Off-Highway Tires America Inc.; Yokohama Tire Corp.; Zafco International; and ZC Rubber America Inc.



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