Current Issue

PREMIUM CONTENT FOR SUBSCRIBERS ONLY

Commercial Business Retail Wholesale Distribution

My beliefs, not make-believe

Order Reprints
My beliefs, not make-believe

Believe it or not, I have been editor of Modern Tire Dealer for 10 years! Between my editorials and Web blogs, you probably know more about me than you ever dreamed, or feared, possible.

I have revealed my love of, in no particular order, donuts, especially Krispy Kremes; all Cleveland professional sports teams (no pity, please); and classic television programs (I’m a product of the 1960s, after all). From time to time, I mention my wife, Tris, or that I was born and raised in Ravenna, Ohio, or that I’m Catholic.

The video blogs on www.moderntiredealer.com are particularly revealing. They are more of a video diary of my appearance. If you compare my first one from four years ago with the most recent one, you probably will notice that I have gained about 20 pounds (keep in mind the camera adds 10 pounds). And my moustache is grayer.

I am against the Chinese tire tariffs, for Right to Repair legislation, and think nitrogen inflation is a legitimate service.

I’m about to add to your knowledge. Here are more of my beliefs, centered on current events in our industry.

I believe in long-term financial stability versus short-term. This may seem like a no-brainer, but Wall Street doesn’t always think so.

In my early years at Modern Tire Dealer, Groupe Michelin finished the year with what I remember to be a $300 million loss. At the time, I couldn’t believe a company could lose so much money.

I also recall that Michelin didn’t seem worried. The financial report indicated the moves it made were necessary for long-term gain. The next year, the company netted something like $500 million.

I know that a majority of the company’s stock is owned by the Michelin family, so Michelin is not at the mercy of any stock exchange. Still, I thought of that when Michelin recently launched a $1.6 billion “preferential subscription rights” offering to existing shareholders.

Because the offering caught the financial community by surprise, analysts were far from supportive. Partially as a result, Michelin’s stock price dropped significantly.

One of the reasons the company says it needs the money is to “finance the acceleration of Michelin’s growth.” Once again, the company is eschewing short-term results for what it believes is long-term gain. I wish all companies would follow that philosophy.

I believe in American manufacturing. Tire manufacturing capacity in the United States has decreased more than 21%, or 72 million tires, since 1995. Passenger and light truck tire capacity has dropped 25%, with 11 plants closing.

However, five consumer tire facilities have been built since then. Three are in South Carolina: Greenville and Lexington (Michelin North America Inc., 1997 and 1999, respectively) and Aiken County (Bridgestone Americas Tire Operations LLC, 1999).

The two newest plants operate in Georgia. Pirelli Tire North America opened its MIRS (Modular Integrated Robotized System) plant in Rome, Ga., in 2002. Toyo Tire North America Manufacturing Inc. opened in White, Ga., in 2005.

In 2008, Kumho Tire U.S.A. Inc. broke ground on a consumer tire plant near Macon, Ga. The company delayed construction during the recession, and it remains on hold. When completed, the plant’s production capacity will be “around three million tires.”

I hope no more plants close, but am not naive enough to think all of the older plants will be in operation five years from now. And I have no problems with overseas tire companies building in the U.S. to save on transportation costs and tariffs — where tires are manufactured is more important than who manufactures them.

In a global economy, imports are necessary and should not be denigrated. I still wish that domestic tire manufacturing increases in the years to come.

I believe in “the lowest price.” Recent tire ads in “The Providence Journal” focused on pricing. “Lowest prices guaranteed!” claimed Tire Pros of Rhode Island Inc. “We will not be undersold!” asserted Town Fair Tire Centers Inc.

I have no problems with that type of advertising. In a free-market society, independent tire dealers should be able to determine their own tire prices. Is it a loss leader? Is profit based on volume? It doesn’t matter. You may not like it when your competitor reduces his profit margin, but that’s what competition is all about. 

The idea/basis/strategy behind “4 for $99” was a good one, in part because the customer had to purchase four tires. I would prefer that tire dealers receive top dollar for their tires, and prices are up this year, but in the end, it’s really all about the consumer. Offering overseas product because it is less expensive gives car owners options. That’s a good thing.

 If you have any questions or comments, please e-mail me at bob.ulrich@bobit.com.

Related Articles

Employees Not Hitting the Mark? Make Sure You're Setting the Right G.O.A.L.S.

People and process: My father. Myself. My son

TIA president addresses controversial checkoff program: 'We believe there is a consensus this needs to be done,' says Morgan

You must login or register in order to post a comment.