Steely resolve in the Iron City: Pittsburgh is saturated with tire retailers, yet its independents remain the city's dominant tire distributors
With the exception of Detroit and the auto industry, few cities are as linked to a single industry both in history and popular imagination as Pittsburgh is to steel.
From 1873, when Andrew Carnegie opened his first steel mill, through the 1980s, Pittsburgh was the hub of the American steel industry.
While old-line industrial manufacturers like U.S. Steel and Alcoa remain headquartered in Pittsburgh, the Iron City's fire-belching smokestacks have been supplanted by an economy that's largely based on high-tech industries and financial services.
However, Pittsburgh's lunch pail work ethic remains part of its residents' DNA.
"The heart of the industrial revolution was right here," says long-time Pittsburgh tire dealer Harry Bowser, "and that stays with people who were raised here. We don't quit. If you get your butt kicked today you go back and see the guy tomorrow and find out if he's just as tough as the day he kicked your butt."
Pittsburgh's independent tire dealers have been kicked around for decades by shifting economic winds, outsiders trying to break into the market and competition from each other.
"This has always been a tough market," says Joe Rauso, who's been selling tires in downtown Pittsburgh since 1964.
But Pittsburgh's tire dealers, like their city, are survivors. Like Pittsburgh, they've found ways to adapt to a changing business climate. Some have even completely re-invented themselves. It's all part of doing business in one of the country's most competitive tire markets.
The latest edition of the Pittsburgh Yellow Pages lists nearly 70 independent tire dealers. It also lists dozens of tire manufacturer-owned stores, car dealerships, service stations and warehouse clubs that sell tires. Virtually every tire brand under the sun is available in the greater Pittsburgh area.
"If you want to be a true independent you want to be able to say, 'Yeah, we can get it,'" says Tom Richey, co-owner of Laurel Gardens Tire Service, a single-location dealership several miles north of downtown.
Laurel Gardens Tire is situated in a quiet, residential area between two houses -- one of them belonging to Tom and his wife and business partner, Cindy.
The couple started their company in 1991, working out of their two-car garage. Space is still limited. The Richeys often store tires on their back porch!
The dealership is an anomaly in the Pittsburgh market in that it doesn't offer automotive service. "We're 100% tires," says Tom. "We're tire experts."
They're inventory management experts as well. Because of space constraints, Laurel Gardens Tire only stocks around 4,500 tires at any given time. "In February, we were at 5,500. We've worked really hard on trying to weed out the poor movers. We try to have four of every type of size. Take a 265/60R20 light truck tire for a Dodge or Ford F-150 pickup truck: within that size we'll keep an economy set, then we'll bring in a Cooper or a Goodyear, and then we'll try to have a snow set."
The Richeys buy product from a variety of wholesalers, most of whom provide daily delivery. It's not unusual to see two or three trucks lined up in front of their shop. "When someone leaves, the next one pulls in," says Tom.
"With so many different tires on OE, if you don't have multiple brands, you're really limiting yourself -- maybe to obsolescence."
Pittsburgh tire buyers are more dealer loyal than brand loyal, he says. "Very few people come in here knowing what they want. They come in and say, 'What do I need?' We've built a tremendous reputation with our customers, but it's taken a lifetime to build."
Tom was born and raised on the same street where his dealership sits. Cindy was raised in the same neighborhood. "I went to high school right behind this building," he says.
"We try to be part of the community. We advertise in church bulletins, at bingo halls... we sponsor every high school sports event, community golf outings -- everything you can imagine. If you take a look at our sales from different zip codes, most of our customers are concentrated right here."
And former residents who've moved several hours away will return to Laurel Gardens Tire to buy tires. Taking care of customers pays big dividends in a saturated market like Pittsburgh, according to Tom.
"You go half a mile up the road from here and there's a Tire Kingdom. Go down the road a little more and there's a Sears and a Pep Boys. There are seven Monro Mufflers and Mr. Tire stores in this area. You have Wal-Marts and Sam's Club..." he trails off, counting on his fingers for emphasis.
"But we're very fortunate. We have a nice setup. People know they can come in here and not get skunked. And we get new people who come in here and say, 'I've heard from several people that you're fair.' You can't buy that."
Fifteen miles across town in the southern suburb of Upper St. Clair, Calabro Tire & Auto Service, a single-store, seven-bay dealership, also is reaping the benefits of customer loyalty.
"We have a clientele that's been coming here for three generations," says Janine Calabro, who runs the store along with her brothers Perry and Jack. Calabro Tire was founded by their father, Peter Calabro, in 1941. Perry and Jack have worked in the business all their lives. Janine joined it in 1994.
The dealership is on track to post $2.5 million in sales this year thanks in part to a robust auto service business. "This past summer we were exceptionally busy with auto repair," says Janine. "We do a lot of brake work, state vehicle inspections and oil changes. We do some air conditioner repair and exhaust work.
Calabro's tire business also has been grown significantly. The company only sells consumer tires; it exited the commercial tire segment 10 years ago. Michelin, BFGoodrich and Uniroyal are its main brands. The company also carries some Goodyear products.
"We're in a higher-income area -- in fact, one of the highest income neighborhoods in the state," says Janine. "We get a lot of high-end cars and, of course, are seeing larger tire sizes. We have newer equipment. We can change up to 26 inches."
Sixteen- and 17-inch tires are their top sellers. "You just don't see 14s anymore. Recently we had a car that came in with a 195/75R14, which we haven't stocked in ages. We had to special order it from Michelin."
Janine admits that sticker shock can be a problem with many customers. "When purchasing a new car, a lot of people are not being educated about their tires at the auto dealership. People talk about everything else on a car except the tires until it's time to replace them.
"Car dealers usually don't say, 'Hey, you have a special kind of tire on this car,' so there's definitely a jolt when customers come in for replacement."
Selling to car dealerships has emerged as a reliable -- albeit unglamorous -- revenue stream for Calabro Tire. "It's not a big margin business because it's run through each car manufacturer's dedicated tire program," says Janine. "It's pretty regimented in terms of our compensation per tire."
"But it helps turn our inventory," says Perry. "They move a lot of units for us." Calabro Tire also has cornered a lucrative niche as a licensed Michelin PAX run-flat system dealer. The PAX system consists of four components -- a tire, a wheel, a support ring and an air pressure monitor --that work in tandem to keep the tire on the rim even after a complete loss of air pressure.
"We're the only certified PAX dealer around," says Janine. "We're selling a PAX tire for about $238 per unit."
The PAX-equipped vehicle they see most often is the Honda Odyssey mini-van. "A lot of car dealerships that sell the Odyssey aren't certified to change PAX."
Calabro Tire's techs also are trained to repair PAX assemblies. "The repair process is labor-intensive. If we have to repair the tire, that's about an hour of labor time."
Selling PAX assemblies is another way to differentiate Calabro Tire, Janine explains. "Customers come to us from as far away as West Virginia for them."
The Calabros are convinced that their focus on customer service will continue to yield results.
"I think people today have been to wholesale clubs and they're finding out that low prices are not what they're cracked up to be," says Perry. "They're willing to pay a little bit more if they can get the service.
"We've been here for so long we've seen a lot of competitors come and go. Not that we're invincible, but we're rooted here, so we really don't put much of an emphasis on the competition.”
Pittsburgh sits on the Allegheny Plateau, where three rivers -- the Allegheny, the Monongahela and the Ohio -- meet. Much of the city has been built on steep slopes that are connected by more than 400 bridges of all shapes, sizes and function. Because of this, Pittsburgh's neighborhoods have a self-contained quality not often seen in other metropolitan areas. In fact, the town's tire dealers describe Pittsburgh as a collection of neighborhoods rather than a unified city.
"People here consider themselves as being from their neighborhood, not Pittsburgh," says Shawn Fitzgerald, who oversees wholesale operations for Flynn's Tire & Auto Service.
"It's very good for the independent tire dealer because it's very neighborhood-oriented. The national chains don't necessarily have more of a draw. In fact, they have trouble competing against the small shop that's well-established."
Compared to other dealerships in the city, Flynn's Tire, which entered the Pittsburgh market in 1997, is a newcomer. The Hermitage, Pa.-based chain's point of entry into the Iron City came through its purchase of E.W. Tire, an independent tire dealership that had been around since the 1930s.
Flynn's Tire now has seven retail stores in the greater Pittsburgh area, all of them in outlying neighborhoods. (The company has a total of 17 retail stores throughout Pennsylvania and Ohio.)
Pittsburgh is the biggest market in which Flynn's Tire does business. "Pittsburgh is an older market, age-wise," says Joe Flynn III, the company's president. "When people are used to dealing with someone for 20 years, it's tough to force a change."
One thing that has helped win new customers is the firm's "entire price" policy. The final price of every tire includes installation, application of a new valve stem, old tire disposal, lifetime computer balancing, lifetime rotations and road hazard coverage.
Flynn's Tire is one of Pittsburgh's largest and most visible wholesalers. Company-wide, it has three distribution centers. Its warehouse in Carnegie, Pa., serves the greater Pittsburgh area with 10 trucks that deliver daily.
"We're a WD for Goodyear so we have their G3Xpress program," says Fitzgerald. "We're also a distributor for Yokohama so we have the Yokohama ADVANtage program. We've just added the Continental Gold program. And we have an in-house program for Kelly, the brand we're most known for."
Competition at the wholesale level can be fierce in Pittsburgh, according to Fitzgerald, who also ha wholesaled tires in other parts of the country.
"Most of our customers have a list of wholesalers they know and what brands they carry. They call them and the big questions are, 'What do you have? When can you bring it to me? How much is it?' If they don't like the answer to any of those three, they call the next guy on the list," he says with a laugh.
But make no mistake: wholesaling tires in Pittsburgh comes with some serious challenges. "There's no shortage of competitors," says Fitzgerald. "You can't rest at all because someone is always pushing a new program and trying to get your customers."
Pittsburgh's hilly, fragmented terrain and narrow, winding streets require extra time to navigate. And they are hard on delivery vehicles. "You can't run as efficient a route as you can in the western U.S. where the roads are flat and the infrastructure is more set up for that."
Another factor that will continue to effect commerce in Pittsburgh is its declining population, says Fitzgerald. In 2006, the population of Pittsburgh and the six counties around it was roughly 2,860,000. That number is expected to fall by 30,000 over the next four years.
The expected decline doesn't alarm Fitzgerald, who believes it could benefit the city's independent tire dealers. "If you have new residents moving in, people don't know where to shop and they have a tendency to migrate to national names they may know. It's the word-of-mouth business that keeps the independents going."
The same can be said for on-going customer service, adds Flynn. "If you have good people, you're going to do well. When it's all said and done, we have to make sure we're doing our customers a service and we need the right people in place to do that."
Not everyone believes a shrinking Pittsburgh will be good for its tire dealers. Harry Bowser, owner of Rubber Products Tire Co., sits in his office across the river from downtown Pittsburgh and rattles off the names of defunct steel companies that once had plants in Pittsburgh -- plants that his company serviced.
"Jones & Laughlin Steel, LTV Steel..." he sighs. "J&L was bought out and went bankrupt. LTV went bankrupt."
The 1980s were "brutal" for Pittsburgh's steel industry, says Bowser, who's been in the industrial tire business for 50 years. The decade was equally brutal for tire dealers who sold to steel mills.
"We barely got by in the '80s. Our business went from $6 million to less than $2 million. Some large manufacturers weren't allowed to buy a new product if they could buy a used one. We lost a lot of tire dealers during the '80s because they couldn't stand the heat financially."
Rubber Products' sales have rebounded over the years, but the process "has been as gradual as a snail. If you have an old company with a tremendous reputation, when your customers go back to work they come right back to you. Old, established reputations are what have kept people in business."
Several tire dealerships in Pittsburgh farm out work to Rubber Products because the company specializes in industrial and material handling tires and related service, says Bowser. "You need the equipment and the people to match the kind of work you do. We have the best people and equipment for what we do. Each of my 17 employees is a specialist in what he does. That's why other dealers call us."
Rubber Products runs two fully equipped press trucks and has two stationary presses at its shop. The company also operates two boom trucks.
Tire dealers make up half of the company's customer base. Other clients include industrial equipment dealerships.
No job is too small, he says. "You find yourself doing work where an outsider would say, 'How can you do that? You're not making any money.'
"I just gave an account $570 credit over a dispute. We put tires on two of his machines. Three weeks later, one of the foremen said he didn't want tires on truck number two, just truck number one. Well, we got the orders to go do it, and we did it. But I said, 'We can't drive back up there and convince the guy of that,' so I credited the whole $570 just to keep the end user happy."
Bowser didn't consider it a major loss because the tire dealer who farmed the job out to him has subsequently given him $25,000 in business.
"You find yourself doing these things in all areas of business. You sell a guy four car tires and his kid runs over an object and ruins one of the tires. The tire cost you $60 and you sold it for $80. So he comes in with a long face, and you give him your sympathy and throw a new tire on. If you took the guy out for a couple of drinks and a hot dog, you'd pay more.
"There was a time I took every tread depth gauge out of here. If somebody comes in with a tire, how many dealers take out a tread depth gauge? Right away the customer's unhappy. Make him happy. If you can pull out a $100 bill and make somebody happy, what better advertising is there?
"Whether it's a customer or a supplier, if there's an uncomfortable situation, the first thing you do is eliminate the problem. Once you make an obstacle go away, you can move forward. But if you sit around whining about $300 or $400, you're wasting good creative energy."
A big part of Rubber Products' business is what Bowser calls "special conversions. Take a stock truck that has two 12x20s on it," he says. "Some of those trucks work better with one jumbo tire and wheel assembly on each side rather than duals." Bowser's techs will fabricate the required change-over to customers' specifications.
"When you solve someone else's problem it's the same as solving your own problem."
Bowser is confident in his company's prospects. But he says the biggest problem moving forward will be finding qualified people to replace an aging workforce. "There isn't anyone. The people who are unemployed are unemployable."
Earlier this year, he placed a help wanted ad and received 150 responses; none of them panned out. "You can't hire someone into this business who was laid off by a major engineering firm and made $70,000 last year. The work in our shop is the same as it has been for the past 50 years. We use the same hand tools and the same hammers as they did 10 years before I was born.
"It's like putting shingles on a roof. People just don't want to get up on a roof and scrape off old shingles. It's the nature of how we're raising young people."
John Stickley, who runs Whitehall Tires for Less, a retail tire shop several miles south of downtown Pittsburgh, has had his share of problems finding good people. It recently took him six months to find an assistant manager.
"A lot of people just will not adapt to the demands of this business. And those who deserve more, well, you can't always pay them."
Whitehall sells Michelin, BFGoodrich, Uniroyal, Continental, General, Bridgestone and "some private brand products" out of its eight-bay location.
Stickley agrees with other dealers that Pittsburgh is still an independent tire dealers' market. He's grateful for that. "People would still rather deal within their neighborhood instead of driving to the shopping center."
But the emergence of other points of sale such as car dealerships has put the squeeze on margins. "Automobile dealers previously did not want to be bothered with tires. In fact, if you talk to them up close, they still don't want to bother with tires."
Stickley sells to car dealerships though he's loathe to use the word "sell" and is not entirely comfortable with the concept.
"We don't sell to car dealers; we deliver tires to them. Car manufacturers don't warehouse tires. Car dealers don't warehouse tires. We, the retail tire stores who have been around for a long time, are charged with being the warehouse. I'm the middle man without the mark-up!
"At the bookkeeping level, it looks good. You send out 50 tires a day to various car dealers and you think you're doing great. But a small commission per tire may not be so good. I'm not knocking the fact we're doing business with car dealers, but I'm not so sure it serves our long-term interest.
"I don't know this for a fact, but I have this gut feeling that I'm feeding the guy who's going to put me out of business."
At the retail level, Stickley is trying to boost his store's auto repair business. The age of many of his customers has been a hindrance. "Older people have more time to shop prices for car repair. And if it's a newer car, it's under warranty so you don't see that customer."
The neighborhood in which Whitehall Tires For Less is located has seen better days and is almost a microcosm of Pittsburgh itself, says Stickley.
"I'm not so sure Pittsburgh will ever be what it was," he says, leaning back in his chair. "What's happened is that as the economy has gone down, the businesses that supported people who spent their money here - the steel workers, the coal miners -- are gone. Those guys lived their lives here and spent their money here."
Service industry jobs fall short of replacing the manufacturing jobs that have vanished. "The guy who wants to go out for dinner one night a week? He's gone. The guy who wants to take his family on a nice vacation once a year? He's gone. When you're not making very much money you have no disposable income."
Independent tire dealers will still be able to succeed in Pittsburgh, he says. They'll just have to work harder. "I still think the strength of any neighborhood is the independent businessman. Take all of the independent businesses away from a neighborhood and you don't have a neighborhood."
"I see outsiders try to come in and break up the market and they have a hard time," says Rauso, who runs Lockhart Tire, a downtown Pittsburgh dealership, with his cousin, Pete. Lockhart retails tires to downtown workers but commercial tire accounts make up the bulk of his business. "We don't even have a sign on our building. People just know we're here.
"Customers want service; they don't want to hear the story. The reason we've lasted 44 years is when I tell someone I'll do something, I do it. The customer has enough problems. He doesn't want to worry about the tire man."
Pittsburgh at a glance: City offers diversity of industry
Pittsburgh is one of the oldest major cities in the United States. European traders established posts and settlements in the area as early as 1717. Fort Pitt, the city's predecessor, was built by the British in 1758 during the French and Indian War. Pittsburgh itself was officially chartered as a city in 1816.
* The City of Pittsburgh has a population of 334,500. Another 2.5 million-plus live in the six counties surrounding it. The city's median family income is $46,000.
* Pittsburgh is home to seven Fortune 500 companies: Allegheny Technologies, H.J. Heinz Co., Mellon Financial Corp., PNC Financial, PPG Industries, WESCO International and U.S. Steel. Six Fortune 1000 companies also call Pittsburgh home: Allegheny Energy, American Eagle Outfitters, Consol Energy, Dick's Sporting Goods, Kennametal and Wheeling-Pittsburgh Steel.
* Once the center of the American steel industry, Pittsburgh has developed into a high-tech center. Carnegie Mellon University is recognized as one of the top technical universities in the world. The NASA Robotics Engineering Consortium is based in Pittsburgh.
* Pittsburgh "firsts" include the first Ferris wheel (1892); World Series (1903); commercial radio station (1920); U.S. public TV station (1954); retractable sports arena dome (1961); Big Mac sandwich (1967); and simultaneous heart, liver and kidney transplant (1989).
* Famous people from or who have lived in Pittsburgh include polio vaccine inventor Jonas Salk; steel tycoon and philanthropist Andrew Carnegie; explorer Admiral Robert Peary; oil industry pioneer Samuel Martin Kier; inventor George Westinghouse; Boy Scouts of America founder William Boyce; songwriter Stephen Foster; singer Perry Como; actors Gene Kelly, Jimmy Stewart, Johnny Weissmuller and Charles Bronson; artist Andy Warhol; kids' TV show host Fred "Mr. Rogers" Rogers; athletes Honus Wagner, Stan Musial, Arnold Palmer, George Blanda, Johnny Unitas, Joe Montana and Billy Conn.
* Pittsburgh is within a two-hour flight or a day's drive of more than 70% of the U.S. population, according to www.visitpittsburgh.com. An estimated 10 million people visit the city each year.