Stay with Bandag or switch to Michelin?

Sept. 13, 2010

In 2009, John Snider made what he calls the hardest decision of his career: switching from long-time supplier Bridgestone Bandag Tire Solutions (BBTS) to a new supplier, Michelin North America Inc.

Snider Tire Inc. had been a Bridgestone new truck tire dealer since 1980 and a Bandag retreader since 1985.

By switching to Michelin, Snider Tire also became a Michelin Retread Technologies Inc. (MRTI) retread franchisee. In this exclusive interview, John Snider explains why he made the move.

MTD: What led to your decision to switch from BBTS to Michelin? What was the scenario?

Snider: Our industry is evolving. Goodyear has been in the retreading business and when Michelin got into the retreading business over 10 years ago, it started to change the dynamics of our industry. You had Bandag, which was an independent company, and you had Bridgestone, which did not have a retread process that was widely in use in the U.S.

I think most dealers felt that ultimately Bridgestone would buy Bandag. It seemed like a logical thing. But as long as Bandag was an independent company, the choice to renew your (Bandag) franchise was a pretty easy choice because you retained access to all the (new truck tire) brands and you really weren’t tied to anybody. For example, if I was doing business with Michelin, that was my only tie to them — that they were selling me new tires. If they didn’t want to do business with me or I didn’t want to do business with them, I could find somebody else, but I still had my Bandag plants.

Bandag was a free spot on the bingo card. They kind of helped us maintain our independence.

When Bridgestone bought Bandag (in 2007), I think from my perspective the decision to renew the franchise became a different decision.

It became “Do you want to align yourself with Michelin, Bridgestone or Goodyear?” I could give you a case for or against all three, so there is no perfect answer.

MTD: Were you being courted by Michelin at the time?

Snider: There aren’t a lot of secrets in our industry. They know when people’s franchises are expiring, so I wouldn’t say we were courted. But they were aware of the situation — that we would be coming up to a franchise renewal — so they started some conversations. It evolved over many months.

As the opportunity was presented to me, it became clear that in the case of Snider Tire, it was the right business decision. I wasn’t mad at Bridgestone or Bandag. I have tremendous respect for them. I also have a lot of respect for Goodyear. It wasn’t that I was unhappy with anybody.

This was a game changer for us. For us to make the decision to move from a long-term relationship with Bandag and a long-term relationship with Bridgestone to a closely aligned relationship with Michelin... it was a very difficult decision. It was not made without tremendous analysis and soul searching. But we were presented with an opportunity because of where we are and it made sense to Michelin. We have less in-line competition over our footprint than we had before, and it just made sense to move in that direction.

MTD: Did BBTS make any overtures to convince you to stay with them?

Snider: I was having conversations with them, as well. They are great people. They treated me well personally and they treated Snider Tire well. It just came down to what the opportunity was for Snider Tire to stay the course we were on versus going a different course. I made the decision that we were going to take the different course. I felt that was the better opportunity for our company.

MTD: In an earlier conversation with MTD, you mentioned that there was “no way to anticipate what we went through” converting from BBTS to Michelin. Can you elaborate?

Snider: We communicated our decision to BBTS toward the end of our franchise period. Our franchise was running out. They elected — and certainly it was their right — to terminate our franchise on its termination date. We had eight Bandag plants and in 45 days we were going to have two MRTI plants, and we had a lot of tires to retread. We asked ourselves, “How are we going to manage all of this?” We used other dealers — other MRTI retreaders — to retread tires for us. We had to tremendously ramp up production at the two plants we were acquiring.


MTD: How long did the changeover process take?

Snider: About 24 hours! (laughs) When we came to work on May 1, we were no longer a Bandag retreader. Then Bridgestone cancelled us on the new tire side, I think, effective 30 days later.

Communicating that to everyone in (our) organization, you don’t know what the reaction is going to be. We were closing eight retread plants, so that was impacting a number of our employees. We were acquiring 10 Tire Centers LLC locations as part of the deal, so we were going through that concurrently. We were doing all the legal stuff on that. And obviously, we had a supplier that was unhappy with us over the decision we were making, and they were active in the market.

MTD: How did you communicate these changes to your customers?

Snider: Quickly. Because of our franchise arrangement, we were not able to communicate it until our franchise terminated. I think word was certainly out, but we had to be very careful about our communications. We went and sat face-to-face with our customers and told them what we were doing and how it would impact them.

MTD: What did you say or do to reassure them that service levels and product quality would remain what they’ve come to expect over the years?

Snider: Fortunately for us, Michelin has a name, so there was not a concern about the quality of the product. Even if they weren’t using Michelin, they knew the product was good. We also have a lot of history with these customers. They have confidence in us and believe that we are going to do what we say we’re going to do. We’re going to provide them with service, we’re going to honor our commitments, and if something happens that we don’t anticipate, we’re going to make it right. That’s really what they want to hear.

MTD: Did you lose customers or business as a result of the switch?

Snider: Absolutely. During the decision-making process, that was part of our analysis. We knew there was business that was contractually obligated to BBTS — some very large customers. Ryder was one of our largest customers and we knew we would lose that from day one.

Some customers, for whatever reason, preferred not to make the change with us, and we expected some of that. On the other hand, we gained access to some new customers we didn’t have access to previously. We brought on new customers.

There were just a lot of moving parts. For about 12 months, it was challenging. We had a lot of people working very hard. But at no time did I question the decision. It was the right thing for us to do. But did I, in advance, think about all the moving parts there would be? No. There was no way to.

MTD: Because you are an MRTI retreader, are you required to carry new Michelin truck tire products?

Snider: No, I don’t guess that’s a requirement... it’s not a written requirement. But I don’t know if Michelin would have an interest if you were just going to offer the retread process. I don’t know if they would offer you their retread process. The two go hand-in-glove just like Bridgestone/Bandag and Goodyear and its retread process.

MTD: A lot of independent tire dealers will eventually face a similar decision: Do you stick with a long-time supplier even though it may not be particularly advantageous to you anymore, or do you switch allegiance to a supplier that may be more in tune with who you are and where you want to take your company. What would be your advice to a dealer who finds himself or herself in that situation?

Snider: For many years, we’ve had the good fortune of being able to represent multiple tire lines. Most people still have a number of new tire lines... certainly we do. I think if you’re going to align yourself with one of the Big Three and a retread process, that decision will be different for each individual. It’s going to be based on where they are geographically, who their competition is, what their growth aspirations are and who they have confidence in.

There are a lot of things that go into that decision. I think it would be very difficult for me to advise anyone else about what to do. I’m confident I made the right decision for us.