Callaghan Tire focuses on 'total service"

April 1, 2004

A well-spoken man, Todd Severson isn't one to use many cliches in conversation. But if there's one phrase that he uses regularly, it's "total service." The term is more than just a buzzword at Callaghan Tire, where Severson serves as president. It's the strategy that propelled the company to one of its most profitable years ever in 2003 with some $28 million in sales.

Retread veterans

Predominantly a commercial tire dealership, Bradenton, Fla.-based Callaghan Tire has 11 locations throughout the "Sunshine State," including outlets in major markets like Miami and Tampa and stores in smaller towns like Lakeland, Ocala and Naples. The company also operates two Bandag retread shops, one at company headquarters in Bradenton and another in Riviera Beach, Fla., which it acquired from West Palm Beach Bandag Inc. last September.

Retreading has been a substantial revenue stream for Callaghan Tire since owner Dan Callaghan left Bandag Inc., where he was central division manager, to open his own plant in 1978. The dealership produces nearly 240 medium truck tire retreads per day in Bradenton, plus some light truck tire retreads.

The Riviera Beach plant is producing about 50 retreads per day, and he and Callaghan (Severson's father-in-law) plan to eventually double the plant's output. (Two more of Callaghan's sons-in-law, Guy Virgilio and Mike Morgan, also work at the dealership, as do daughters Patty Virgilio and Jane Trinci. Callaghan's wife, Betty, is the company's vice president.)

The shop has turned out to be a good fit for Callaghan Tire. "It's our link to our east coast customers," says Severson. The plant is modest in size at 7,500-square-feet -- compared to Bradenton's 20,000-square-feet -- but the company wants to add onto it within the next three years.

Severson says the West Palm Beach plant will begin the ISO 9000 Certification process this summer. (Bradenton was certified last fall.) The designation differentiates Callaghan Tire from other retread operations and has proven to be an effective selling point.

Great expectations

Callaghan Tire has about 1,000 retread accounts, most of them based in Florida. National account fleets comprise 35% to 45% of the dealership's total retread business, up from 25% three years ago and 10% a decade ago. "We have leasing companies, over-the-road haulers, pick-up and delivery companies, construction companies -- just about everything."

Retread accounts expect a lot more from tire dealerships than in the past, according to Severson. Price isn't the main factor anymore. "They want me to have a total package of products, service and information," he says. Customers want Callaghan Tire to track not only their retreads, but also their new tires. Many are taking advantage of the dealership's mounted program. And a growing number of clients are moving to a "just-in-time" inventory strategy. "They want certain levels and we assist them in keeping appropriate levels. Whether I'm warehousing or they are, we work on that together. They want to drive costs out of their tire programs."

Service isn't a commodity

Retreads have become a commodity item in some customers' eyes, according to Severson. This hasn't stopped Callaghan Tire from successfully raising its retread prices by as much as 15% over the last five years. "We've had material price increases and our operating costs have gone up." The dealership's plant wages jumped 30% to 40% within the last half-decade in order to stay competitive with other manufacturing jobs.

In most cases, customers understand why price hikes are necessary, says Severson. "We make sure they know our story." However, some are less accepting. "You have to determine if you want to keep them as customers. And sometimes they choose to go elsewhere if they don't see the value.

"Overall, we have a great customer base. We have customers who have been with us since the day we opened. They've been great partners." Severson says the company's sales development and account managers use a "Conquest List" to target prospective customers.

Right now, Callaghan Tire's main goal is managing its rapid growth. (The dealership opened a new commercial tire center in Jacksonville, Fla., three months ago that already is exceeding expectations.) "I don't think 2004 will be a year to do more acquisitions or locations," says Callaghan. "It will be a year to fine tune what we have and put the right peg in the right hole. When you expand, it obviously costs you money and you have to recoup that."

But don't expect Callaghan Tire to rest on its laurels, says Severson. "Customers have a lot of good products to choose from. But (their) needs and expectations are changing all the time.

"We have cradle-to-grave expertise in the tire business. We're tire solutions experts."

Callaghan Tire makes service truck safety a top priority: Road service specialist uses extensive checklist to evaluate techs

"No job is worth doing unless it can be done safely," reads a sign at Callaghan Tire's main office in Bradenton, Fla. This maxim extends to the dealership's service truck operations. Callaghan Tire runs 60 service trucks out of 11 locations throughout Florida. "It's important to make sure our guys are the best guys out there," says Callaghan Tire President Todd Severson -- and that includes being the safest.

That's where Bill Wren, the dealership's safety manager, comes in. Wren, who has 28 years of service truck experience, rides with new service truck techs until he determines they are competent. During the process, he evaluates their progress using the following checklist (employees' competency levels in each category are either deemed "acceptable" or "needs improvement").

* Workmanship: proper use of tools; neatness; completing the job properly.

* Knowledge: proper tire repair procedure; proper mounting and dismounting; proper jacking and wheel assembly removal; care and use of air pressure gauge; use of valves and cores.

* Tools: proper use of safety cage; use of safety glasses and hard hat; weekly rotation of tire inflation gauges; checking torque of impact wrenches; proper jacking procedure; proper use of stands and wheel blocks.

* Equipment: proper use of flares and triangles; inspection of wheels, lugs and studs; use and inventory of first-aid kit; check regulators on compressor; check air lines and couplers.

* Truck: check brakes, brake lights, head lights, turn signals, mirrors, horn and seatbelts daily.

Wren also performs random, unannounced checks of service truck operators as they work. "I also go from shop to shop, checking safety," he says.