Slow but steady wins the race, says Marangoni's Sweatman: Company quietly builds dealer network, sales

June 1, 2004

Cool, calm and calculated is a good way to sum up Marangoni Tread North America Inc.'s growth strategy. It's taken five years for Marangoni to sign 13 retreaders in the U.S. and two more in Canada. To an outsider, that may seem a bit lethargic. But Marangoni President Bill Sweatman and Verona, Italy-based parent company, Marangoni SpA, won't change its growth strategy.

This year will be pivotal for Marangoni. The company's new $10 million, Madison, Tenn., Ringtread plant -- its first manufacturing facility in the United States -- started manufacturing in late April.

"We've actually tripled our business in the last two years," says Sweatman, "so this additional capacity will be much needed as we continue to grow."

In February, Marangoni added both Jacksonville, Ill.-based I.T.R. Inc., a sister company of Brahler's Truckers Supply Inc., and Jackson, Tenn.-based Tire Treads Inc. to its roster. The company is in the process of sewing up additional retreaders. Commercial Tire Dealer recently caught up with Sweatman to discuss Marangoni's progress and its plans for 2004.

CTD: How did Marangoni triple its business in the last two years?

Sweatman: By adding to our distribution. We've been telling our story to a lot of people individually and making presentations. There hasn't been an immediate conversion across the board, but in our industry things run their own course. It takes a little bit of time.

CTD: You've signed 15 dealers in five years. Some people may consider that to be a slow pace. Why so long?

Sweatman: We're selling into a mature industry that sells to a mature industry. Change is very slow. Some (signees) made the decision relatively fast; others were "wait and see." Certainly there's a lot of resistance from our competitors to give up existing dealers. We're late in the game. We can't do things with smoke and mirrors. We're very deliberate.

CTD: Building your own plant is a huge step. (Previously, Marangoni had imported tread from Italy and Brazil.) Why was this necessary?

Sweatman: It was necessary to reduce the supply chain. As we grow, our inventory needs and the mix of our offerings are changing as well. This will now give us the capacity we need to start shortening the supply line. Production will be shifting throughout the rest of the year. As we increase our production, we'll start moving molds into this market.

CTD: In many cases, the retreaders you pursue have worked with your competitors for many years. How do you convince them to drop their long-term suppliers and join Marangoni?

Sweatman: Growth and profit opportunities. We have a distinct product. But it's not for everybody. Some guys are too locked into what they're (already) doing. Dealers have to look at their market, their customer base and what they want to do with their business.

CTD: Marangoni gained market share last year (the company holds 1.5% of the U.S. truck tire retread market, according to MTD's January 2004 Facts Issue). But Bandag and Goodyear -- and to a lesser extent, Michelin and Oliver -- remain the big domestic players. What are the advantages of being "the little guy?"

Sweatman: We certainly can appeal to dealers who want to remain independent and manage their own business as opposed to being managed. We're not going to compete with our own dealers.

CTD: What is Marangoni's biggest challenge right now?

Sweatman: We're fairly well-known among independent truck tire retreaders, but at the fleet and end user level there's a lot of opportunity to strengthen our brand and our identity. Most of what we do (there) is educational: contrasting the Ringtread product vs. flat precure. In many cases, it has to be done one company at a time through plant tours, demonstrations, etc.

Our existing guys are growing rapidly and we're adding three or four new (retreaders) each year. Our product has been well received. We expect to double our business over the next two years. We're excited about our future.