Goodyear Dunlop MD Discusses HiQ, Christian Salvesen and the Truck Tyre Business

Arriving at Tyre Fort in Birmingham, the first thing you notice is the still gleaming Norbert Dentressangle logo that now hangs on the adjacent distribution centre (the Goodyear and Dunlop brands on the side of the huge building excepted). Less than a month after his appointment as general manager was made public, Mark Brickhill encountered something of a sea change in the company’s newly revamped distribution setup. In January 2006 Goodyear Dunlop decided to hand over the warehousing and delivery control of most its products to a third party logistics company (3PL).

The idea was for Goodyear Dunlop and Christian Salvesen (as it was then) to work together to improve efficiencies and costs for everyone involved. To say feelings about this move in general were mixed would be something of an understatement. And to say the service wasn’t as good as all the respective parties had hoped for would be similarly wide of the mark. Mark Brickhill is very open about this “blip” and actually wrote to customers at the time to apologise for the service operating below expectations. But that wasn’t the only bit of upheaval the management was faced with. Next, the third-party logistics supplier Goodyear Dunlop outsourced its delivery service to was bought by a competitor. Prior to this announcement in October 2007, profits at Christian Salvesen fell 19 per cent, a fact the company at least partly attributed to the higher than expected start-up costs encountered in what it described as a “difficult” distribution deal with Goodyear Dunlop and Continental Tyre Group. However, change is not always bad. And what had looked like fairly dire straits, now – in the light of Christian Salvesen being bought out by French logistics specialists Norbert Dentressangle – looks more like teething troubles. Speaking to Tyres & Accessories, Mark Brickhill is open about the fact that the Salvesen to ND transition brought with it a paradigm shift from profit margin to service-centred philosophy distribution. And this can only mean a better service in the future. Referring to the logistics changeover, Mark Brickhill commented: “There is a significant difference in mindset [between Christian Salvesen and Norbert Dentressangle (ND)]. ND want to work towards a service led model and key leadership changes mean they are now performing to a pretty outstanding level.” Brickhill expects further premium manufacturers to join Continental and Goodyear Dunlop as Norbert Dentressangle distribution partners. Driven together to be first Something else Brickhill brought with him was a finely-tuned mission statement aimed at bringing some clear objectives to Tyre Fort – “driven together to be first”.

The three words “driven, together, first” are at the very centre of this and they carry with them some ambitious goals. The basic flavour of this is that Goodyear Dunlop a) wants to further leverage the fact that it is the only top manufacturer with two premium brands at its disposal and b) is aiming to increase sales of high value, UHP and run-flat tyres. Goodyear Dunlop already has the youngest product range in the market with 25 per cent of new unit volume being drawn from products less than two years old. And as if this wasn’t enough, two more range launches are scheduled in the next 10 months. Truck Force to enter profit in 2009 Goodyear Dunlop’s detractors would have the truck tyre market believe that there are serious problems in the company’s commercial vehicle department. Mark Brickhill, however, paints quite a different picture. Firstly, Truck Force is already showing signs of being a turnaround success story. Since the commercial vehicle retail arm separated from the HiQ passenger retail business, and the two chains were each allowed to follow strategies tuned to the respective business areas, both operations appear to be better off. Perhaps the best sign of this is the fact that Truck Force, which was once a significantly loss making operation, is now at breakeven and on schedule to enter profit in 2009. But this doesn’t tell the whole story. From Mark Brickhill’s point of view, the fact that Truck Force has evolved into a service-led operation has had much to do with its improved performance. On the subject of service, call response performance is singled out as a particularly good indicator. The 14 equity depots Truck Force runs all currently manage to successfully respond to 92 per cent of first calls. Some of the company’s partners are recording results as high as 94 per cent.

According to Brickhill, you can’t solve a problem until you know there is a problem – and it is this kind of benchmarking that shows that Goodyear Dunlop has the best service network on the market. And what of one competitor’s claims that it will be able to take the number three spot in the CV tyre market, according to market share, by the end of 2008? “We have made some clear ‘where to play’ choices,” Brickhill responded, explaining that Goodyear Dunlop doesn’t intend to buy market share or sell tyres at any price. “There is good business still to be had on regional fleets,” he added. HiQ The other side of Goodyear Dunlop’s retail operation is its HiQ passenger tyre sales operation. The very short story here is that the management decided not to sell the HiQ tyre chain to a team of four managers led by retail director Neil Burrows. At the time this was announced it appeared as if the company was experience a kind of Alan Revie/National Tyres manoeuvre. Instead the company will continue with its plans to sell franchises in 15 regional zones across the UK. HiQ’s management team will be based at Goodyear Dunlop’s TyreFort in Birmingham.

So why didn’t the management buy-out pan out? Because the bidding process was oversubscribed primarily, Brickhill explains praising the quality of the MBO bid. However, HiQ franchise bidders ranged from branch cooperatives to particular big-hitters in the tyre industry. According to official sources, a third of those that registered their intent to get involved in the franchise actually submitted bids, with rather half of these being successful. The result, so the Goodyear Dunlop MD says, is that HiQ will be the only tyre retail operation to be driven by so many entrepreneurs at the region level. As far as sales volumes are concerned, the target is to increase unit sales from the historical figure of around 360,000 tyres a year to 1 million. And this all gives HiQ the opportunity to be a bigger player in the fleet market. Recently, Goodyear Dunlop has invested heavily HiQ, namely with the formation of a training academy and an increase in marketing investment including title sponsorship of the British Touring Car Championship. HiQ executives say this deal is expected to continue for another three-year contract.