TGI continues expanding its global presence

The maxim “location, location, location” is often quoted in relation to real estate, however it can equally apply to the success of a business. One company aware of this is Tire Group International, Inc. The Miami, Florida based wholesaler is active throughout the world, yet its location gives it particular strength in the Latin America and Caribbean regions. In recent times TGI has increased its focus on developing this geographic advantage to its full potential.

“Latin America and the Caribbean have always been a focus as Florida serves as a gateway to this region. It accounts for 40 per cent of our overall sales,” Tire Group International CEO Antonio Gonzalez told Tyres & Accessories days after the company announced the establishment of a new sales office in Peru’s capital, Lima. “We are continuing to consolidate our position and grow in this region. The advantage we have over our competition is that we are close to our customers. Extending our presence within the region is part of a growth strategy we have developed over the last three years.”

The recently opened Peru sales office joins a number of others set up in the past couple of years, namely in the Dominican Republic, Venezuela, Mexico and Brazil. Mr. Gonzalez reports these sales offices have been “very successfully” established and the current focus through these regional sales offices is the promotion of both TGI’s private brands and the portfolio of other brands the company distributes. “We distribute some 30 to 35 brands throughout the region and our objective is to find dealers for every brand within the region.”

These four abovementioned private brands are Astro, Cosmo, Industar and Luna. The moulds for these private brand tyres – some 300 in total – are all owned by TGI and the line-ups are produced in China, Thailand and India to the company’s own specifications. The latest major addition to the four private brands is Cosmo’s truck and bus radial range: “Our Cosmo truck radial line was released early 2010 and has picked up a bit of steam in the last year. We are looking at increasing capacity and adding new moulds and patterns to the range,” Gonzalez says. “We are also happy with the performance of our Industar TBB line and are in the process of shifting our moulds to a factory that is capable of supplying all our current demand requirements.” Overall, the private brands on offer cover the passenger car, light commercial, truck, off-road, agricultural and industrial sectors and are sold in niche markets within regions that include Latin America, the Caribbean, the Middle East and Asia. Gonzalez comments that TGI is working towards “establishing a global presence” with its own brands.

TGI appears well on its way to reaching this goal. The company CEO shared with Tyres & Accessories that in a typical month it exports tyres to an average of 45 countries. Europe, the Middle East and Asia continues to account for some 30 per cent of total sales, and the domestic US market adds a further 30 per cent with sales there having doubled in the last few years. In addition to its export business the company is also active as a tyre purchaser, transferring good deals acquired in one part of the world to another whenever the opportunity arises.

During 2010 Tire Group International grew sales in every product segment aside from industrial and agricultural, where supply issues were behind a slight decline. In total the company grew 35 per cent year-on-year in terms of revenue and 26 per cent in unit sales – a growth Gonzalez calls very solid. Unit sales amounted to around 1,200,000 pieces. Looking ahead to what this year will bring, the CEO says TGI is expecting continued growth and the company’s relationship with manufacturers will be “a key factor as it means we can access production.”

This last point is one of concern to the entire wholesaling business this year, Gonzalez notes. “The tyre shortage is something that everyone here has been facing the last one and a half years and it is a situation that is continuing to grow as the financial crisis wanes and the economy picks up. Factories that cut production in 2008 are trying to lift production but some manufacturers that closed plants cannot replace their lost production quickly.” In such an environment it has been essential for TGI to assure its customers that their supplies are safe. “At the moment we are telling our sales team they are “more psychologists than salesmen,” Gonzalez shares. “It is essential they reassure their customers that what is currently happening in the market can be seen as a good thing. We can assure a continued supply of products. We also say to our sales team to make it clear to customers that pricing is secondary in the present climate, the most important thing is ensuring they have products on their shelves – if they have it they will sell it. There is no point holding out for the perfect deal at the moment as there are now less manufacturer deals than ever. They don’t need to make deals right now.”

As everyone acquainted with the tyre industry is well aware, raw material prices are showing no sign of changing the direction they’re heading in. Mr. Gonzalez notes that today these price increases are often driven by Chinese manufacturers. To offset the trend towards higher prices TGI is booking orders and buying production in advance. “We don’t see the situation dissipating any time soon, at least before the end of the year. Fuel prices have also been affecting freight costs, adding to higher prices all-round.”

With two major issues confronting the industry this year, at least Tire Group International doesn’t feel under pressure from something many US based tyre wholesalers confronted with dread in 2009 – the imposition of tariffs on tyres imported from China. “The US tariffs on Chinese produced tyres initially hurt margins but we have adjusted to it,” the company CEO explains. “Following the introduction of tariffs domestic US manufacturers increased their prices and this has allowed a price gap to remain, thereby making Chinese tyres again more competitive. In addition, we are now bringing less and less products in from China and are instead importing more from places like Thailand, Indonesia and Taiwan, production locations that are competitive price-wise but don’t attract tariffs. Chinese manufacturers are okay with this – they now have strong domestic market demand and their plants are still operating at full capacity.”

To realise its anticipated continued growth in 2011, Gonzalez and Tire Group International are aware that “everything depends on supply.” The company CEO states that production is “key” to a successful year and the fact that TGI can supply its customers with the products they need is one of the company’s main attractions; customers know they are aligned with the right people. “We’re excited about the future,” says Gonzalez in closing.