Bridgestone has invested £250,000 in training and refurbishment within its First Stop network.
The independent tyre dealers have planned a complete upgrade of First Stop outlets in a drive to reinforce the brand across the UK.
The investment will also enable the development of training programmes designed to improve the skills of both tyre technicians and management personnel.
Despite its dire financial situation Goodyear Tyre and Rubber Co. has paid its chief executive $1.5 million US, in salary and bonuses last year.
The Green Tyre Dealer Scheme launched recently by the Retread Manufacturers’ Association to promote the safety, performance and environmental benefits of retreaded tyres has been endorsed by the Chairman of the National Tyre Distributors Association. Martin Rowlands, Director of the Kinross-based retailer Tyrefair Ltd, was one of the first dealers to join the Green Tyre Dealer Scheme. He is also the current Chairman of the National Tyre Distributors Association, the national body representing independent tyre dealers within the UK. Rowlands said: “I wholeheartedly support the active promotion of retreaded tyres and applaud the RMA for their initiative in developing the Green Tyre Dealer Scheme. Retreads are environmentally friendly, their appearance is good, they have the same speed rating as new tyres and they are excellent value for money”.
Although the results of the Pirelli group have improved during the first nine months of this year, it is the tyre business that really shines. What was taunted by analysts as the “old economy” two years ago now represents the pearl of the company. That tyres participate in the company’s turnover with “only” around 45 per cent, but with an EBIT of 174 million Euro for the first nine months in the face of expected 194 million EBIT for the company as a whole says it all. As in previous years Pirelli’s General Manager Tyres Francesco Gori travelled to Las Vegas in order to deepen contacts to the market, from which the Italian tyre manufacturer still expects a lot in the future.
On the largest tyre market of the world, the USA, Pirelli was not very lucky during the last 20 years. From all of this nothing is left. There is nothing in common and the two keep out of each others’ way. Nevertheless, Pirelli did not give up the US market. After the MIRS factory started in Rome/Georgia earlier this year, ever more strongly, the Italians will generate a turnover of approximately 250 million Euro this year with American customers and for the second time in a row will end a financial year in Northern America with a profit. This is all the more remarkable as that the initial costs of the MIRS factory are to be borne. This time Pirelli is taking the difficult and time-consuming route into the market via the OE manufacturers. But a glance on Pirelli’s OE business, which shines with high growth rates, is worth while: here Pirelli proceeds rather selectively; anyway, the Italians do not supply bread and butter tyres with weak margins. On the one hand it concerns high-quality ultra high performance and expensive Off-Road tyres, which are manufactured in Rome, and on the other hand the company supplies tyres from the Brazilian factories into the American original equipment to customers such as Ford and Chrysler. Beginning next year, Gori says, a considerable volume will also come from the newly built Brazilian tyre factory in Salvador (Feira de Santana, Bahia). This factory is considered as particularly efficient and economical, so that the OE business in Northern America might be good fun not only under volume criteria, but will be profitable as well. And concerning sales prospects Pirelli shouldn’t have any real worries, because right now there are dozens of dimensions that are homologated with General Motors, these will be followed by orders. Thus the growth in the North American OE market will continue.
However, also on the American replacement market Gori has set himself and his staff ambitious goals. According to Gori the tyre manufacturer succeeded in finding new dealers, that were interested in Pirelli, and these in sufficient numbers. Tyre dealers observe the market very closely and notice quickly, in which direction trends go and with whom they should form a coalition, in line with Gori’s perception. The good position within the OE business, in addition with predominantly high-quality tyres, let Pirelli become ever more a valuable partner for the replacement business. In the last few years Pirelli grew in North America annually by almost 20 per cent and this is what Gori wants to realise for the coming years, too. However, with all optimism Gori refers to the extremely hard competition in North America, where each manufacturer wants to maintain ground. Pirelli could improve drastically all services, delivery speed, etc., and even concerning the prices the tyre manufacturer was able to position the brand better than last year. “But,” acknowledges Gori, “we are still far away from what we want and what we have to reach.”
North America is the big challenge for Pirelli, here the Italians find larger growth prospects even over years, which must be exhausted. The termination of the co-operation with Cooper was in reality, at least it looks that way today, a completely new beginning in Northern America. Concerning the costs of distribution and services over the whole of the continent, Gori calms down: there was no problem, everything is on schedule.
Bridgestone/Firestone has survived the largest tyre recall in the history of the tyre industry in North America, and yet has switched again into forward gear. Under the guidance of its charismatic boss John Lampe, the company is now working hard on an improvement of the results, so that the record loss extending far beyond a billion dollars for 2001 will soon be forgotten.
Two years ago Lampe succeeded at Las Vegas in bringing around 4,000 tyre dealers on the side of his company and the brands Bridgestone and Firestone. And he has lost none of his persuasive power. At this year’s SEMA Show in Las Vegas Lampe presented to thousands of dealers new Firestone products and advertising campaigns, aimed to affect these Firestone customers emotionally. It became clear that the new rise of the tyre brand Firestone cannot be stopped, not even in North America.
Talking to T&A, Lampe briefly reminded us of the tough times. At the peak of the crisis the company counter-steered with the brand Bridgestone. But then again Lampe doesn’t want to hear, that Bridgestone has been made a cheaper tyre brand as planned: “A more differentiated view is necessary. With a volume line we were cheaper, because we wanted to absorb Firestone decreases, but for example with the Potenza, which represents the top line, we have always held the price and could hold it. Since the Firestone recall we carried out changes, with which we can annually sell eight million additional Bridgestone tyres by now. Today we sell more Bridgestone and Firestone tyres than before.” Before and after! Talking to John Lampe that is to be heard several times. In Lampe’s world this means: before and after the tyre recall. During the last three years a change took place towards the brands Bridgestone, Firestone and Dayton. 65 per cent of all tyres sold carry a Bridgestone or a Firestone signature; today already predominantly that of Bridgestone. And that will continue, because nowadays the OE business is exclusively carried out with Bridgestone tyres and in the longer term this should affect the company’s replacement business. Approximately 40 per cent of all passenger car and 4 x 4 tyres, that are sold in America, went “before” into the OE business. Today there is only about 30 per cent. Lampe: “Three years ago we were in a rather despairing financial situation and had to do something for relaxation. The OE business was profitable at no time. And of course we could not afford to always produce volume to whatever costs, but we have very much paid attention to profitability. Our market share is now lower than “before,” but we have the more profitable dimensions. Also Michelin acted very selectively, and into these gaps pushed some European and Asian manufacturers.”
Approximately 90,000 visitors were expected to the 37th SEMA exhibition in Las Vegas according to organiser Specialty Equipment Market Association, without exception specialised public. The annual fair, that usually takes place in November, is comparable with the German Automechanika. For the past decade the tyre sector has been a very important part of the Show. All the tyre manufacturers with interest in the American tyre market are present in Las Vegas. Visitors however shouldn’t expect the presentation of groundbreaking new products. On the contrary: Las Vegas is a suitable place, at which business relations between customers and suppliers can be established or deepened. Despite all the economic difficulties the world’s gambling capital, in the desert of Nevada, is booming. And “9/11” seems to have passed this city without trace, a city which still builds one fancy hotel next to another. The Hilton hotel in Las Vegas it is adjacent to the fairground, once the largest hotel in the world with approximately 3,500 rooms, is nowadays less significant. Others have 4,000, 5,000 or even more rooms. Reportedly a hotel with 8,000 rooms is to be built shortly. At present the city waits for the opening of another luxury hotel, which is to dominate not only by size, but also by luxury. The opening is due in two years. To be on the safe side, the planned French name for the hotel was axed, because it is feared that too many patriotic Americans would avoid such a hotel, after the Gauls dared not to take part in the Iraqi war.
The tyre exhibition in Las Vegas is surely still a meeting of trade specialists. One enters the halls, looks to the left and to the right into the vast array of different exhibition booths. Nevertheless, any visitor has toured every booth within a short time. Although tyre manufacturers such as Bridgestone, Goodyear, Michelin, Cooper, Pirelli, Hankook, Kumho, Yokohama and others are present, the important decisions are not taken at the show. The pricipal discussions take place in the hotels. There the life pulsates. There the receptions take place. There, tyre dealers are invited to meet with their suppliers to specify commercial objectives for the coming year. The large tyre manufacturers not only offer product, but also various kinds of marketing and sales promotion programs. It is the tyre manufacturers aim to bring partners into line in order to improve their new tyre business by at least 50 per cent.
John Lampe, who is CEO of Bridgestone/Firestone Americas Holding and the first foreigner to become a member of the board of the Japanese parent company, certainly enjoys great respect among American tyre bosses. Even a forced tyre recall that cost the company more than 1 billion dollars couldn’t bring Bridgestone to its knees. After a billion dollar loss in 1999, last year Bridgestone/Firestone Americas could again report 90 million in profits. And this positive trend doesn’t seem to be coming to an end. “Obviously we are far away from what a business with an 8 billion dollar turnover has to achieve,” John Lampe tells TYRES & ACCESSORIES at the SEMA show in Las Vegas. Lampe doesn’t speak in terms of “yesterday and today”, but in categories “before and after the recall” and explains to T&A the measures taken for recovery and change. It is like this: all “core products” will be marketed exclusively through Bridgestone’s “Family-Channel”. As well as the Bridgestone sales chain, independent tyre dealers belong to the Family-Channel.
We hear a lot today about the demise of the retread industry, especially the car tyre sector, and a lot of tyre dealers have stopped stocking retreads, preferring instead to carry cheap new tyres.
Against this background, it is refreshing to learn of an independent tyre dealer who is not only still stocking retreads, but actively selling them. The company in question is Durham-based retailer and wholesaler Tyrespot, which stocks tyres from nearby manufacturer C-Tyres, and Managing Director John Shaw says that he has seen retread sales rise over the last two years and he expects to increase sales by a further ten per cent this year.
He explains: “We have never changed our policy towards retreads. Our experience has shown that if we stock them, we will sell them. This year we expect to sell more than 20,000 retreaded tyres through our retail and wholesale business, proving that it has been well worthwhile sticking with the product.”
John Shaw points out that much of Tyrespot’s growth has been achieved in market niches, emphasising the opportunities open to dealers willing to target and work at these markets. He says: “Although sales of 80 series retreads have stagnated, we have seen substantial growth in sales of retreads for 4×4 vehicles as well as increased demand for 65, 55 and 50 series tyres. It is clear that there is a large potential market for the sale of retreaded tyres to younger drivers who want to make sure that they are legal and who see the economic benefits offered by retreads. In addition, we are looking closely at the opportunities presented by retreads within the winter tyre market. As a result, we are well on the way to a record year of retread sales.”
Fit4Fleet, the GM-backed network of independent tyre dealers supporting company car fleets, has extended operations to provide coverage in the Republic of Ireland as part of plans to provide customers with extensive coverage throughout the British Isles.
Managing director, Dominic Bateson, believes that the move will also bring a great improvement in the service standards enjoyed by fleet drivers in the country, saying: “Most of the tyre chains that have traditionally serviced fleet drivers are concentrated around the main conurbations, such as Dublin, Cork and Waterford. But what use is that to drivers having a tyre problem out on the road, many miles away from one of those cities? Their needs have to be catered for also. To us, this was an obvious gap in coverage and one of our core objectives has been to establish a comprehensive spread of centres throughout the Republic, so that when a driver has a problem, assistance can be provided promptly.”
Fit4Fleet already has 60 centres in the Republic, with at least one in each of the country’s 26 counties, and personnel at each centre have undergone training to ensure that they are fully able to meet the standards required. This means that the network now numbers more than 900 depots in the UK and the Irish Republic.
When we contacted a number of tyre manufacturers to obtain information for this feature, we received a number of reactions along the lines of “Winter tyres? There’s not much call for them in the UK.” Some companies had to contact their mainland European offices for product details and the situation is neatly summed up by the fact that, if you want Michelin’s latest high speed winter tyre in the UK, it has to be ordered specially.
Perhaps this is not that surprising, as there is a shortage of winter tyres in mainland Europe, caused by the long winter which went on into March this year. One estimate is that winter tyre inventories are now around 15 per cent below normal, at six million units.
But the UK winter tyre market is minimal, mainly because we have light snowfalls over much of the country. However, you do not need snow for a winter tyre to be effective and to improve driver safety. The main supporter of this view is the head of Vredestein UK, Bert Stellinga. When he first came to the UK, he declared himself amazed at the tiny size of the UK winter tyre market and it is his ambition to see this grow.
If they are not designed for snow, then why fit winter tyres? The simple answer is that, when it is cold and wet – which, let’s face it, is more typical winter weather than snow – a winter tyre performs better than a summer version. Research showed that, in these conditions, braking distances were significantly shorter for winter-shod vehicles. The figure that you will see mentioned throughout the articles in this feature is +7ºC; below this, winter tyres outperform summer tyres.
Vredestein wanted to enhance winter tyre sales, so the company joined forces with a medium-sized car leasing company and the Euromaster chain of tyre retailers. The leasing company was looking at ways to differentiate itself from the herd and, after being convinced by a series of braking tests that stopping distances were indeed shorter on winter tyres (and by analysing accident statistics and finding that more happened in the winter) it came on board.
Says Bert Stellinga: “Back in 1995, winter tyres accounted for half of one per cent of Dutch tyre sales and, by the end of 2002, it was up to around seven per cent” he remembers. If we accept the rough figure of 25 million tyres in the UK replacement tyre market, then seven per cent equates to 1.75 million tyres, which is a figure that should be of interest to the manufacturers and to the tyre dealers too.
Fit4Fleet, the GM-owned, UK-based network of independent tyre dealers supporting company car fleets, has announced an expansion of its activities into the Republic of Ireland. The network already has 60 centres in the Republic and the Irish Fit4Fleet operation will be headed up by Barry Eccles, who has extensive fleet experience.
Analysing some of the marketing opportunities open to the retreading industry and how it might approach a common strategy. In doing so, the retreading sector, will initially have to face the fact that as an industry it has never been in a position where it has had to design a classical marketing plan before. Retreads traditionally were taken for granted as the budget option for the tyre industry. All tyre shops stocked passenger retreads and these were automatically sold to budget oriented customers. Budget new tyres did not form a viable competition to retreads at the bottom end of the market because retreads still enjoyed a significant price advantage and many budget tyres were of poor quality. To secure a sale all retreaders needed to do was to assure good prices, good product quality and good service to the retailer. Nowadays, it is clear that these attributes alone are no longer adequate. In the truck tyre market the situation is somewhat different. Retreads have long been part of the life cycle of the tyre. The market has always been considered healthy and so the question as to whether the industry’s marketing strategy was being efficient in reaching its message to as much of the potential market as it should was seldom raised. However, with pricing issues now becoming more relevant, the issue of the optimisation of the market is becoming more critical. The impact of the downturn in car tyre retreading has been particularly severe in the UK where sales by UK retreaders fell from 4.4 million units in 1995 to around a million today, with a number of high profile retreaders being forced into receivership. This situation was exacerbated by the strength of Sterling resulting in the almost overnight disappearance of vital export markets. It has to be recognised that passenger retreads are now niche products. There is still a place for passenger retreads in Europe but, unless the generic marketing of passenger retreads is improved, the fear must be that the market will follow a similar path to the United States, where it has now almost completely disappeared. To counter this, a sample marketing plan has been drawn up, the key elements of which are as follows: A scientific research programme to ascertain the performance qualities of retreads, using the results as part of a PR campaign. Direct lobbying of government departments and public bodies with a view to highlighting the environmental message that the retreading industry wishes to portray. At government level, the aim would be to persuade individual departments to accept retreading as the best practical environmental option and to include retreads in their purchasing policy. The incorporation of tyre dealer seminars and training days. This proposal generated some considerable thought as it was felt that there was not much point wasting money trying to change the views of tyre dealers and fitters whose minds were already set on opposing the sale of retreads. Instead, the idea would be to use funds to help in the training and support of dealers who had proved themselves to be positive towards retreads. Allied to this is the decision to create a “Green Tyre Dealer Scheme” backed up with the production of a retread buyers guide. This would allow the retreading business to channel sales through dealers who support the retreading industry, thereby reducing switch selling. A promotionally effective presence at exhibitions. This would include car and truck shows as well as events frequented by the environmental lobby. A comprehensive PR campaign is proposed, aimed at the tyre trade press, environmental magazines, motoring magazines, the national and regional press and other consumer interest groups such as women’s magazines. In addition, the incorporation of a press monitoring service to measure the success of the campaign. It has also been planned to introduce a response service to react to bad press in the same way as TRIB does. For the truck and bus market an informative newsletter is suggested dealing with tyre related issues in general but, allowing plenty of scope for promoting the argument in favour of retreads. This activity is based upon the knowledge that the regular truck press is editorially light on tyre related issues and indeed rarely covers anything concerning retreads. Other activities include the design of a campaign website, the increased use of environmental newsgroups on the internet to promote retreads, the production of brochures and presentation materials for use by fleet engineers, the police, schools and tyre dealers and the production of promotional merchandising items such as cab stickers, tacho holders, mugs etc. Finally, a comprehensive but highly targeted advertising campaign focused on environmentally friendly consumers. Part of this strategy would be the promotion of the “Green Tyre Dealer Scheme” mentioned earlier. These are the main elements of a package which could make a considerable contribution towards improving sales of retreaded tyres.
Reports in the Indian press suggest that Michelin has embarked on a tyre market analysis to determine whether it is worthwhile investing in a manufacturing facility in India. In 2000, Michelin was said to be considering an investment of Rupees 500 crore (around 90.5 million Euros) in a manufacturing facility, but the scheme fell through due to the low level of radialisation in the market.
Every professional truck driver or motorist knows about the problem arising from wet roads. Especially overtaking a truck in the wet, which can be compared to a leap in the dark with a high level of risk when the rainwater is being splashed aside by the steer axle tyres. It’s this dangerous splash Michelin aims to counteract with a world-first: the patented Anti-Splash tread pattern. With the introduction of a deflector into the tyre’s design, comprising a small horizontal rib on the shoulder between the sidewall and the tread of the tyre, the splash will be deflected back down towards the road surface. The bow wave effect, which is responsible for the visibility, and thus the safety, of the truck and the car drivers, will be minimised.
Hercules Tire & Rubber Company has appointed Bruce Campbell to the newly created position of Director of Commercial Sales. His task will be to develop new business and increase current commercial business with Hercules stockholders, distributors and commercial tyre dealers. Mr. Campbell has an extensive background in the commercial tire business, most recently with TCI/Michelin.
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