Random Notes
September 3, 2008
• Hey, sorry we’ve been tardy in updating this blog. Not looking to make excuses, but other things have taken center stage. We’re back now, fresh and ready to tackle the day’s dealings.
• Found this great blog site you OTR tire dealers might enjoy. It’s at www.buybigtires.com and delivers some interesting takes on the big tire side of the industry. Don’t know who writes the blog – unfortunately that appears to be a state secret – but they do read Tire Review.
• Going through the judging process for this year’s Top Shop Awards – nearly 100 entries again this year, and every one of them demonstrates clearly just how great independent tire dealers really are. Sharp-looking locations, high levels of training, outstanding community service and support, top-shelf customer service and highly creative promotions.
If you ever want to understand why most tire dealers aren’t afraid of the Big Box Wolf, take a close look at how U.S. and Canadian independents work. Even after 25-plus years in this business, it still amazes me!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Angry Tire Companies
September 3, 2008
Interesting that our friends at American Tire Corp. are a bit miffed at us. Apparently pointing out the obvious and questioning their public statements is not fair game.
I am not going to review ATC’s concerns here. You can read about it in the News section of this site. I suggest, if you are interested, that you visit ATC’s Web site (www.americantire.us) and read for yourself its large collection of “news releases.” You might notice that some of them have never been picked up for use by this or any other magazine.
I will also not address the anonymous e-mail I received over the weekend questioning my “objective” regarding ATC.
I will, however, say this: If any company – public or private – makes unusual, suspicious or otherwise unsubstantiated claims, it should fully expect someone to ask a few questions. That’s how it works here. You cannot just say something – anything – and call it “fact.”
This is particularly true if said company has a track record of playing it a little fast-and-loose with the language used in both its press releases and its ads.
We get hundreds of press releases from companies each year, and more than few offer superlatives about products or projects. And that’s fine. That’s their right. At the same time, it is our job to sort through the self-aggrandizing and work down to the cold, hard facts.
Our job is to report the news – not just what some company thinks we should publish – to best inform our readers and allow them to draw their own conclusions. We are naturally skeptical of any “news” presented to us by any company – large or small, public or private – because we are gatekeepers working to the best interests of our readers.
If any company’s statements might tend to mislead or otherwise confuse our readers, we will call them into question, we will point them out and we will still leave it to the readers to make the ultimate decision.
Equally, if any company develops products, services or facilities that meet the needs of North American dealers, then we will happily report on those facts. In fact, we welcome their success here and anywhere they choose to do business.
But we will not simply pay lip-service to their statements, and we will not stand by and leave questionable claims unchallenged. We will leave that to others.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
SEMA Writes
August 19, 2008
Dear Jim,
I just had the opportunity to read your column “Show Me The Value” in this month’s Tire Review (July 2008).
Your comments are increasingly important in this challenging economic era and changing business landscape. The notion that we need to “wait out this storm” in anticipation of better times is a dangerous one. The trade show business has far too many victims who decided to “stick it out” rather than adapt and change with the times.
Led by the vision and experience of our current board of directors and the volunteers from our industry who served before them, we have a culture within the organization that positions the show at the forefront of our industry. Our foundation is built on quality and value – these words also serve as our guiding light as we adapt and change the show in the future.
Tangible examples of this commitment is best demonstrated by:
• An increased investment in international marketing which will deliver historically high numbers of buyers from international markets.
• Enhancements to the registration process that enables qualified attendees from the industry enhanced services while protecting the integrity of the show by screening out consumers and other non-qualified registrants. We are focused on delivering “quality” attendees that are qualified to do business at the show.
• Focus on emerging buyer categories like auto dealers who will be attending the first-ever Dealer Day, an intensive program for dealer principals that will create new revenue streams for their dealerships and new business for our exhibitors.
• Ongoing collaboration with hotels and trade show service providers to raise the level of service and value, while reducing or holding the rates. Our room block has more $100 hotel rooms than any time in our history.
• Our free education programs and networking events are now attended by more participants than ever before. These attendees are using the programs to add value to their show experience and go back to their businesses equipped with an enhanced ability to improve their profitability.
• Leveraging the exposure and marketing value of established and emerging media channels that attend the show that will highlight the products from our show to millions of consumers in global automotive markets.
While trade shows are subject to the same cyclical effects as any other business, the solid ground that our show was built on and the entrepreneurial spirit and innovation that our industry will continue to feed the success of the show and guide the future.
Thank you for addressing these important issues regarding the show. If you like, I would be happy to discuss any of these initiatives in greater detail.
Peter MacGillivray
SEMA
Vice President of Events and Communication
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
There Goes Our Wall
August 19, 2008
Word is that some four million-scrap tires have been removed from the border separately the U.S. from Mexico. Seems that area has long been a dumping ground for unwanted rubber and other garbage.
U.S. and Mexican representatives last week signed the Tire Initiative Letter of Understanding, which reportedly created tire pile prevention measures for the 2,000-mile border area and any associated health risk.
“Scrap tires along the U.S.-Mexico border pose major health threats for the millions of border residents,” said Matt Hale, director of the EPA Office of Solid Waste. “With the support of both of our countries, we can prevent the creation of additional scrap tire piles and clean up our border communities.”
Of course, neither side mentioned where the tires may have comes from nor pointed out any responsible parties.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Cooling Off
August 18, 2008
China’s tire production engine has slowed – to a virtual crawl by China’s standards. Tire output by China Rubber Industry Association member companies grew just 12% through the first half of the year, down from an 18% annual growth rate in recent years.
Just 124 million tires were produced in the first half by 46 member companies, CRIA reported. The association says its members represent about 70% of the country’s total tire output.
"Although tire output and sales growth was relatively strong, profits fell sharply, mainly because the prices of raw materials, especially natural and synthetic rubber, have surged, eating into companies' profits," the association said.
CRIA also said that if raw material costs don’t ease, perhaps 30 % of its members could end the year in red numbers.
Unfortunately, car sales in China have also slowed considerably, driven by rising fuel costs and a general economic slowdown in China. While still in positive numbers, China’s economy has cooled as the government has acted to rein in its furious growth over the last five years.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
More Green for Green
August 18, 2008
Within hours of each other, a carmaker group and a car dealer group announced “green” initiatives.
The Alliance of Automobile Manufacturers wants Americans to “save money at the gas pump, reduce fuel use and cut carbon dioxide emissions” thanks to its new consumer education effort: EcoDriving.
And what is EcoDriving? The same series of smart driving tips we have all seen countless times – don’t tailgate, don’t drive too fast, avoid jackrabbit starts, etc., etc., etc.
Not wanting to be left out, the National Automobile Dealers Association announced that September will be free "Green Check-up Month" nationwide. NADA members are being urged to “offer free Green Checkups” to drivers, focusing on “the things that have the most effect on fuel economy, such as oil and air filters, engine performance, tire pressure and emission controls.”
Not only that, but NADA wants to point out that its members “have invested close to a billion dollars on facility upgrades and new construction over the past few years to reduce energy consumption at their dealerships.” Read that carefully.
NADA says this investment “includes cutting-edge heating and cooling methods, more efficient lighting, as well as wind and solar power. Today, several dealerships are LEED-certified by the U.S. Green Building Council's Leadership in Energy and Environmental Design program.”
OK, I gotta give them credit. But I also have to ask: Were they truly being green, or trying to save a buck while sales are falling like autumn leaves?
One thing neither group addressed is how they will stop certain automakers from trying to convince us that their giant SUVs are “fuel efficient.” Compared to what? A 747?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Random Notes
August 12, 2008
Get Out of Here! Really?
Word on the street is that Wal-mart is having serious thoughts about being in the tire business. Low margins and its inability to be competitive against knowledgeable competition is leaving a mark, apparently. Seven Wal-mart stores have been targeted for a trial run sans tire and auto service centers, with the space being converted over to other non-automotive products. Perhaps this will be the start of something special.
Glad They Don’t Work for Us
Ford says it’s serious about quality. Really serious. As Ford ramps up production of small cars – a full two years after Americans starting moving away from big gas hogs – it wants the quality of its small cars to be second to none. The automaker is assigning hourly workers to catch quality problems on the factory line before they get to the showroom. The effort is pointed at reducing Ford’s “things gone wrong” index to 800 per 1,000 vehicles. The industry average? 1,512 per 1,000. Imagine if the tire industry settled for that kind of batting average.
On the Mend
Heard from old friend Alpio Barbara, owner of 2007 Top Shop Award finalist Redwood General Tire out in Redwood, Calif. He’s at home recuperating from some surgery, but is still busy keeping tabs on things in the shop. And sending me notes. Get well soon, Alpio.
Patent Medicine and You
Consumers are mad after any remedy for high gas prices, and the InterWebs are chock full of oddball promises of more miles per gallon, including some outfit selling tablets to place in the gas tank and carb and another with something that creates a powerful air vortex in the fuel injection system. Life Science 9 in California (no wonder) says it has created biofuel from bug excretion – what we call poop. It plans to build a facility that will deliver biofuel at $1.25 per gallon! Back in the mid-1970s I worked for a guy who hooked up with another knucklehead on a gas mileage scheme…this was back when gas passed the disastrous $1 per gallon mark! Their solution: pumping a mist of water into the carb. Didn’t say he was bright, just the owner of the business.
Victim of Technology
The folks that publish the Yellow Pages (and all of the variations thereof) were miffed at news reports that ad sales in such directories were falling rapidly as consumer use moved from the bulky books to the Internet. Seems impatient Americans have found the InterWebs easier to use than their directories. While the various publishers dispute the survey findings, the medium may be on its way out. AOL’s Walletpop blog recently published a list of the Top 25 Things Vanishing from America – things like classified ads, pit toilets and personal checks. The Yellow Pages came in at No. 24.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Greening of America?
August 11, 2008
Everywhere you look and in anything that natters, it seems like America wants to be green. Whether it’s wallet-preservation or true concern for our mutual future, regular citizens are looking at ways to save energy, find energy alternatives and reduce pollution.
But getting to green is going to take a lot more than just doing it, it appears.
Political subdivisions – cities, counties, villages and townships to you and me – all have various zoning rules, and in many cases these regulations limit green options.
Near where I live, a group of citizens sent green project requests to six neighboring towns. It was a test to see how the entities would react requests for guidance about erecting a 50-foot wind turbine and/or covering 40% of their backyards with solar panels, which is what they estimated was necessary to run their homes “off the grid.”
While only three of the six towns responded, it seems 50-foot towers with giant propeller blades would not be permitted. The solar panel idea seemed to be OK, but neighbors might have issues, they were warned.
The point of the exercise was to see just how ready local governments were to deal with green issues. Apparently they have some work to do. Sure, not everyone can have a five-story wind turbine in their backyard (though I think that would be cool), government bodies need to adjust their rules and regs to consider such proposals.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Chicken Little
August 11, 2008
Most popular question I am asked these days? “So, what do you hear out there?”
By “out there,” the questioner means “tire sales.” And while I’ve been asked that question for years, it has never come with today’s level of concern, dread and, sometimes out-right desperation.
The answer, I guess, depends on who is doing the telling, or who you want to believe. RMA, for instance, just issued a revised 2008 forecast saying that the industry, on an overall basis, will be off some 4% vs. 2007. Most of that expected decrease, says RMA, is driven by sharp declines on the OE side.
But looking a bit closer, replacement shipments aren’t expected to fare very well, either. Compared to 2007, P-metric will be off 1%, LT-metric will fall 7% and medium truck will drop 3.5%, says RMA. Those aren’t slight declines – that represents some 3.1 million tires. And keep in mind that 2007 was a bad year compared to 2006, and 2006 was way off from 2005.
RMA’s numbers only reflect shipments by manufacturers, not over-the-counter sales. On that side of the ledger, things appear to be far worse. In their first-half financials, tire companies made note of the condition of the North American market, claiming sales declines between 1% and 8%. As I have shared with folks, anecdotal evidence tells me that retail tire sales could finish the year off between 7% and 12%!
A lot of this is regional in nature; some tire sales areas are more sensitive to economic impacts than others. Still, we have a serious problem.
How the rest of the year plays out cannot be predicted. Some economists are calling for the end of the world as we know it, others think things will at least level out by the end of the year. Look, oil prices have dropped sharply over the last two weeks, so who knows what will happen. Recession, inflation, depression – they are all still in the mix, and it is doubtful the first Tuesday in November will bring instant relief.
Dealers need to stay on top of the news, stay on top of their markets, and stay sharp.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Letters From the Field
August 6, 2008
I, too, was actually stunned by the poor handling of this problem (First Off, June 2008). When the ABC story aired I thought, “Where in the hell did they find this guy to protect our image.” He kept blaming England and Europe. I was actually embarrassed to be a tire dealer after that report.
Fortunately it aired at a time most of my customers are out for the summer months. The RMA needs to step up or shut up. I agree with your statement, we need one loud voice. Thanks and sorry for taking so long to reply. You and your staff have some of the best articles I've ever read.
We need a united voice, just not the one the RMA sent up against ABC. As info, our local KUTV station did a tire story on expiration date on tires. The reporter showed the DOT code and explained what it meant. His name is Bill Gephart and his report is on KUTV.com. He was actually quite fair.
I also noticed something that needs to be brought to everyone's attention. Are we so desperate to make a sale that we will put the wrong speed rated tires on a customer's car? All I ask is would the owner a tire store put four tires with the steel belts showing on his wife’s car and send her and kids on a cross country trip? Hell no! Would the manager do the same? I don't think so.
This is the same image we have faced for years, and we haven't gotten any smarter. I am livid when I see some tire store put the wrong tires on the car. If you do that and can sleep at night, you will make some attorney rich. May the Force be with you.
Speed ratings have everything to do with the performance of the car. Don't you think the manufacturer tested the car with those tires? Stop thinking that speed ratings mean nothing. They mean everything. If you just do the right thing we wouldn't be having this problems.
Keep on bringing these articles to the forefront, eventually we may win one. Thanks.
Mike Watchek
Owner
Big O Tires
South Ogden, UT
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Dear Future President…
August 5, 2008
…OK, we get it. While your fixation on proper tire inflation – and the use of tire gauges – as a means to improve gas mileage has been the most positive attention our industry has had in quite a while, please stop. Stop it now. Please.
We’re tired of this overly long campaign anyway, and now you’ve gone and double-parked the campaign buses right in the middle of our private party.
You see, unlike Paris Hilton, we really do think there is such a thing as too much, and too much attention worries us. Cause the next thing you know, Paris is actually going to try to use one of those tire gauge thingees and then where will we be?
Look, a workable and realistic energy policy is vital to this country’s future. No doubt. Cheney’s super secret one has obviously not worked, so we’re choking on it big time. And since our industry is co-dependent on oil and energy, well, we do have an interest.
But the tire industry has enough problems. We don’t need to be the center of attention in some BS spitting match over who has a serious energy plan. Does the phrase “cheesy gimmick” ring a bell with either of you? Well, that is what the whole tire gauge thing has turned into, according to national media.
So do us all a big favor and find some other mud to sling. The boys over in appliances are all hiding under the counter. I’m sure they’d like some of your campaign love.
[BTW: You’d of thought one of the tire companies would have tried to make hay with this focus on tire gauges and proper inflation. Nope. The first one in the pool was nitrogen system maker Air Products, which put out a news release in the subject of proper inflation today. Good heads up, guys.]
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
The Password Word Is: Excessive
Aug. 1, 2008
Wall Street, get this, was upset that ExxonMobil failed to reach its profit target for the second quarter. Because, apparently, $12 billion in net, net, net profit just isn’t enough.
So these accounting and speculation junkies had a hissy. Well, screw ‘em.
I saw a flack on ABC yesterday trying to explain that ExxonMobil’s record quarterly profit was not, in fact, excessive. He claimed that the ratio of net profit to sales was below that of countless other sectors, so ExxonMobil was actually hurt! Screw him, too.
I’m not sure what the true definition of “excessive” is anymore. When one company racks up more than $30 billion in net profits for a year – after all the bills and taxes have been paid – my brain says that is excessive. When that company’s entire industry pulls down more than $150 billion in net profits, again, I’m thinking excessive. Put those net profits against the high-flying costs for gas and diesel and the negative impact it has had at every level of the economy and, well, excessive.
But apparently I’m wrong.
The tire industry isn’t doing so great, in large part because of the growing costs of raw materials (derived from oil) and energy costs (again, that oil stuff) and the impact of a worsening global economy (driven, of course, by high oil and fuel prices). Excessive costs that cannot be offset by sales.
The auto industry just reported their quarterlies. Guess what? Excessive losses. $15 billion by GM alone.
Like to see what ExxonMobil’s profits might be without cars and tires. Doubt it would be excessive.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Will There Be Anything Else, Sir?
Aug. 1, 2008
Saw this beauty on the New York Daily News’ online blog. Thought I‘d share:
“John McCain is mocking Barack Obama as full of hot air on energy policy for saying people should inflate their tires properly. But if you ask auto experts, Obama may have a 2.8 billion-gallon point.
“First, though, a little perspective. Obama used the inflate tires line to mock McCain’s let’s-drill-more approach, which most experts say won’t produce any gasoline for 10 years. So McCain is now mocking the mockery as if that were Obama’s actual plan. Got it?
“Now to the point. The best estimate we’ve heard for a gas tax holiday (part of McCain’s plan) is that it would save people about $70 (Obama says less). But if you’ve got underinflated tires, said Dan Zielinski, of the Rubber Manufacturer’s Association, who pointed us to data from NHTSA and California’s AAA and federal data, you could save yourself about $200 by pumping up your wheels. Is that a bad idea?
“And if everyone did it, that’d be 2.8 billion gallons of gas. Nothing to sneeze at. And it’s free.”
Nice to see we can be of service, guys!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Square Peg, Round Hole?
July 31, 2008
If ever a company didn’t need more aggravation, Continental faces additional speculation that its truck tire business is up for bids.
Conti’s global truck tire group saw first half sales drop about $32 million year-over-year, and operating income for the group is off 45.9% vs. the first half of 2007. Its operating margin, a key figure for Conti managers, was 4.6% for the half, far off the company’s 10% goal. Comparatively speaking, Conti’s consumer tire and ContiTech divisions delivered margins of 13% and 12.3%, respectively.
Top Conti management had previously stated that under-achievers might be jettisoned. And, with all of its traction, stability, braking and telematics operations, it is no secret that Conti is fashioned around the car, not the over-the-road truck.
Now that it’s embroiled in a cash-burning battle for its independence, could the truck tire group, indeed, be on the blocks?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Speaking of a Crappy Economy…
July 31, 2008
You could only call it karma.
Someone stole the tires and wheels right off the 2005 Cadillac STS owned by Prince Georges Delegate Justin Ross. Right in his driveway. Left the car propped up on four cinder blocks, too.
Cops dusted the Caddy for prints, but the thieves apparently wore gloves. A car and an airbag were stolen nearby that same evening, according to police.
The chief of police said the upscale community has seen a rec ent increase in such crimes. “There has been a noticeable increase,” he said. “We think it might be connected to the economy. Some people are desperate for money.”
Of course Ross had a different take. “It is unacceptable that any Prince Georgian has to deal with the level of crime that we deal with. These are strong, middle-class neighborhoods that should not have to deal with this.”
Got a clue, Columbo?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Not Rocket Science
July 30, 2008
The news that Bridgestone/Firestone is keeping its tech center in Akron is certainly good news for the city and the state, both of which could use some good economic vibes, to be sure.
To say Murfreesboro, Tenn. – some 15 miles from BFS headquarters – had no chance to land BFS’ tech center and hundreds of jobs would be a bit of an understatement. It had a snowball’s chance in %$@&.
Getting a brand spanking new building is well deserved for one of Akron’s largest employers. After Goodyear got its headquarters deal done – keeping 3,500 jobs in Akron – it certainly was BFS’ turn.
But a new building to replace the century-old former Firestone world headquarters was a small part of the financial equation. The real dollar value of the deal comes in continuity.
The compounded cost of relocating about 600 jobs from Akron to middle Tennessee would be enormous. Not every employee would take the move, so besides paying to uproot families, BFS would face shelling out millions in finding, relocating and training hundreds of new hires.
Second, the loss of those veteran employees who would not make the move – the institutional knowledge that would be lost – is incalculable. You can’t just replace experienced people and not expect problems. I was there when Bridgestone USA moved from Southern California to Nashville, with only about 20% of the staff making the move. Dozens of new faces struggled in their new jobs, costing the company months in momentum and more.
As Bridgestone Americas Holding chairman and CEO Mark Emkes rightly pointed out yesterday, his company employs more people in Akron than it does at its headquarters in Nashville. Translated: Firestone and Bridgestone/Firestone have been an important part of Akron’s fabric for more than 100 years. Those bonds are very hard to break, if not impossible.
And Emkes heavily praised the efforts of the Akron team, reminding everyone that BFS’ tires originate Akron.
BFS (and Goodyear, too) is smart enough to know you can stack bricks anywhere – and get a good deal to do so. But you cannot find good, seasoned employees – especially scientists and engineers – anywhere.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Super Special Secrets
July 30, 2008
You’d think this job would be easier. This is the 21st century, the days of high-speed info exchange, instant global sharing. It is, by result, the days of doing more with less.
When I was a young puppy in this industry, tire company price increases were closely held state secrets. One had to tap into the right person within companies to get the scoop. And that meant dozens of phone calls and endless rounds of phone tag.
Today, with blistering raw material costs, everyone is raising prices on a pretty regular schedule. We all know that.
Yet, some players in this biz still want to play Secret Agent. I get whispered phone calls, hand scrawled notes and odd responses to inquiries I never placed. Some don’t even bother sharing the information.
And this is not a “publicly traded company” thing. Nearly all are traded on one stock market or another; those traded on these shores follow no pattern. Some send out releases, others do not. Head scratcher to be sure.
Of course, MOST tiremakers take the time to put out a press release explaining their increases. That is straight forward and straight up. What is boggling is when one division within a company will tell us about its increase, while the other wants to resort to, let’s say, “unofficial official communications.” Can’t even have one policy in the same building?
Frankly, it is irritating, wholly unnecessary and accomplishes nothing. Everyone in this industry knows what is going on, and sharing price increase info does not break any anti-trust laws I know of (hear that you attorneys?). Come clean, folks.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Commuter Blues
July 29, 2008
Americans and Canadian are driving less, a lot less. Blazing high fuel costs have put a real crimp in miles driven thus far this year. Meanwhile, most public transportation systems are reporting higher ridership as gas-price squeezed drivers drop the keys and grab a seat.
Latest government stats say that since November last, Americans have shaved 40 billion miles from their routines, a huge number. In May alone, the miles we drove fell off 9.6 billion vs. May 2007, the third largest drop the Department of Transportation has ever seen.
While that may be better for the environment, it isn’t helping the wallet. First, even with increased ridership, public transport still has fuel bills to pay – and they aren’t getting smaller. Many have instituted fare increases, offsetting some of what ex-commuters were saving.
Second, less miles means less gas taxes, which equates to a troublesome decrease in funds available for infrastructure improvements. That means potholes aren’t getting fixed, roads aren’t being repaved, bridges aren’t being repaired and new roadways are on hold. Not good news because all of that will have to be paid for some how and some day.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
More Reader Notes
June 29, 2008
I haven’t even finished reading your article (First Off, June 2008) and I’m compelled to write and thank you. Your insight and objectivity on this issue are certainly welcomed by me and, I’m sure, many other tire dealers.
I, too, was upset by the ABC 20/20 piece and its obvious (to us) sensationalistic approach. But after giving it much thought and discussion with my store managers I began to see that we would all be better off by taking some positive action to deal with public concerns. We will be putting some new policies in place at Frisby Tire that will address this issue.
Don Frisby
President
Frisby Tire Co.
Ottawa, Ontario
(Note: Frisby is vice president of Ontario Tire Dealers Association, and tells me that he plans to include this subject as an agenda item in September.)
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Brickyard Blues
June 29, 2008
If you want to know why we don’t spill a lot of ink covering tire-company racing activities, look no further than this past weekend’s Brickyard 400.
This morning my e-mail was jammed with various stories and columns regarding the “tire debacle” at the Indianapolis Motor Speedway.
Race tires are a unique product, and many factors (often outside of the control of the tiremaker) influence their performance. When they work, no one says a word. When they don’t…
It’s the why the tires “don’t work” that is most troublesome for us. I have every confidence Goodyear (the lone tire supplier to NASCAR) didn’t want reams of bad press, so I’m sure they built the best tires they could. I’m also sure that is the same with every other tire company that races on weekends.
We’re not race car, race tire or race track engineers, therefore providing any valuable – or even viable – information is impossible. Best we stay out of the way lest we inadvertently provide incorrect information. If you really want to know the details, I’m sure you can find a resource.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
All-American Disappointment
June 23, 2008
The All-American Soap Box Derby runs this weekend at Derby Downs in Akron.
For those of you too young to remember, the Soap Box Derby program – also know as the Gravity Grand Prix – was founded decades ago as a great father-child summer project. This was before video games and today’s so-called “extreme” sports – pretty much glorified bike riding and skateboarding.
This year 600 racers and their carefully crafted motorless race cars showed up in Akron for the world finals – 600 kids from all over the world. This weekend, world champions will be crowned in various age and car divisions.
So who hasn’t show up? Any kind of committed national sponsor.
Once upon a day, Chevy was the program’s national sponsor for many, many years. So, too, were some tire companies, but all short term. Today, the program struggles to make ends meet, despite the countless thousands of volunteer hours that keep the program on track. It lacks any kind of national sponsor, and lost its limited national exposure when telecasts of the finals were discontinued a few years ago. Without a major supporter, the Derby program has a hard time getting enough minor sponsor support.
The cost to be a national sponsor? Well, I dare say it would be a heck of a lot less than some of the sponsorship activities we see companies get involved in. For a tire company it should be a no-brainer, especially if the sponsorship was leveraged and helped bring store traffic to its dealers. Plus, it would deliver a positive message to young people looking for something meaningful and positive to do.
Anyone?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Nothing Positive Here
June 23, 2008
Been watching the Conti takeover situation carefully, and I don’t see this ending well.
Frankly, any time a substantially smaller company makes a run at a far larger firm, bad things happen. We’ve seen it over and over again. When that takeover attempt can only be described as “hostile,” worse things happen.
Ball-bearing maker Schaeffler Group, one-third the size of Continental AG, saw weakness and is trying to exploit it. Conti, burdened by billions in loans it took to acquire Siemens VDO, saw the market go away from it as global auto sales plummeted. That left Conti, while financially healthy, less than secure in its valuation.
For whatever reason, certainly not one that has anything to do with good business, the privately held Schaeffler Group decided to play the black knight. Stock traders, who are in it for the money, will follow along without a care as to the result.
What will Schaeffler do if it wins its bid? Well, as it will then be burdened by Conti’s debt load and will have limited ability to raise additional funding and will need pretty much a whole new top management team, I suspect Conti will be parsed out in chunks, with Schaeffler keeping what it sees as the most valuable. The tire group will not be one of those, to be sure.
And that is too, too bad.
The situation is somewhat reminiscent of the late James Goldsmith’s greenmail run at Goodyear back in 1986. The tiremaker went debt-heavy trying to fend the Brit off, and while it eventually won the battle it was badly damaged in the process. Goldsmith went away, millions the richer. Goodyear barely hung on, and spent the better part of the next 20 years trying to recover.
What does Schaeffler bring to the Conti table? Nothing. What will Schaeffler lose in the bid? Nothing.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Koppel on China
June 22, 2008
Just finished watching Ted Koppel’s extensive four-part report “The People’s Republic of Capitalism” that aired on Discovery channel earlier this month. Love that DVR!
Overall, the series was very well done, thanks to the extensive access Koppel and his crew had across China. While occasionally repetitive, the series took a close look at China’s state-driven and lightning-fast economic growth from various angles, including how the country’s single-sighted focus on economic growth impacts everyone from the rich to the poor, trade partners to companies, even those who are trying to catch the gravy train but are falling a few steps short.
For someone fairly unfamiliar with China, the four-hour show offered a solid glimpse at what is happening there. What it is not – best of all – is an exercise in bashing China and blaming it for the loss of industry here and elsewhere in the world.
To be sure, China has a lot of problems, and, as Koppel well pointed out, many of those have taken a back seat to the government’s laser focus on growth. China’s theory – and one certainly established by the histories of Western states – is that the other issues will resolve themselves over time as the massive economic engine continues to churn.
Perhaps, but there can be no doubt that China’s wide-spread government and private-sector corruption, the broadening gap between rich (and I mean filthy rich) and the poor (like those trying to live on $600 per year), its worker safety record, and the worst air, land and water pollution this world has ever seen are far more than little inconveniences that unabashed capitalism will some how disappear.
Friendly reminder: Capitalism didn’t make our environment cleaner, government did.
Politics and government are what they are, so it was a shame that Koppel failed to take the time to fully understand the cultural, logical and psychological support PRC’s government has. Yes it is “communist,” but certainly not the same brand of communism that made our parents and grandparents cringe.
Koppel’s is the same failing many Americans have when we consider other parts of the world: “democracy” is a one-size-fits-all solution. One Chinese businessman was astute enough to call Koppel out when, during a discussion of corruption, he asked: “Don’t you have corrupt politicians and businessmen? Don’t people bribe your inspectors?”
It is easy to forget that China has never, ever had any form of political freedom. Whether ruled by emperors or power-hungry revolutionaries, the Chinese have never enjoyed so much as one second of true political freedom. As a country and society, China – for as ancient as it is – is not mature enough yet to handle the responsibilities attached to the vast freedoms we often take for granted.
And the Chinese get it, even if Koppel didn’t. Unlike the not-so-distant past, today’s Chinese citizen enjoys a great deal of individual freedom, and sees government for what it is. As one young man in Koppel’s report said, “I don’t love my government, but I trust my government.”
On a recent trip to China, I had a lengthy discussion with a local about China’s government and its relationship with citizens. “How would you manage a company with 1.3 billion employees?” Good point. Not an easy task for any one person or any one form of government or even the best run corporation.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Bailing Out
June 21, 2008
Word that Nicole Nason plans to leave her post as head of NHTSA at the end of this month should come as no surprise. She, like others, will be leaping into surely lucrative private sector jobs as the Lame Duck Express nears its inevitable destination next January.
Nason, on the job barely two years, can be noted for one thing: During her brief tenure, she managed to not screw anything else up – primarily, of course, because she didn’t do anything. Too bad she wasn’t around when NHTSA developed its still-stupid TPMS regulations.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Take A Bow
July 18, 2008
Ever want to feel good about this industry’s place in the scheme of things?
Our sister magazine Counterman recently published its annual Top 100 Automotive Aftermarket Suppliers list, developed in conjunction with AASA.
Tire manufacturers – specifically Bridgestone/Firestone, Goodyear, Michelin, Continental Tire North America and Cooper held five of the top 10 positions. BFS, Goodyear and Michelin, in fact, were among the top five; oil giants Shell and Exxon held the other two slots among the top five.
The gap (in 2007 sales dollars) between first-place BFS and 10th place Federal-Mogul was an eye-popping $12.6 billion. That’s billion with a B.
Thought you’d like to know just how important we really are.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
The Land of Gobbledygook
July 17, 2008
A media friend of mine sent this along to me a couple of years ago. Written by Gene Weingarten, it first appeared in the Washington Post in May 2007. I hereby dedicate this post to all of my friends in PR.
Read It and Lacrimate: Implementing a parameter-based verbal interface with the professionally periphrastic
From time to time, I am cruelly slandered by members of the public relations industry, who accuse me of writing unfairly about their profession. Nothing could be further from the truth. I love PR professionals. They're a hoot, because they are such pathetic, desperate dillweeds.
I am right now looking at something called Your Market Wire Newsletter, a package of financial "news" that arrives, unbidden, in journalists' inboxes every week. It is filled with incomprehensibly written press releases on subjects of even less interest than can be found in a non-interest-bearing fiduciary debenture with negative yield. That's exactly how these releases read, only they are less scintillating and more crammed with jargon. One word never suffices when 16 can do the job; big, important-sounding words are better than small, clear ones. Plans are "initiatives." They are not begun; they are "implemented." These releases could sedate an enraged rhinoceros.
Here's a release from MasterCard (headquartered, interestingly, in Purchase, N.Y.) announcing an incremental change in one of its programs so as to maximize "categories of spend" by "scoring cardholder activity against specific parameters using a rules-based engine."
In another release, a company called HQ Sustainable Maritime Industries Inc. identifies itself as "a leader in toxin-free integrated aquaculture and aquatic product processing" that "practices cooperative sustainable aquaculture, using nutraceutically enriched feeds."
A release from a company called Clarkston Consulting breathlessly discloses that Clarkston "has been selected as the SAP implementation partner for Bumble Bee Foods Inc., North America's leading marketer of shelf-stable protein."
"Shelf-stable protein" is apparently "canned fish." We are never actually told what SAP is.
So I decided to call the PR people who issued these releases and tell them that The Washington Post wants to write a big piece about their little story. (To PR people, in terms of arousal, this is like mainlining pheromones.) Then I would tell them that I just had one teensy little question to ask, and once they answered it, we'd be good to go. The question would be written like their press releases. When they failed to understand me, I'd say, "Well, too bad. I guess I just can't do the story."
I started with Angelia Jackson, the PR person for Clarkston.
Me: Vis-a-vis the implementation of SAP technology, what is the source-related derivation of the acronymically based identifier of the service entity, and how does it operate so as to enhance production and profitability or, alternatively, improve the business model of the shelf-stable protein supplier of which Clarkston is now a client?
Angelia: So you're asking me what SAP is an acronym for and how it helps Bumble Bee?
Me:
Angelia: Hello?
Me: You understood me?
Angelia: Sure, it was very clear.
I didn't know what to say. I had no backup plan! So I thanked her for her time and next tried Meir Kahtan, representing MasterCard.
Me: Given the degree to which the deployment of incentives-based purchasing paradigms leads to the accretion of goods and the contracting of services by consumers in patterns and to extents that may prove inimical to the sorts of budgetarily sagacious decision-making vis-a-vis the prudent marshaling of available resources and or investment strategies, might your new program, through positive reinforcement of negatively nuanced patterns of behavior, contribute to economic nonviability on a user-based scale?
Meir: That's a great question!
Me: It is? What IS the question?
Meir: You're asking if we are going to spend ourselves silly, right?
Me: Uh, right.
I felt as though I had entered an alternate reality. And, in a way, I had. I was lost in the land of the Gobbledygooks, trapped among the morbidly verbose, and I was speaking their language. By the time I got to my third call, I was a pathetic, desperate dillweed myself. And angry. I took it out on Dan Stepanek, PR guy for HQ Sustainable Maritime Industries.
Me: First, your press release identifies your chief executive as "Norbert Sporns." What is his real name?
Dan: Norbert Sporns.
Me: If you say so. Can you semiotically explain, interpret or otherwise elucidate from a hermeneutic standpoint, vis-a-vis the terminology in this press release relating to toxin-free integrated aquaculture and aquatic product processing, what actions, processes or industrial practices are performed upon what nature of product so as to encompass the aforementioned terminology as it relates to your company?
Dan: We provide frozen, toxin-free tilapia farmed in ponds in China.
Me:
Dan: Hello?
Me: You got that?
Dan: Sure.
Me:
Dan: So, do you want to talk to Norbert?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Readers Write
July 17, 2008
Read your Fuzzy Fix (TR, March 2008) piece and how it hits home with me and my particular situation.
I own and operate a small, five-employee tire business in eastern Kentucky. The business caters solely to the underground coal mining industry in the region. Over the last 30 years I have seen all the majors fall out of the 10- to 20-inch diameter tire market with the exception of Specialty Tires of America.
My major supplier of mining tires for the last seven years has been Alpha Tire Systems with China-produced products. I have a major problem with this anti-dumping situation as some of the product types and designs that I am currently getting from China has never been produced in America. For the last 20 years, I pleaded with every U.S manufacturer to produce these type of products only to be rejected.
So I ask Mr. Taylor and his followers, how are you going to help me when you show no interest in producing the type of tires that my customers have become accustomed to for the last eight to 10 years?
Brent Wagner
Pikeville Mining Tire Sales Inc.
Pikeville, KY
Cops & Rubber
June 16, 2008
Sometimes you just can’t make stuff up.
The article about tires below was sent to me by a friend, and comes from Officer.com, the Web site of a trade magazine serving police departments across the U.S. The article, which discusses tire inflation pressure recommendations for police cars, was first published in 2005.
I would be interested in your take on the recommendations made here. Send them to me at jsmith@babcox.com.
The link for this article is: http://www.officer.com/article/article.jsp?siteSection=19&id=27281
Driving Under Pressure: Proper Tire Pressure Could Save Your Life
By: SGT. DAVE STORTON EVOC Contributor Officer.com
How many officers check the tire pressure on their patrol car on a regular basis? We all seem to be great at checking that the lights and siren work, because the time to find out they don’t work is not when you get a Code 3 call. Likewise, the time to find out your tire pressure is too low is not when you are in a pursuit and trying to take a corner at high speed.
What is proper pressure?
The proper tire pressure for the Police Crown Victoria is 44 psi. If you look on the sidewall of the tire, you will see that it lists 44 psi max pressure. Regardless of what vehicle you have, use the maximum pressure listed on the sidewall. Higher pressure results in better performance, decreased tire wear, and it lessens your chance of hydroplaning at a given speed. This number on the sidewall lists “the maximum amount of pressure you should ever put in the tire under normal driving conditions.” Pursuits and Code 3 responses are not “normal driving conditions.” Many agencies maintain tire pressure at 35 psi since this is what is listed in the owner’s manual and on the door placard. The reason the owner’s manual lists 35 psi is because we get the same manual as the civilian version of the Crown Victoria. The police version, however, is fully loaded with communications equipment, a cage, and your gear. You are not looking for a soft and cushy ride, you want performance.
Myths about pressure
Let’s put to rest some common misconceptions. The tires will not balloon out creating a peak in the center portion of the tread when tire pressure is above 35 psi. There is a steel belt that prevents this from happening. Also, you are not overstressing the tire with higher pressure, and the tire will not be forced off the rim with higher pressure. The picture above is Bobby Ore of Bobby Ore Motorsports driving a Ford Ranger on two wheels. The tires on the left side have 100 psi in them, and they happen to be tires and rims from a 1999 Crown Victoria! This is a dramatic example of how pressure holds the tire in shape, and how much stress a tire can handle.
Performance
If you were able to watch a tire as it travels across the ground at high speed, you would see that it deflects to one side during cornering. The faster you are going through a corner, the more tire deflection you get. As the tire deflects over onto the sidewall, you get less traction and more of a tendency to understeer or oversteer. This could spell disaster when negotiating a corner at high speed during a pursuit or a Code 3 run. Higher pressure keeps the tire from deflecting onto the sidewall as much, which keeps more of the treaded portion on the road.
A good demonstration for EVOC instructors is to have students drive a high-speed course in a vehicle with 32 to 35 psi. Then have them run the same course with 44 to 50 psi in the tires. The student will experience a marked difference in performance. Having officers experience this difference in vehicle performance is much more effective than just telling them to check their tire pressure.
Hydroplaning
When a tire rolls across a road covered with water, the tire tread channels water away so the rubber remains in contact with the road. The factors that affect hydroplaning are speed, and water depth. Conventional wisdom says that vehicles will hydroplane in as little as 1/16th of an inch of water. Not so coincidentally, legal tread depth is 1/16th of an inch.
Tire manufactures and the Association of Law Enforcement Emergency Response Trainers International (ALERT) have shown that tires have more of a tendency to hydroplane when pressure is low. This happens because the tire footprint (the portion of the tire actually in contact with the road) is larger. For those of you who water ski, think of which is easier to get up on: a fat ski or a skinny ski. More tire surface in contact with the water makes it easier to hydroplane, just as it is easier to water ski on a fat ski. Also, a soft tire can be pushed in more by the pressure of the water on the center portion of the tread. This results in less rubber in contact with the road.
Tire wear
Much better tire wear results from maintaining proper pressure. Tires with lower pressure will wear off the outside of the tread faster from the deflection of the tire during cornering, and the tires will heat up more from increased road friction. This is one of the factors that caused the failure of a certain brand of tires on Ford Explorers some years ago. In 1999 the San Jose Police Department realized a significant cost savings by increasing the pressure in the training fleet to 50 psi. They soon followed up by increasing the pressure in the patrol fleet to 44 psi. For liability reasons, most agencies are reluctant to exceed the maximum pressure listed on the tire for actual patrol vehicles, but they reap the cost saving when going to 50 psi on training vehicles.
Next time you inspect your vehicle, make sure you check your tire pressure since your ability to performance drive is significantly affected by it. You are not driving to the store to get a loaf of bread! You may be called upon to chase a dangerous criminal or respond to assist another officer in trouble. You don’t wonder whether or not your gun is loaded before you hit the street; don’t’ wonder whether your tire pressure is correct once the pursuit starts. Check your tires routinely, just as you do with all other critical equipment.
Sgt. Dave Storton is the Director of the San Jose Police Academy, and he holds a Master's Degree in Adult Education. He is the lead instructor for the Emergency Vehicle Operations Course (EVOC) at the San Jose Police Academy, and is a lead instructor for the local regional academy. He teaches EVOC instructor courses, advanced EVOC instructor courses, off road EVOC, counter-terrorist / dignitary protection driving, and motion picture stunt driving. Dave has trained over 3,500 drivers.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Interpreters Wanted
July 15, 2008
Here’s a great opportunity for recent college grads looking for an important job and world travel.
While enjoying lunch on a recent flight back from China on China Eastern Airlines, I reached for a four-inch long packet on the tray that by all appearances was a wet nap for post-meal use. The two smiling cartoon faces on the blue and green package assured me that I would be quite happy using the product.
And then I read the only English words on the packet.
“Wet Turban Needless Wash.”
“Chinglish,” as it was described to me, has become a serious issue for Chinese companies trying to do business in the U.S. Chinglish, the inadvertent hacking of common English, is why a simple wet nap was ill-depicted as “needless” and as a “turban.” Top-flight companies there are frustrated by the problem because they feel such makes them look, well, less professional.
The root of the problem is that Chinese alphabetic characters often have multiple (and I mean multiple) meanings, all dependant on any number of things, such as the word’s position in a sentence or, as was the case here, the actual subject of the sentence. Chinese companies, in good faith, hire people to convert Chinese into English. These are often Chinese who have learned to speak English, but don’t really understand English – a huge difference when it comes to common product names.
Thus, what should have read “Wet Face Wash Cloth” became “Wet Turban Needless Wash.”
Seems they need another layer of interpreter there, one who can put the proper polish on the English phrases.
I am old enough to remember similar translation issues with Japanese companies and even those from South Korea, so I’m pretty sure Chinglish will be a thing of the past before too long.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Growing Companies Big Deal
July 14, 2008
Perhaps more than a little lost at the tail end of a July 7 news item we posted was word that Miami-based South Dade Automotive was ranked 181 in Hispanic Business magazine’s annual rundown of the Top 500 Hispanic business in the U.S. CEO Jorge Pola and his team have done a tremendous job building their business, and in being an integral part of the local community.
This honor is a pretty big deal for the company, an ACCC member, and well it should be. Any time our industry is positively recognized by a notable national publication, it is a big deal.
The magazine also listed the Top 50 Exporters for 2008, which included four tire firms: South Dade Automotive, Tire Group International, Tire Masters International and Lucy’s Tire Inc. Congrats to all!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Foxes in the Hen House
June 11, 2008
First it was our own RMA inviting car dealers to participate in National Tire Safety Week. Now SEMA has invited the National Automobile Dealers Association to come on down to Las Vegas.
SEMA plans “a first-of-its-kind, comprehensive ‘Dealer Day’ program designed exclusively for NADA members at the 2008 SEMA Show,” according to aSEMA release.
In a nutshell, SEMA is inviting car dealers to see all of the cool things we in the aftermarket do so that they can do them, too.
I guess it would be different if the NADA attendees brought something to share, like data on repair procedures, TPMS, odd-ball tire/wheel sizes, instruction on how to integrate aftermarket electronics, selling and installing accessories and the such – all ofthe things thousands of independent businesses have been built upon.
But all the car dealers will be bringing are cameras and notepads.
SEMA feels this new relationship will give its core members – the independents – new opportunities to gain business from car dealers.
NADA president Phil Brady, though, seems to have another idea: “At a time when many dealers are looking for new ways to generate additional revenue and sales, this program will provide dealers with new ideas and strategies to help improve their bottom-line performance by creating profitable accessory programs," he said.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
With Neighborhood Watches Like These…
June 11, 2008
It’s a dangerous world out there, and now apparently there is no one left to trust.
Laura Shuttleworth and her husband Matthew Swarney live in quiet suburb of Toronto. A well-to-do suburb, with million-dollar homes. And it was quiet until someone took to slashing their tires. Over the past 18 months, the family SUV had been attacked some 30 times. That’s 30 new SUV tires in a year and a half.
Nobody could figure out who the culprit was. Not the neighbors, whose vehicles were never touched, nor the police, or even the Neighborhood Watch.
So the couple hired a PI, who set up a camera and recorded hours of tape.
Finally, the perp returned and was videoed in action. On July 2, police arrested 70-year-old Albert Fulton on numerous tire assault-related charges.
Now here’s the funny part. Good old Albert is coordinator of the Wychwood Park Neighborhood Watch program. Seems Albert had a bone to pick with the victims over parking in the street, which apparently is some sort of unwritten rule, but certainly not law.
Now Albert has a restraining order, which will prevent him rom watching any neighbors.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Sign Me Up
June 10, 2008
American Tire Corp., the ubiquitous OTR tire “manufacturer” that pumps out “press releases” at a near record rate, is still hot on buying Goodyear’s entire North American OTR tire business. According to its latest missive, ATC said it would hold information events for its employees, and has invited a number of senior Goodyear experts to speak at these.
ATC said it will hold these information events “on a regular basis until its purchase of Goodyear's Topeka OTR tire plant is finally realized.”
Not only that, but ATC plans to establish a negotiating team in an effort to acquire the Akron giant’s OTR biz.That may be one lonely negotiating table; to be kind, I would not expect Goodyear to attend.
Still waiting for my invitation for the groundbreaking for ATC’s $500 million radial OTR tire plant, located in a secret place somewhere in Washington state. Oddly, though, my friends on the business desk of the Seattle Post-Intelligencer, the state’s largest newspaper, have not heard of such a massive project. Apparently they just haven’t gotten any of the press releases.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
That Bang You Heard was the Sound of Money
July 9, 2008
NBC recently reported that the number of unrepaired potholes around theU.S. is increasing, primarily because of the rising cost of oil. NBC estimates that just 33% of potholes are getting proper attention.
The cost of the asphalt has gone up 70% over the last five years, and diesel fuel (which powers paving equipment) is up 63% this year alone. Then you can add revenue lost from gas taxes (which fun road work) dueto decreased driving, and tax dollars lost by local governments due to declines in employment, etc.
Could be a great time to be a tire dealer…and one who can get wheels...if you can survive this economy.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Americans Really Downsizing
July 9, 2008
The Federal Highway Administration reported that Americans drove 1.4 billion miles less in April than they did the year prior, while there was a noted surge in the use of public transport.
Through April, Americans have cut some 20 billion miles from their past behavior, which projects out to a 60 billion mile decrease for the entire year.
“We’re burning less fuel as energy costs change driving patterns, steer people toward more fuel-efficient vehicles and encourage more to use transit," said the ever vigilant Transportation Secretary Mary Peters said. "Which is exactly why we need a more effective funding source than the gas tax."
More interesting: Sales data from the FHA says midsize SUV sales through May were off 38%vs. the first five months of 2007, while sales of cars reached 57% ofall personal vehicle sales.
The times, they are a changin’.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Growing Companies Big Deal
July 14, 2008
Perhaps more than a little lost at the tail end of a July 7 news item we posted was word that Miami-based South Dade Automotive was ranked 181 in Hispanic Business magazine’s annual rundown of the Top 500 Hispanic business in the U.S. CEO Jorge Pola and his team have done a tremendous job building their business, and in being an integral part of the local community.
This honor is a pretty big deal for the company, an ACCC member, and well it should be. Any time our industry is positively recognized by a notable national publication, it is a big deal.
The magazine also listed the Top 50 Exporters for 2008, which included four tire firms: South Dade Automotive, Tire Group International, Tire Masters International and Lucy’s Tire Inc. Congrats to all!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Time For Passenger Retreads?
July 8, 2008
A few things crossed my desk recently indicating that passenger tire retreading in North America may be up for a rebirth.
Obviously, ever rising new tire and fuel pump prices are at play here. But so is the current “Green” trend.
A recent study in Europe concluded that retreaded tires produce significantly less carbon emissions than new tires. The study showed that the manufacture of a 17.5-inch new tire produces 86.9 kg of CO2 emissions vs. 60.5 kg of CO2 for an equivalent retread, a saving of 26.4 kg or a 30% reduction in emissions.
Across the other pond, Bridgestone Corp. is leveraging its Bandag subsidiary to open a series of passenger tire retread shops/retail stores in Japan. Twenty such shops are planned in the test marketing effort.
Old friend Harvey Brodsky, head of TRIB, weighed in on the subject in one of his recent newsletters:
“Although many readers of this newsletter may think that I have lost my mind, after much thought I seriously believe that we may see a resurgence of passenger retreading in North America and other parts of the world.
“I don’t expect to see 13-inch and other small size tires being retreaded, but the larger size tires, along with light truck and high performance tires are perfect candidates, PROVIDING the casings are suitable for another useful life.
“The timing couldn’t be better since the Green movement is finally being taken seriously by public sector fleets along with a large – and growing – segment of the motoring public.
“I have been invited to make a presentation about passenger retreading at an upcoming conference in September.
“This could be a very interesting growth opportunity for our industry.
“I’ve been driving on retreads for over 30 years and back when I first got into the retread industry, one out of every five replacement tires sold in the U.S. was a retread!
“I’d really like to hear from readers regarding whether you think it is a good or bad idea, along with your reasons.”
So would I. Send your comments to Harvey at info@retread.org. Hit me up at jsmith@babcox.com.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Not on the Nitro Bandwagon
July 8, 2008
Jim,
Your pushing of the N2 program appears to be driven by advertising dollars. This whole thing is a sham propagated by equipment manufacturers.
In our neck of the woods, N2 is already being given away for free with a tire purchase. We use the Consumer Reports article to show that N2 is not the value that should make your tires more expensive. (What is better, air or dry air?)
I'm afraid that the day of the tire purchase add-ons has come and gone. Now most of us are just happy to get the sale and hope for some car repair add-on!
I have been reading your magazine for most of my career (38 years) and continue to enjoy most of it. Thanks.
Dave Hamad
Columbus, Ohio
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Your 15 Minutes Are Finally Up, Pal
July 7, 2008
Andrew Firestone finally got hitched. Finally. To a Serbian model no less.
You’ll remember Andrew from his ill-fated turn on ABC’s The Bachelor some five years ago. And since then, his name has popped up more often than most people change socks. Most notably in this industry, where he holds the distinction of being Harvey Firestone’s great, grandson.
Of course, Andrew is to the tire industry as I am to nuclear physics. Maybe now he can settle down, have a few kids and go back to fussing with his dad’s wine business.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Market Blues
June 20, 2008
Lost of talk these days about how the “market” is down. Most people look at tire shipment figures, which are, in my humble view, not really indicative of the real market, just the production/shipping side of the ledger. Still, we’re looking at consumer tire shipments being down between 5% and 7% through the first half of the year.
Our Business Barometer feature each month shows a slightly different tale. Based on real retail activity – not shipments and certainly not attitudes – retail tire sales have been in a nosedive since January, save for brief respite in April when sales showed a year-to-year bounce of about 1%.
Some dealers are having decent years, others are struggling mightily. Anecdotal evidence strongly suggests the consumer tire market at retail is off around 12% vs. 2007…and last year was NOT a great one.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Green Wave East
June 19, 2008
Couple of interesting things I learned during my recent trip to China. ‘Green’ is the in thing there, but it’s not going as well as, well, you might think.
The government recently banned the use of plastic shopping bags less than 0.025mm thick, about what our plastic grocery bags run. Shops are no longer allowed to simply give them to customers at checkout. Of course, thicker bags are allowed…and (you’ll love this) shopkeepers still have the option of selling the banned bags to customers for pennies.
The so-called “bag belt” in Guangdong, where most plastic shopping bags are produced, faces massive layoffs.
A two-year-old ban on the use of gasoline in mopeds ran into a bit of a speed bump. Next to bicycles, mopeds are the most commonly used form of in-town transport in China, and the gas ban was designed to reduced air pollution (as if millions of mopeds were the whole air pollution problem there).
Owners had to convert to LPG, requiring a small expense for a conversion kit. But recent shortages of LPG at filling stations have caused a good many to break the law and unconvert – switching back to gasoline rather than walking.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Dangerous Pursuits
June 18, 2008
Anyone who says they drive in China is either a native or plum nuts. Traffic congestion in the city is bad enough, but driving habits make it worse…at least for us Westerners who don’t quite understand the delicate balance of natural forces involved.
Lane straddling is the norm as it leaves the driver two options to go based on which lane is moving faster. Line up four or five straddlers and you've got an interesting problem.
Unexplained braking and slalom-style lane changes are all part of the experience. Side mirrors are only for decoration, it seems, as overtaking often involves nearly clipping the front fender of the slower vehicle. We're talking fractions of an inch here. City intersections are a free-for-all. Pedestrians cross wherever (and whenever) they choose, usually without even looking at oncoming traffic. Same with bikes, scooters and mopeds.
In rural Rugao, where there is far less car and truck traffic, driving means sharing beautiful boulevard-style streets with a combination of old farm wagons, bikes, foot traffic, mopeds, overloaded trucks and even motorcycles – all of which could be in the road at any time.
Driving the open freeways is actually quite nice, save for the sudden hard braking that occurs when the driver spots an active traffic camera just waiting to issue a speeding citation.
You wanna scare a teenage driver straight? Put them in a cab in Shanghai.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
More Reader Notes
June 17, 2008
Thanks for Highlight
Thank you so much for the outstanding article on Atlantic Tire & Service displayed in May’s publication of Tire Review. It really meant a lot to us to be recognized not only for our most recent award, but also for your taking the time to do an in depth story on our business.
On behalf of Anthony Blackman and myself, we sincerely thank you for spotlighting Atlantic Tire & Service in your highly respected magazine.
Amy Haverland Alexander
Chief Operating Officer
Atlantic Tire & Service
Raleigh, N.C.
No Nitro Fan Here
Come on Mr. Smith. Regarding nitrogen usage in automotive tires, the undisputed, scientifically proven advantages of nitrogen are so minuscule that there is no real advantage for the consumer. This is just another example of a "wallet flush." Or better worded, it is another opportunity to rip off the consumer.
How long have we been fighting to be respected in this industry? Eventually consumers will get wise, and nitrogen use in tires will do nothing more than give people another reason to not trust us. I find it very upsetting that a magazine as established and respected as yours would even allow such advertisements. The BS meter was pegging out as I read the quotes from the different nitrogen machine manufacturers in your article. I guess it's all just about money.
Jim Hackney
Owner
Auto Diagnosis
Amherst, Ohio
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Grey Market Blues
June 17, 2008
Thanks to the U.S. economy and the strong euro, the old grey market has been working overtime, with U.S. distributors selling branded product to contacts in Europe. Believe me, tiremakers hate grey marketing – a lot.
I have heard from more than a few people close to the action that some tiremakers are considering removing European marks from tires intended for sale in North America, making it harder for grey marketers to have a market. And you may see some OE export price adjustments made to curb profiteering in that segment.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Readers Respond
June 11, 2008
We also attended the Reifen show last month in Essen, Germany. I was looking on the Internet for some evaluation/description of the show and found your blog.
Actually I didn't Google "Reifen 2008 in media.” I used the "why Bridgestone didn't attend Reifen 2008." I'm curious about this because, from our understanding, Bridgestone, Michelin and Goodyear are major brands in tire industry. And Reifen is supposed to be the "No.1 tire show," from the organizer's description.
So I'm wondering why Bridgestone was absent for this tire party? I noticed there were lots of reports about the deal between Bridgestone and Toyo, so is there any connecting about these two things?
I like to read your tire blog and I'd like to share information about Chinese OTR tire development in the future.
Benjamin Zhang
Marketing Specialist
Techking Tires Ltd.
China
I'm giving a seminar on tread depth issues at the Automechanika show in Toronto in June. In reference to your February column “For Gatlin's Sake," (a great column incidentally) I would correct one item, to wit: Canada's tread depth law is 1.5 mm, which is less than 2/32-inch by a hair. But a hair is a hair when it comes to stopping on wet roads (2/32-inch is 1.6mm).
This government mandated depth is just not giving motorists the margins of safety required when stopping quickly on wet roads.
Another consideration that is seldom mentioned is that tread depth should be measured in all areas across the tread – not just the middle grooves as some pundits and legislations suggest. Tires could show 2/32-inch in the middle groove, be completely worn on both shoulders and be considered safe by some to drive on. Go figure!
Paul Hyatt
President
Superior Tire & Auto
Toronto
Earthquake Shakes More Than Land
June 9, 2008
Just got back from a week in China visiting with a few manufacturers there.
The biggest news in China was not the preparations for the upcoming Olympics. The news on everyone’s lips and on everyone’s minds there was the massive earthquake that rocked Sichuan Province on May 12…and the 400+ aftershocks that have hit there area since.
We cannot fathom a natural disaster of that magnitude – 70,000 people killed, mostly children, and another 20,000 still missing. Newspapers were filled with stories about survivors, the rescue efforts, the schools that collapsed, and the anger and scared residents of that area.
It has also scraed the heck out of people living thousands of miles away.
TV networks broadcast a range of telethons to raise money for disaster relief. Popular music artists hurried out songs and videos to help raise money. And common folk, most of whom don’t make even $3,000 per year there, were giving all they could to help.
Domestic tire companies like Double Coin (and its CMA U.S. unit) have donated millions, as have Michelin, Bridgestone, Yokohama and others.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Expect More ‘Massive’ Price Hikes
June 6, 2008
European market analysts are calling for “massive” tire price increases to offset the negative impact of astronomical natural rubber costs. May 2008 NR prices were up 12% vs. the month prior and 40% vs. 2007’s average price.
Apparently the Europeans aren’t watching oil prices, which have grown at a faster rate and are much more worrisome to producers around the world.
Whatever. We have seen three rounds of price increases already this year…and we’re not even six months in. And there is no reason to believe the increases will abate in either size or frequency. I suspect we’ll see at least two more rounds of hikes by Christmas.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
The Continuing Drama
June 4, 2008
If anyone can explain the Amtel-Vredstein–Sibur Russian Tyres drama, let me know.
Yes, I know it’s not that big of a deal on this continent, but it has potential impact regarding Vredestein.
Three years ago, A-V was hot number in the industry, modernizing its plants, adding new capacity and building a broad retail distribution system in stodgy old Russia. Problem was they overextended themselves – a lot – and didn’t deliver well on the sales side.
Over the last year we’ve read that A-V was trying to merge with Sibur Russian Tyres, which took advantage of –V’s troubles to become that country’s top tiremaker. The on-again, off-again talks have led nowhere to date, and now cash-strapped A-V has apparently applied to takeover Sibur Russian.
Huh???
Hey, a little soap opera never hurt anyone. This one is fin to watch, if not totally perplexing.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Tire Prices and Turbulence
May 28, 2008
Pirelli execs, say news reports out of Europe, are not ruling out additional tire price increases in both the third and fourth quarters of this year. Raw material, transportation (fuel) and energy costs are killing manufacturers in every sector.
I doubt that the situation will improve, and fully expect most (if not all) tiremakers to revisit pricing at lest twice more this year.
We’re not getting any help from anyone (re: government) at abating these ridiculous costs, especially in light of the astronomical net-net-net profits oil companies are turning. This isn’t about more drilling in North America or so-called “energy independence” – it is all about unfettered corporate greed.
Driving miles are being driven down sharply, which means tires lasting longer between replacements. Fuel costs add cost/profit pressure to your bottom lines, as well as those of your customers. Home and business heating costs next year are expected to escalate at unbelievable rates. If there is a light at the end of this economic-headache tunnel, I don’t see it.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Back to the Future
May 28, 2008
Thinking back on the recent Bridgestone-Toyo alliance announcement, I suggested that we shouldn’t read too much into that deal. I have heard some speculation that one was buying the other, or that there would be some kind of merger.
Never say never, but I still doubt that is part of the plan. Financially, both are healthy and there is no financial or competitive reason for such a tie-up.
BUT, given the state of affairs with production costs – primarily raw materials and energy – this relationship could be the shape of things to come.
The industry will certainly be looking at this arrangement with great interest. The economies of scale in raw material purchasing alone will attract attention. Think, too, of the possibilities when you consider how the deal may advance both companies’ engineering and technology, not to mention production efficiencies.
In short: This relationship may open the door to similar deals between other competitors.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Notes & Scribbles
May 27, 2008
Almost let the month get away without noting that May was the 20th anniversary of Bridgestone Corp.’s purchase of Firestone Tire & Rubber Co. for a then unheard of $2.6 billion. It was a watershed moment in tire industry history, and a huge moment in U.S. economic history. I recall the excitement in Akron when the purchase was announced, mostly from the thousands of residents (and Firestone employees) would be made millionaires in the deal. There was also a great sense of relief that the months-long bidding battle between Bridgestone and Pirelli had been settled one and for all. I recall, too, attending the Firestone shareholders meeting during which the sale was approved and sitting at the post meeting press conference when then Bridgestone chief Akira Yeiri made the ill-fated comment that the purchases was “a merger of equals.” That statement set the table for years of painful – and expensive – efforts to get the whole thing to work, primarily because both parties believed it was a merger. Anyone else remember the days when Bridgestone/Firestone Inc. claimed it was losing $1 million a day? So imagine how I cringed when at the recent Bridgestone/Firestone North American Tire Bizcon meeting BFNAT officials constantly refered to its $1 billion purchase of Bandag as a “merger.” …
Think Chinese tiremakers are abusing the U.S. market? Try being a tiremaker in India right now, where Chinese imports represent fully 91% of that country’s tire imports. Despite anti-dumping duties that were nearly doubled in the past year, the price differential between domestically produced tires (radial and bias) and those brought in from China is still between 10% and 30%...Just got a copy of a white paper “The Value of Green Tires to Corporate Profitability.” In the 32-page tome, the authors (one a consultant and the other a Rice University business school prof) flack for increased use of “engineered ultra-fine recycled rubber powder” in tire production. Neither is a rubber scientist, and it shows in some of the unverified claims they make about the benefits of using the material. I have every confidence tire companies are considering every possible option to lower raw material costs, and recycled tire rubber is certainly getting play. We just don’t need another group of inexperienced people running to the consumer media with their questionable claims…
Troubled U.S. economy has been driving trucking fleets under, most notably New Jersey’s Jevic Transportation, which suddenly closed down earlier this month. 1,900 employees have lost their jobs, and thousands of trucks and trailers sit idle. President and CEO David Gorman said the LTL carrier was the victim of rising diesel costs, decreased shipping due to the slump, increasing insurance costs and tightening credit. …Struggles between the rich and poor are not limited to our current economic dilemma. The Financial Times recently reported that citizens of Germany, France, Italy, China and the UK are more critical of the gap between the rich and poor than U.S. residents. When asked if the rich should be taxed more, less or the same than the poor, some 75% of Japanese said higher, and more than 60% of Spaniards, Germans and Americans agreed. …Not only are we gulping at the gas pump, home heating pricing is headed upward, too. Average monthly heating bills in my corner of the world are expected to double next winter. Double. Might want to consider other ways to keep your stores and bays warm…
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Random Notes from Essen
May 23, 2008
Bridgestone-Toyo Tie-Up
May 16, 2008
While you can never say never, I don’t know that one should read too much into today’s announcement that Bridgestone and Toyo will buy stakes in each other.
Fact is, in order for the two companies to say more than “Good morning” to each other and not run afoul of regulators they needed to make the cross investment. The real point of the deal is to maximize efficiencies and raw material purchasing power.
If it goes beyond that, well…like I said, never say never.
In details revealed in Bridgestone’s official statement, the deal is intended to leverage their combined size to get better raw material pricing, allow co-development of new production technology and machinery, create “economies of scale” in production and distribution – perhaps even to include cross-production of each other’s products, and study other opportunities for so-called synergies.
In the deal, Toyo will issue 20 million shares (8.72% of its total outstanding), which Bridgestone will buy. Likewise, Bridgestone will issue 3.9 million treasury stocks (0.49% of its total) for Toyo to buy. The deal has been approved by both boards and will be concluded in mid-October.
As a side note: In its official announcement, Bridgestone listed the primary shareholders of both companies. Interesting to note that among Toyo’s primary stakeholders are Toyota Motor (4.56%) and Yokohama Rubber Co. (1.9%).
Welcome to the Tire Review Blog
May 16, 2008
It’s no fancy introduction to be sure, but it’s a 21st century concept that will deliver a richer view of your industry.
As with most blogs, the TR Blog will be rather informal, kind of watercooler chat with a mix of news, observations, opinion, thoughts and ideas that we hope will provide invaluable insight, a more 360-degree view of your industry.
From time to time, we will share the sights and input we experience at various industry events, our take on industry issues and activities, and reports on forces that we think will influence the industry – and your business – in the future.
Check back often because this space will be updated on an irregular schedule: sometimes once a week, sometimes multiple times a day.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Judging Books by Covers
May 15, 2008
I will freely admit that I'm not the bull riding kind of guy. So when Cooper recently invited me to join them in Chicago for the Cooper Tire Invitational, a stop on the 30-plus city Professional Bull Riders series, I contemplated my options. Like mowing the lawn, painting our barn, maybe painting my neighbor's barn, getting my teenager to do his homework. Off to the still-wintery Wndy City I went.
I will also freely admit when I am wrong. No, I am still not a mega-fan of bull riding (though I take my hat off to those guys, many of whom I met during the event, and none I would want to be when they hit age 65), but I discovered a few things that perhaps you might think about.
More than one person was left scratching their heads when Cooper announced in January that it was becoming a sponsor partner of PBR. Watching guys get tossed around like rags while trying to stay on top of 2,000-pounds of muscle and four ounces of brain does not appeal to a broad base. You might think.
Over two nights, PBR attracted more than 20,000 Chicagoans to the Rosemont Horizon – 20,000 people who wanted to be there and braved rather unspring-like weather to do so. Inside the arena was a full evening of family-oriented entertainment (including outdoor country concerts supported by Cooper), fan-friendly (and very polite) competitors, family-friendly booths by the tour's key sponsors (like Cooper) and a captivating, lively sponsor-friendly "show." No one could walk out of that building and say they had a bad time. Not even me.
Cooper has been taking dealers out to these PBR events in advance of their arrival in those dealers' markets, giving them a first-hand look at how they can leverage this sponsorship to attract customers and build awareness. It's a low pressure "Hey, we just want you to see" approach. Cooper knows its PBR sponsorship is not for everyone, but dealers should take a good hard look before pushing it off.
Like anything in marketing, you get out what you put in. What do you do when your tire suppliers bring you well-supported tie-in opportunities? Especially for something as consumer-friendly and engaging as pro bull riding? Top, successful dealers jump on these opportunities to make some hay (sorry for the pun).
– Jim Smith
Deep in the Heart of Texas
May 14, 2008
Speaking of guys with busted body parts….If you think you can drive a competition-level off-road race truck, think hard. Real, real hard.
I was just down at Continental Tire North America’s test facility in Uvalde, Texas, and learned that lesson first hand, as did the bevy of enthusiast journalists in attendance. (Side note: TR was the only tire magazine to attend the event).
Conti christened its new off-road test track – one mile of back-busting hell – by letting us inexperienced louts run modified race trucks through the course. Then, of course, we took the passenger seat as pro drivers showed us how it’s really done. Ouch!
To summarize: try driving fast while having your head and neck jarred in three directions at once.
None of us buried the race truck in the scrub brush, but, then again, none of us will be signed on to drive Baja.
The track itself is a mix of surfaces, from loose gravel to heavy silt, tire-slicing rocks to plain old dirt. Conti is using its new multi-surface circuit to test its LT tires, and its new off-road race tires. Should be sufficiently brutal to accomplish that!
BTW: I don’t care who you are, a full Nomex race suit on a 101˚ day in the Texas desert sucks. Period.
– Jim Smith
September 3, 2008
• Hey, sorry we’ve been tardy in updating this blog. Not looking to make excuses, but other things have taken center stage. We’re back now, fresh and ready to tackle the day’s dealings.
• Found this great blog site you OTR tire dealers might enjoy. It’s at www.buybigtires.com and delivers some interesting takes on the big tire side of the industry. Don’t know who writes the blog – unfortunately that appears to be a state secret – but they do read Tire Review.
• Going through the judging process for this year’s Top Shop Awards – nearly 100 entries again this year, and every one of them demonstrates clearly just how great independent tire dealers really are. Sharp-looking locations, high levels of training, outstanding community service and support, top-shelf customer service and highly creative promotions.
If you ever want to understand why most tire dealers aren’t afraid of the Big Box Wolf, take a close look at how U.S. and Canadian independents work. Even after 25-plus years in this business, it still amazes me!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Angry Tire Companies
September 3, 2008
Interesting that our friends at American Tire Corp. are a bit miffed at us. Apparently pointing out the obvious and questioning their public statements is not fair game.
I am not going to review ATC’s concerns here. You can read about it in the News section of this site. I suggest, if you are interested, that you visit ATC’s Web site (www.americantire.us) and read for yourself its large collection of “news releases.” You might notice that some of them have never been picked up for use by this or any other magazine.
I will also not address the anonymous e-mail I received over the weekend questioning my “objective” regarding ATC.
I will, however, say this: If any company – public or private – makes unusual, suspicious or otherwise unsubstantiated claims, it should fully expect someone to ask a few questions. That’s how it works here. You cannot just say something – anything – and call it “fact.”
This is particularly true if said company has a track record of playing it a little fast-and-loose with the language used in both its press releases and its ads.
We get hundreds of press releases from companies each year, and more than few offer superlatives about products or projects. And that’s fine. That’s their right. At the same time, it is our job to sort through the self-aggrandizing and work down to the cold, hard facts.
Our job is to report the news – not just what some company thinks we should publish – to best inform our readers and allow them to draw their own conclusions. We are naturally skeptical of any “news” presented to us by any company – large or small, public or private – because we are gatekeepers working to the best interests of our readers.
If any company’s statements might tend to mislead or otherwise confuse our readers, we will call them into question, we will point them out and we will still leave it to the readers to make the ultimate decision.
Equally, if any company develops products, services or facilities that meet the needs of North American dealers, then we will happily report on those facts. In fact, we welcome their success here and anywhere they choose to do business.
But we will not simply pay lip-service to their statements, and we will not stand by and leave questionable claims unchallenged. We will leave that to others.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
SEMA Writes
August 19, 2008
Dear Jim,
I just had the opportunity to read your column “Show Me The Value” in this month’s Tire Review (July 2008).
Your comments are increasingly important in this challenging economic era and changing business landscape. The notion that we need to “wait out this storm” in anticipation of better times is a dangerous one. The trade show business has far too many victims who decided to “stick it out” rather than adapt and change with the times.
Led by the vision and experience of our current board of directors and the volunteers from our industry who served before them, we have a culture within the organization that positions the show at the forefront of our industry. Our foundation is built on quality and value – these words also serve as our guiding light as we adapt and change the show in the future.
Tangible examples of this commitment is best demonstrated by:
• An increased investment in international marketing which will deliver historically high numbers of buyers from international markets.
• Enhancements to the registration process that enables qualified attendees from the industry enhanced services while protecting the integrity of the show by screening out consumers and other non-qualified registrants. We are focused on delivering “quality” attendees that are qualified to do business at the show.
• Focus on emerging buyer categories like auto dealers who will be attending the first-ever Dealer Day, an intensive program for dealer principals that will create new revenue streams for their dealerships and new business for our exhibitors.
• Ongoing collaboration with hotels and trade show service providers to raise the level of service and value, while reducing or holding the rates. Our room block has more $100 hotel rooms than any time in our history.
• Our free education programs and networking events are now attended by more participants than ever before. These attendees are using the programs to add value to their show experience and go back to their businesses equipped with an enhanced ability to improve their profitability.
• Leveraging the exposure and marketing value of established and emerging media channels that attend the show that will highlight the products from our show to millions of consumers in global automotive markets.
While trade shows are subject to the same cyclical effects as any other business, the solid ground that our show was built on and the entrepreneurial spirit and innovation that our industry will continue to feed the success of the show and guide the future.
Thank you for addressing these important issues regarding the show. If you like, I would be happy to discuss any of these initiatives in greater detail.
Peter MacGillivray
SEMA
Vice President of Events and Communication
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
There Goes Our Wall
August 19, 2008
Word is that some four million-scrap tires have been removed from the border separately the U.S. from Mexico. Seems that area has long been a dumping ground for unwanted rubber and other garbage.
U.S. and Mexican representatives last week signed the Tire Initiative Letter of Understanding, which reportedly created tire pile prevention measures for the 2,000-mile border area and any associated health risk.
“Scrap tires along the U.S.-Mexico border pose major health threats for the millions of border residents,” said Matt Hale, director of the EPA Office of Solid Waste. “With the support of both of our countries, we can prevent the creation of additional scrap tire piles and clean up our border communities.”
Of course, neither side mentioned where the tires may have comes from nor pointed out any responsible parties.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Cooling Off
August 18, 2008
China’s tire production engine has slowed – to a virtual crawl by China’s standards. Tire output by China Rubber Industry Association member companies grew just 12% through the first half of the year, down from an 18% annual growth rate in recent years.
Just 124 million tires were produced in the first half by 46 member companies, CRIA reported. The association says its members represent about 70% of the country’s total tire output.
"Although tire output and sales growth was relatively strong, profits fell sharply, mainly because the prices of raw materials, especially natural and synthetic rubber, have surged, eating into companies' profits," the association said.
CRIA also said that if raw material costs don’t ease, perhaps 30 % of its members could end the year in red numbers.
Unfortunately, car sales in China have also slowed considerably, driven by rising fuel costs and a general economic slowdown in China. While still in positive numbers, China’s economy has cooled as the government has acted to rein in its furious growth over the last five years.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
More Green for Green
August 18, 2008
Within hours of each other, a carmaker group and a car dealer group announced “green” initiatives.
The Alliance of Automobile Manufacturers wants Americans to “save money at the gas pump, reduce fuel use and cut carbon dioxide emissions” thanks to its new consumer education effort: EcoDriving.
And what is EcoDriving? The same series of smart driving tips we have all seen countless times – don’t tailgate, don’t drive too fast, avoid jackrabbit starts, etc., etc., etc.
Not wanting to be left out, the National Automobile Dealers Association announced that September will be free "Green Check-up Month" nationwide. NADA members are being urged to “offer free Green Checkups” to drivers, focusing on “the things that have the most effect on fuel economy, such as oil and air filters, engine performance, tire pressure and emission controls.”
Not only that, but NADA wants to point out that its members “have invested close to a billion dollars on facility upgrades and new construction over the past few years to reduce energy consumption at their dealerships.” Read that carefully.
NADA says this investment “includes cutting-edge heating and cooling methods, more efficient lighting, as well as wind and solar power. Today, several dealerships are LEED-certified by the U.S. Green Building Council's Leadership in Energy and Environmental Design program.”
OK, I gotta give them credit. But I also have to ask: Were they truly being green, or trying to save a buck while sales are falling like autumn leaves?
One thing neither group addressed is how they will stop certain automakers from trying to convince us that their giant SUVs are “fuel efficient.” Compared to what? A 747?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Random Notes
August 12, 2008
Get Out of Here! Really?
Word on the street is that Wal-mart is having serious thoughts about being in the tire business. Low margins and its inability to be competitive against knowledgeable competition is leaving a mark, apparently. Seven Wal-mart stores have been targeted for a trial run sans tire and auto service centers, with the space being converted over to other non-automotive products. Perhaps this will be the start of something special.
Glad They Don’t Work for Us
Ford says it’s serious about quality. Really serious. As Ford ramps up production of small cars – a full two years after Americans starting moving away from big gas hogs – it wants the quality of its small cars to be second to none. The automaker is assigning hourly workers to catch quality problems on the factory line before they get to the showroom. The effort is pointed at reducing Ford’s “things gone wrong” index to 800 per 1,000 vehicles. The industry average? 1,512 per 1,000. Imagine if the tire industry settled for that kind of batting average.
On the Mend
Heard from old friend Alpio Barbara, owner of 2007 Top Shop Award finalist Redwood General Tire out in Redwood, Calif. He’s at home recuperating from some surgery, but is still busy keeping tabs on things in the shop. And sending me notes. Get well soon, Alpio.
Patent Medicine and You
Consumers are mad after any remedy for high gas prices, and the InterWebs are chock full of oddball promises of more miles per gallon, including some outfit selling tablets to place in the gas tank and carb and another with something that creates a powerful air vortex in the fuel injection system. Life Science 9 in California (no wonder) says it has created biofuel from bug excretion – what we call poop. It plans to build a facility that will deliver biofuel at $1.25 per gallon! Back in the mid-1970s I worked for a guy who hooked up with another knucklehead on a gas mileage scheme…this was back when gas passed the disastrous $1 per gallon mark! Their solution: pumping a mist of water into the carb. Didn’t say he was bright, just the owner of the business.
Victim of Technology
The folks that publish the Yellow Pages (and all of the variations thereof) were miffed at news reports that ad sales in such directories were falling rapidly as consumer use moved from the bulky books to the Internet. Seems impatient Americans have found the InterWebs easier to use than their directories. While the various publishers dispute the survey findings, the medium may be on its way out. AOL’s Walletpop blog recently published a list of the Top 25 Things Vanishing from America – things like classified ads, pit toilets and personal checks. The Yellow Pages came in at No. 24.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Greening of America?
August 11, 2008
Everywhere you look and in anything that natters, it seems like America wants to be green. Whether it’s wallet-preservation or true concern for our mutual future, regular citizens are looking at ways to save energy, find energy alternatives and reduce pollution.
But getting to green is going to take a lot more than just doing it, it appears.
Political subdivisions – cities, counties, villages and townships to you and me – all have various zoning rules, and in many cases these regulations limit green options.
Near where I live, a group of citizens sent green project requests to six neighboring towns. It was a test to see how the entities would react requests for guidance about erecting a 50-foot wind turbine and/or covering 40% of their backyards with solar panels, which is what they estimated was necessary to run their homes “off the grid.”
While only three of the six towns responded, it seems 50-foot towers with giant propeller blades would not be permitted. The solar panel idea seemed to be OK, but neighbors might have issues, they were warned.
The point of the exercise was to see just how ready local governments were to deal with green issues. Apparently they have some work to do. Sure, not everyone can have a five-story wind turbine in their backyard (though I think that would be cool), government bodies need to adjust their rules and regs to consider such proposals.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Chicken Little
August 11, 2008
Most popular question I am asked these days? “So, what do you hear out there?”
By “out there,” the questioner means “tire sales.” And while I’ve been asked that question for years, it has never come with today’s level of concern, dread and, sometimes out-right desperation.
The answer, I guess, depends on who is doing the telling, or who you want to believe. RMA, for instance, just issued a revised 2008 forecast saying that the industry, on an overall basis, will be off some 4% vs. 2007. Most of that expected decrease, says RMA, is driven by sharp declines on the OE side.
But looking a bit closer, replacement shipments aren’t expected to fare very well, either. Compared to 2007, P-metric will be off 1%, LT-metric will fall 7% and medium truck will drop 3.5%, says RMA. Those aren’t slight declines – that represents some 3.1 million tires. And keep in mind that 2007 was a bad year compared to 2006, and 2006 was way off from 2005.
RMA’s numbers only reflect shipments by manufacturers, not over-the-counter sales. On that side of the ledger, things appear to be far worse. In their first-half financials, tire companies made note of the condition of the North American market, claiming sales declines between 1% and 8%. As I have shared with folks, anecdotal evidence tells me that retail tire sales could finish the year off between 7% and 12%!
A lot of this is regional in nature; some tire sales areas are more sensitive to economic impacts than others. Still, we have a serious problem.
How the rest of the year plays out cannot be predicted. Some economists are calling for the end of the world as we know it, others think things will at least level out by the end of the year. Look, oil prices have dropped sharply over the last two weeks, so who knows what will happen. Recession, inflation, depression – they are all still in the mix, and it is doubtful the first Tuesday in November will bring instant relief.
Dealers need to stay on top of the news, stay on top of their markets, and stay sharp.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Letters From the Field
August 6, 2008
I, too, was actually stunned by the poor handling of this problem (First Off, June 2008). When the ABC story aired I thought, “Where in the hell did they find this guy to protect our image.” He kept blaming England and Europe. I was actually embarrassed to be a tire dealer after that report.
Fortunately it aired at a time most of my customers are out for the summer months. The RMA needs to step up or shut up. I agree with your statement, we need one loud voice. Thanks and sorry for taking so long to reply. You and your staff have some of the best articles I've ever read.
We need a united voice, just not the one the RMA sent up against ABC. As info, our local KUTV station did a tire story on expiration date on tires. The reporter showed the DOT code and explained what it meant. His name is Bill Gephart and his report is on KUTV.com. He was actually quite fair.
I also noticed something that needs to be brought to everyone's attention. Are we so desperate to make a sale that we will put the wrong speed rated tires on a customer's car? All I ask is would the owner a tire store put four tires with the steel belts showing on his wife’s car and send her and kids on a cross country trip? Hell no! Would the manager do the same? I don't think so.
This is the same image we have faced for years, and we haven't gotten any smarter. I am livid when I see some tire store put the wrong tires on the car. If you do that and can sleep at night, you will make some attorney rich. May the Force be with you.
Speed ratings have everything to do with the performance of the car. Don't you think the manufacturer tested the car with those tires? Stop thinking that speed ratings mean nothing. They mean everything. If you just do the right thing we wouldn't be having this problems.
Keep on bringing these articles to the forefront, eventually we may win one. Thanks.
Mike Watchek
Owner
Big O Tires
South Ogden, UT
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Dear Future President…
August 5, 2008
…OK, we get it. While your fixation on proper tire inflation – and the use of tire gauges – as a means to improve gas mileage has been the most positive attention our industry has had in quite a while, please stop. Stop it now. Please.
We’re tired of this overly long campaign anyway, and now you’ve gone and double-parked the campaign buses right in the middle of our private party.
You see, unlike Paris Hilton, we really do think there is such a thing as too much, and too much attention worries us. Cause the next thing you know, Paris is actually going to try to use one of those tire gauge thingees and then where will we be?
Look, a workable and realistic energy policy is vital to this country’s future. No doubt. Cheney’s super secret one has obviously not worked, so we’re choking on it big time. And since our industry is co-dependent on oil and energy, well, we do have an interest.
But the tire industry has enough problems. We don’t need to be the center of attention in some BS spitting match over who has a serious energy plan. Does the phrase “cheesy gimmick” ring a bell with either of you? Well, that is what the whole tire gauge thing has turned into, according to national media.
So do us all a big favor and find some other mud to sling. The boys over in appliances are all hiding under the counter. I’m sure they’d like some of your campaign love.
[BTW: You’d of thought one of the tire companies would have tried to make hay with this focus on tire gauges and proper inflation. Nope. The first one in the pool was nitrogen system maker Air Products, which put out a news release in the subject of proper inflation today. Good heads up, guys.]
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
The Password Word Is: Excessive
Aug. 1, 2008
Wall Street, get this, was upset that ExxonMobil failed to reach its profit target for the second quarter. Because, apparently, $12 billion in net, net, net profit just isn’t enough.
So these accounting and speculation junkies had a hissy. Well, screw ‘em.
I saw a flack on ABC yesterday trying to explain that ExxonMobil’s record quarterly profit was not, in fact, excessive. He claimed that the ratio of net profit to sales was below that of countless other sectors, so ExxonMobil was actually hurt! Screw him, too.
I’m not sure what the true definition of “excessive” is anymore. When one company racks up more than $30 billion in net profits for a year – after all the bills and taxes have been paid – my brain says that is excessive. When that company’s entire industry pulls down more than $150 billion in net profits, again, I’m thinking excessive. Put those net profits against the high-flying costs for gas and diesel and the negative impact it has had at every level of the economy and, well, excessive.
But apparently I’m wrong.
The tire industry isn’t doing so great, in large part because of the growing costs of raw materials (derived from oil) and energy costs (again, that oil stuff) and the impact of a worsening global economy (driven, of course, by high oil and fuel prices). Excessive costs that cannot be offset by sales.
The auto industry just reported their quarterlies. Guess what? Excessive losses. $15 billion by GM alone.
Like to see what ExxonMobil’s profits might be without cars and tires. Doubt it would be excessive.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Will There Be Anything Else, Sir?
Aug. 1, 2008
Saw this beauty on the New York Daily News’ online blog. Thought I‘d share:
“John McCain is mocking Barack Obama as full of hot air on energy policy for saying people should inflate their tires properly. But if you ask auto experts, Obama may have a 2.8 billion-gallon point.
“First, though, a little perspective. Obama used the inflate tires line to mock McCain’s let’s-drill-more approach, which most experts say won’t produce any gasoline for 10 years. So McCain is now mocking the mockery as if that were Obama’s actual plan. Got it?
“Now to the point. The best estimate we’ve heard for a gas tax holiday (part of McCain’s plan) is that it would save people about $70 (Obama says less). But if you’ve got underinflated tires, said Dan Zielinski, of the Rubber Manufacturer’s Association, who pointed us to data from NHTSA and California’s AAA and federal data, you could save yourself about $200 by pumping up your wheels. Is that a bad idea?
“And if everyone did it, that’d be 2.8 billion gallons of gas. Nothing to sneeze at. And it’s free.”
Nice to see we can be of service, guys!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Square Peg, Round Hole?
July 31, 2008
If ever a company didn’t need more aggravation, Continental faces additional speculation that its truck tire business is up for bids.
Conti’s global truck tire group saw first half sales drop about $32 million year-over-year, and operating income for the group is off 45.9% vs. the first half of 2007. Its operating margin, a key figure for Conti managers, was 4.6% for the half, far off the company’s 10% goal. Comparatively speaking, Conti’s consumer tire and ContiTech divisions delivered margins of 13% and 12.3%, respectively.
Top Conti management had previously stated that under-achievers might be jettisoned. And, with all of its traction, stability, braking and telematics operations, it is no secret that Conti is fashioned around the car, not the over-the-road truck.
Now that it’s embroiled in a cash-burning battle for its independence, could the truck tire group, indeed, be on the blocks?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Speaking of a Crappy Economy…
July 31, 2008
You could only call it karma.
Someone stole the tires and wheels right off the 2005 Cadillac STS owned by Prince Georges Delegate Justin Ross. Right in his driveway. Left the car propped up on four cinder blocks, too.
Cops dusted the Caddy for prints, but the thieves apparently wore gloves. A car and an airbag were stolen nearby that same evening, according to police.
The chief of police said the upscale community has seen a rec ent increase in such crimes. “There has been a noticeable increase,” he said. “We think it might be connected to the economy. Some people are desperate for money.”
Of course Ross had a different take. “It is unacceptable that any Prince Georgian has to deal with the level of crime that we deal with. These are strong, middle-class neighborhoods that should not have to deal with this.”
Got a clue, Columbo?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Not Rocket Science
July 30, 2008
The news that Bridgestone/Firestone is keeping its tech center in Akron is certainly good news for the city and the state, both of which could use some good economic vibes, to be sure.
To say Murfreesboro, Tenn. – some 15 miles from BFS headquarters – had no chance to land BFS’ tech center and hundreds of jobs would be a bit of an understatement. It had a snowball’s chance in %$@&.
Getting a brand spanking new building is well deserved for one of Akron’s largest employers. After Goodyear got its headquarters deal done – keeping 3,500 jobs in Akron – it certainly was BFS’ turn.
But a new building to replace the century-old former Firestone world headquarters was a small part of the financial equation. The real dollar value of the deal comes in continuity.
The compounded cost of relocating about 600 jobs from Akron to middle Tennessee would be enormous. Not every employee would take the move, so besides paying to uproot families, BFS would face shelling out millions in finding, relocating and training hundreds of new hires.
Second, the loss of those veteran employees who would not make the move – the institutional knowledge that would be lost – is incalculable. You can’t just replace experienced people and not expect problems. I was there when Bridgestone USA moved from Southern California to Nashville, with only about 20% of the staff making the move. Dozens of new faces struggled in their new jobs, costing the company months in momentum and more.
As Bridgestone Americas Holding chairman and CEO Mark Emkes rightly pointed out yesterday, his company employs more people in Akron than it does at its headquarters in Nashville. Translated: Firestone and Bridgestone/Firestone have been an important part of Akron’s fabric for more than 100 years. Those bonds are very hard to break, if not impossible.
And Emkes heavily praised the efforts of the Akron team, reminding everyone that BFS’ tires originate Akron.
BFS (and Goodyear, too) is smart enough to know you can stack bricks anywhere – and get a good deal to do so. But you cannot find good, seasoned employees – especially scientists and engineers – anywhere.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Super Special Secrets
July 30, 2008
You’d think this job would be easier. This is the 21st century, the days of high-speed info exchange, instant global sharing. It is, by result, the days of doing more with less.
When I was a young puppy in this industry, tire company price increases were closely held state secrets. One had to tap into the right person within companies to get the scoop. And that meant dozens of phone calls and endless rounds of phone tag.
Today, with blistering raw material costs, everyone is raising prices on a pretty regular schedule. We all know that.
Yet, some players in this biz still want to play Secret Agent. I get whispered phone calls, hand scrawled notes and odd responses to inquiries I never placed. Some don’t even bother sharing the information.
And this is not a “publicly traded company” thing. Nearly all are traded on one stock market or another; those traded on these shores follow no pattern. Some send out releases, others do not. Head scratcher to be sure.
Of course, MOST tiremakers take the time to put out a press release explaining their increases. That is straight forward and straight up. What is boggling is when one division within a company will tell us about its increase, while the other wants to resort to, let’s say, “unofficial official communications.” Can’t even have one policy in the same building?
Frankly, it is irritating, wholly unnecessary and accomplishes nothing. Everyone in this industry knows what is going on, and sharing price increase info does not break any anti-trust laws I know of (hear that you attorneys?). Come clean, folks.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Commuter Blues
July 29, 2008
Americans and Canadian are driving less, a lot less. Blazing high fuel costs have put a real crimp in miles driven thus far this year. Meanwhile, most public transportation systems are reporting higher ridership as gas-price squeezed drivers drop the keys and grab a seat.
Latest government stats say that since November last, Americans have shaved 40 billion miles from their routines, a huge number. In May alone, the miles we drove fell off 9.6 billion vs. May 2007, the third largest drop the Department of Transportation has ever seen.
While that may be better for the environment, it isn’t helping the wallet. First, even with increased ridership, public transport still has fuel bills to pay – and they aren’t getting smaller. Many have instituted fare increases, offsetting some of what ex-commuters were saving.
Second, less miles means less gas taxes, which equates to a troublesome decrease in funds available for infrastructure improvements. That means potholes aren’t getting fixed, roads aren’t being repaved, bridges aren’t being repaired and new roadways are on hold. Not good news because all of that will have to be paid for some how and some day.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
More Reader Notes
June 29, 2008
I haven’t even finished reading your article (First Off, June 2008) and I’m compelled to write and thank you. Your insight and objectivity on this issue are certainly welcomed by me and, I’m sure, many other tire dealers.
I, too, was upset by the ABC 20/20 piece and its obvious (to us) sensationalistic approach. But after giving it much thought and discussion with my store managers I began to see that we would all be better off by taking some positive action to deal with public concerns. We will be putting some new policies in place at Frisby Tire that will address this issue.
Don Frisby
President
Frisby Tire Co.
Ottawa, Ontario
(Note: Frisby is vice president of Ontario Tire Dealers Association, and tells me that he plans to include this subject as an agenda item in September.)
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Brickyard Blues
June 29, 2008
If you want to know why we don’t spill a lot of ink covering tire-company racing activities, look no further than this past weekend’s Brickyard 400.
This morning my e-mail was jammed with various stories and columns regarding the “tire debacle” at the Indianapolis Motor Speedway.
Race tires are a unique product, and many factors (often outside of the control of the tiremaker) influence their performance. When they work, no one says a word. When they don’t…
It’s the why the tires “don’t work” that is most troublesome for us. I have every confidence Goodyear (the lone tire supplier to NASCAR) didn’t want reams of bad press, so I’m sure they built the best tires they could. I’m also sure that is the same with every other tire company that races on weekends.
We’re not race car, race tire or race track engineers, therefore providing any valuable – or even viable – information is impossible. Best we stay out of the way lest we inadvertently provide incorrect information. If you really want to know the details, I’m sure you can find a resource.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
All-American Disappointment
June 23, 2008
The All-American Soap Box Derby runs this weekend at Derby Downs in Akron.
For those of you too young to remember, the Soap Box Derby program – also know as the Gravity Grand Prix – was founded decades ago as a great father-child summer project. This was before video games and today’s so-called “extreme” sports – pretty much glorified bike riding and skateboarding.
This year 600 racers and their carefully crafted motorless race cars showed up in Akron for the world finals – 600 kids from all over the world. This weekend, world champions will be crowned in various age and car divisions.
So who hasn’t show up? Any kind of committed national sponsor.
Once upon a day, Chevy was the program’s national sponsor for many, many years. So, too, were some tire companies, but all short term. Today, the program struggles to make ends meet, despite the countless thousands of volunteer hours that keep the program on track. It lacks any kind of national sponsor, and lost its limited national exposure when telecasts of the finals were discontinued a few years ago. Without a major supporter, the Derby program has a hard time getting enough minor sponsor support.
The cost to be a national sponsor? Well, I dare say it would be a heck of a lot less than some of the sponsorship activities we see companies get involved in. For a tire company it should be a no-brainer, especially if the sponsorship was leveraged and helped bring store traffic to its dealers. Plus, it would deliver a positive message to young people looking for something meaningful and positive to do.
Anyone?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Nothing Positive Here
June 23, 2008
Been watching the Conti takeover situation carefully, and I don’t see this ending well.
Frankly, any time a substantially smaller company makes a run at a far larger firm, bad things happen. We’ve seen it over and over again. When that takeover attempt can only be described as “hostile,” worse things happen.
Ball-bearing maker Schaeffler Group, one-third the size of Continental AG, saw weakness and is trying to exploit it. Conti, burdened by billions in loans it took to acquire Siemens VDO, saw the market go away from it as global auto sales plummeted. That left Conti, while financially healthy, less than secure in its valuation.
For whatever reason, certainly not one that has anything to do with good business, the privately held Schaeffler Group decided to play the black knight. Stock traders, who are in it for the money, will follow along without a care as to the result.
What will Schaeffler do if it wins its bid? Well, as it will then be burdened by Conti’s debt load and will have limited ability to raise additional funding and will need pretty much a whole new top management team, I suspect Conti will be parsed out in chunks, with Schaeffler keeping what it sees as the most valuable. The tire group will not be one of those, to be sure.
And that is too, too bad.
The situation is somewhat reminiscent of the late James Goldsmith’s greenmail run at Goodyear back in 1986. The tiremaker went debt-heavy trying to fend the Brit off, and while it eventually won the battle it was badly damaged in the process. Goldsmith went away, millions the richer. Goodyear barely hung on, and spent the better part of the next 20 years trying to recover.
What does Schaeffler bring to the Conti table? Nothing. What will Schaeffler lose in the bid? Nothing.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Koppel on China
June 22, 2008
Just finished watching Ted Koppel’s extensive four-part report “The People’s Republic of Capitalism” that aired on Discovery channel earlier this month. Love that DVR!
Overall, the series was very well done, thanks to the extensive access Koppel and his crew had across China. While occasionally repetitive, the series took a close look at China’s state-driven and lightning-fast economic growth from various angles, including how the country’s single-sighted focus on economic growth impacts everyone from the rich to the poor, trade partners to companies, even those who are trying to catch the gravy train but are falling a few steps short.
For someone fairly unfamiliar with China, the four-hour show offered a solid glimpse at what is happening there. What it is not – best of all – is an exercise in bashing China and blaming it for the loss of industry here and elsewhere in the world.
To be sure, China has a lot of problems, and, as Koppel well pointed out, many of those have taken a back seat to the government’s laser focus on growth. China’s theory – and one certainly established by the histories of Western states – is that the other issues will resolve themselves over time as the massive economic engine continues to churn.
Perhaps, but there can be no doubt that China’s wide-spread government and private-sector corruption, the broadening gap between rich (and I mean filthy rich) and the poor (like those trying to live on $600 per year), its worker safety record, and the worst air, land and water pollution this world has ever seen are far more than little inconveniences that unabashed capitalism will some how disappear.
Friendly reminder: Capitalism didn’t make our environment cleaner, government did.
Politics and government are what they are, so it was a shame that Koppel failed to take the time to fully understand the cultural, logical and psychological support PRC’s government has. Yes it is “communist,” but certainly not the same brand of communism that made our parents and grandparents cringe.
Koppel’s is the same failing many Americans have when we consider other parts of the world: “democracy” is a one-size-fits-all solution. One Chinese businessman was astute enough to call Koppel out when, during a discussion of corruption, he asked: “Don’t you have corrupt politicians and businessmen? Don’t people bribe your inspectors?”
It is easy to forget that China has never, ever had any form of political freedom. Whether ruled by emperors or power-hungry revolutionaries, the Chinese have never enjoyed so much as one second of true political freedom. As a country and society, China – for as ancient as it is – is not mature enough yet to handle the responsibilities attached to the vast freedoms we often take for granted.
And the Chinese get it, even if Koppel didn’t. Unlike the not-so-distant past, today’s Chinese citizen enjoys a great deal of individual freedom, and sees government for what it is. As one young man in Koppel’s report said, “I don’t love my government, but I trust my government.”
On a recent trip to China, I had a lengthy discussion with a local about China’s government and its relationship with citizens. “How would you manage a company with 1.3 billion employees?” Good point. Not an easy task for any one person or any one form of government or even the best run corporation.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Bailing Out
June 21, 2008
Word that Nicole Nason plans to leave her post as head of NHTSA at the end of this month should come as no surprise. She, like others, will be leaping into surely lucrative private sector jobs as the Lame Duck Express nears its inevitable destination next January.
Nason, on the job barely two years, can be noted for one thing: During her brief tenure, she managed to not screw anything else up – primarily, of course, because she didn’t do anything. Too bad she wasn’t around when NHTSA developed its still-stupid TPMS regulations.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Take A Bow
July 18, 2008
Ever want to feel good about this industry’s place in the scheme of things?
Our sister magazine Counterman recently published its annual Top 100 Automotive Aftermarket Suppliers list, developed in conjunction with AASA.
Tire manufacturers – specifically Bridgestone/Firestone, Goodyear, Michelin, Continental Tire North America and Cooper held five of the top 10 positions. BFS, Goodyear and Michelin, in fact, were among the top five; oil giants Shell and Exxon held the other two slots among the top five.
The gap (in 2007 sales dollars) between first-place BFS and 10th place Federal-Mogul was an eye-popping $12.6 billion. That’s billion with a B.
Thought you’d like to know just how important we really are.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
The Land of Gobbledygook
July 17, 2008
A media friend of mine sent this along to me a couple of years ago. Written by Gene Weingarten, it first appeared in the Washington Post in May 2007. I hereby dedicate this post to all of my friends in PR.
Read It and Lacrimate: Implementing a parameter-based verbal interface with the professionally periphrastic
From time to time, I am cruelly slandered by members of the public relations industry, who accuse me of writing unfairly about their profession. Nothing could be further from the truth. I love PR professionals. They're a hoot, because they are such pathetic, desperate dillweeds.
I am right now looking at something called Your Market Wire Newsletter, a package of financial "news" that arrives, unbidden, in journalists' inboxes every week. It is filled with incomprehensibly written press releases on subjects of even less interest than can be found in a non-interest-bearing fiduciary debenture with negative yield. That's exactly how these releases read, only they are less scintillating and more crammed with jargon. One word never suffices when 16 can do the job; big, important-sounding words are better than small, clear ones. Plans are "initiatives." They are not begun; they are "implemented." These releases could sedate an enraged rhinoceros.
Here's a release from MasterCard (headquartered, interestingly, in Purchase, N.Y.) announcing an incremental change in one of its programs so as to maximize "categories of spend" by "scoring cardholder activity against specific parameters using a rules-based engine."
In another release, a company called HQ Sustainable Maritime Industries Inc. identifies itself as "a leader in toxin-free integrated aquaculture and aquatic product processing" that "practices cooperative sustainable aquaculture, using nutraceutically enriched feeds."
A release from a company called Clarkston Consulting breathlessly discloses that Clarkston "has been selected as the SAP implementation partner for Bumble Bee Foods Inc., North America's leading marketer of shelf-stable protein."
"Shelf-stable protein" is apparently "canned fish." We are never actually told what SAP is.
So I decided to call the PR people who issued these releases and tell them that The Washington Post wants to write a big piece about their little story. (To PR people, in terms of arousal, this is like mainlining pheromones.) Then I would tell them that I just had one teensy little question to ask, and once they answered it, we'd be good to go. The question would be written like their press releases. When they failed to understand me, I'd say, "Well, too bad. I guess I just can't do the story."
I started with Angelia Jackson, the PR person for Clarkston.
Me: Vis-a-vis the implementation of SAP technology, what is the source-related derivation of the acronymically based identifier of the service entity, and how does it operate so as to enhance production and profitability or, alternatively, improve the business model of the shelf-stable protein supplier of which Clarkston is now a client?
Angelia: So you're asking me what SAP is an acronym for and how it helps Bumble Bee?
Me:
Angelia: Hello?
Me: You understood me?
Angelia: Sure, it was very clear.
I didn't know what to say. I had no backup plan! So I thanked her for her time and next tried Meir Kahtan, representing MasterCard.
Me: Given the degree to which the deployment of incentives-based purchasing paradigms leads to the accretion of goods and the contracting of services by consumers in patterns and to extents that may prove inimical to the sorts of budgetarily sagacious decision-making vis-a-vis the prudent marshaling of available resources and or investment strategies, might your new program, through positive reinforcement of negatively nuanced patterns of behavior, contribute to economic nonviability on a user-based scale?
Meir: That's a great question!
Me: It is? What IS the question?
Meir: You're asking if we are going to spend ourselves silly, right?
Me: Uh, right.
I felt as though I had entered an alternate reality. And, in a way, I had. I was lost in the land of the Gobbledygooks, trapped among the morbidly verbose, and I was speaking their language. By the time I got to my third call, I was a pathetic, desperate dillweed myself. And angry. I took it out on Dan Stepanek, PR guy for HQ Sustainable Maritime Industries.
Me: First, your press release identifies your chief executive as "Norbert Sporns." What is his real name?
Dan: Norbert Sporns.
Me: If you say so. Can you semiotically explain, interpret or otherwise elucidate from a hermeneutic standpoint, vis-a-vis the terminology in this press release relating to toxin-free integrated aquaculture and aquatic product processing, what actions, processes or industrial practices are performed upon what nature of product so as to encompass the aforementioned terminology as it relates to your company?
Dan: We provide frozen, toxin-free tilapia farmed in ponds in China.
Me:
Dan: Hello?
Me: You got that?
Dan: Sure.
Me:
Dan: So, do you want to talk to Norbert?
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Readers Write
July 17, 2008
Read your Fuzzy Fix (TR, March 2008) piece and how it hits home with me and my particular situation.
I own and operate a small, five-employee tire business in eastern Kentucky. The business caters solely to the underground coal mining industry in the region. Over the last 30 years I have seen all the majors fall out of the 10- to 20-inch diameter tire market with the exception of Specialty Tires of America.
My major supplier of mining tires for the last seven years has been Alpha Tire Systems with China-produced products. I have a major problem with this anti-dumping situation as some of the product types and designs that I am currently getting from China has never been produced in America. For the last 20 years, I pleaded with every U.S manufacturer to produce these type of products only to be rejected.
So I ask Mr. Taylor and his followers, how are you going to help me when you show no interest in producing the type of tires that my customers have become accustomed to for the last eight to 10 years?
Brent Wagner
Pikeville Mining Tire Sales Inc.
Pikeville, KY
Cops & Rubber
June 16, 2008
Sometimes you just can’t make stuff up.
The article about tires below was sent to me by a friend, and comes from Officer.com, the Web site of a trade magazine serving police departments across the U.S. The article, which discusses tire inflation pressure recommendations for police cars, was first published in 2005.
I would be interested in your take on the recommendations made here. Send them to me at jsmith@babcox.com.
The link for this article is: http://www.officer.com/article/article.jsp?siteSection=19&id=27281
Driving Under Pressure: Proper Tire Pressure Could Save Your Life
By: SGT. DAVE STORTON EVOC Contributor Officer.com
How many officers check the tire pressure on their patrol car on a regular basis? We all seem to be great at checking that the lights and siren work, because the time to find out they don’t work is not when you get a Code 3 call. Likewise, the time to find out your tire pressure is too low is not when you are in a pursuit and trying to take a corner at high speed.
What is proper pressure?
The proper tire pressure for the Police Crown Victoria is 44 psi. If you look on the sidewall of the tire, you will see that it lists 44 psi max pressure. Regardless of what vehicle you have, use the maximum pressure listed on the sidewall. Higher pressure results in better performance, decreased tire wear, and it lessens your chance of hydroplaning at a given speed. This number on the sidewall lists “the maximum amount of pressure you should ever put in the tire under normal driving conditions.” Pursuits and Code 3 responses are not “normal driving conditions.” Many agencies maintain tire pressure at 35 psi since this is what is listed in the owner’s manual and on the door placard. The reason the owner’s manual lists 35 psi is because we get the same manual as the civilian version of the Crown Victoria. The police version, however, is fully loaded with communications equipment, a cage, and your gear. You are not looking for a soft and cushy ride, you want performance.
Myths about pressure
Let’s put to rest some common misconceptions. The tires will not balloon out creating a peak in the center portion of the tread when tire pressure is above 35 psi. There is a steel belt that prevents this from happening. Also, you are not overstressing the tire with higher pressure, and the tire will not be forced off the rim with higher pressure. The picture above is Bobby Ore of Bobby Ore Motorsports driving a Ford Ranger on two wheels. The tires on the left side have 100 psi in them, and they happen to be tires and rims from a 1999 Crown Victoria! This is a dramatic example of how pressure holds the tire in shape, and how much stress a tire can handle.
Performance
If you were able to watch a tire as it travels across the ground at high speed, you would see that it deflects to one side during cornering. The faster you are going through a corner, the more tire deflection you get. As the tire deflects over onto the sidewall, you get less traction and more of a tendency to understeer or oversteer. This could spell disaster when negotiating a corner at high speed during a pursuit or a Code 3 run. Higher pressure keeps the tire from deflecting onto the sidewall as much, which keeps more of the treaded portion on the road.
A good demonstration for EVOC instructors is to have students drive a high-speed course in a vehicle with 32 to 35 psi. Then have them run the same course with 44 to 50 psi in the tires. The student will experience a marked difference in performance. Having officers experience this difference in vehicle performance is much more effective than just telling them to check their tire pressure.
Hydroplaning
When a tire rolls across a road covered with water, the tire tread channels water away so the rubber remains in contact with the road. The factors that affect hydroplaning are speed, and water depth. Conventional wisdom says that vehicles will hydroplane in as little as 1/16th of an inch of water. Not so coincidentally, legal tread depth is 1/16th of an inch.
Tire manufactures and the Association of Law Enforcement Emergency Response Trainers International (ALERT) have shown that tires have more of a tendency to hydroplane when pressure is low. This happens because the tire footprint (the portion of the tire actually in contact with the road) is larger. For those of you who water ski, think of which is easier to get up on: a fat ski or a skinny ski. More tire surface in contact with the water makes it easier to hydroplane, just as it is easier to water ski on a fat ski. Also, a soft tire can be pushed in more by the pressure of the water on the center portion of the tread. This results in less rubber in contact with the road.
Tire wear
Much better tire wear results from maintaining proper pressure. Tires with lower pressure will wear off the outside of the tread faster from the deflection of the tire during cornering, and the tires will heat up more from increased road friction. This is one of the factors that caused the failure of a certain brand of tires on Ford Explorers some years ago. In 1999 the San Jose Police Department realized a significant cost savings by increasing the pressure in the training fleet to 50 psi. They soon followed up by increasing the pressure in the patrol fleet to 44 psi. For liability reasons, most agencies are reluctant to exceed the maximum pressure listed on the tire for actual patrol vehicles, but they reap the cost saving when going to 50 psi on training vehicles.
Next time you inspect your vehicle, make sure you check your tire pressure since your ability to performance drive is significantly affected by it. You are not driving to the store to get a loaf of bread! You may be called upon to chase a dangerous criminal or respond to assist another officer in trouble. You don’t wonder whether or not your gun is loaded before you hit the street; don’t’ wonder whether your tire pressure is correct once the pursuit starts. Check your tires routinely, just as you do with all other critical equipment.
Sgt. Dave Storton is the Director of the San Jose Police Academy, and he holds a Master's Degree in Adult Education. He is the lead instructor for the Emergency Vehicle Operations Course (EVOC) at the San Jose Police Academy, and is a lead instructor for the local regional academy. He teaches EVOC instructor courses, advanced EVOC instructor courses, off road EVOC, counter-terrorist / dignitary protection driving, and motion picture stunt driving. Dave has trained over 3,500 drivers.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Interpreters Wanted
July 15, 2008
Here’s a great opportunity for recent college grads looking for an important job and world travel.
While enjoying lunch on a recent flight back from China on China Eastern Airlines, I reached for a four-inch long packet on the tray that by all appearances was a wet nap for post-meal use. The two smiling cartoon faces on the blue and green package assured me that I would be quite happy using the product.
And then I read the only English words on the packet.
“Wet Turban Needless Wash.”
“Chinglish,” as it was described to me, has become a serious issue for Chinese companies trying to do business in the U.S. Chinglish, the inadvertent hacking of common English, is why a simple wet nap was ill-depicted as “needless” and as a “turban.” Top-flight companies there are frustrated by the problem because they feel such makes them look, well, less professional.
The root of the problem is that Chinese alphabetic characters often have multiple (and I mean multiple) meanings, all dependant on any number of things, such as the word’s position in a sentence or, as was the case here, the actual subject of the sentence. Chinese companies, in good faith, hire people to convert Chinese into English. These are often Chinese who have learned to speak English, but don’t really understand English – a huge difference when it comes to common product names.
Thus, what should have read “Wet Face Wash Cloth” became “Wet Turban Needless Wash.”
Seems they need another layer of interpreter there, one who can put the proper polish on the English phrases.
I am old enough to remember similar translation issues with Japanese companies and even those from South Korea, so I’m pretty sure Chinglish will be a thing of the past before too long.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Growing Companies Big Deal
July 14, 2008
Perhaps more than a little lost at the tail end of a July 7 news item we posted was word that Miami-based South Dade Automotive was ranked 181 in Hispanic Business magazine’s annual rundown of the Top 500 Hispanic business in the U.S. CEO Jorge Pola and his team have done a tremendous job building their business, and in being an integral part of the local community.
This honor is a pretty big deal for the company, an ACCC member, and well it should be. Any time our industry is positively recognized by a notable national publication, it is a big deal.
The magazine also listed the Top 50 Exporters for 2008, which included four tire firms: South Dade Automotive, Tire Group International, Tire Masters International and Lucy’s Tire Inc. Congrats to all!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Foxes in the Hen House
June 11, 2008
First it was our own RMA inviting car dealers to participate in National Tire Safety Week. Now SEMA has invited the National Automobile Dealers Association to come on down to Las Vegas.
SEMA plans “a first-of-its-kind, comprehensive ‘Dealer Day’ program designed exclusively for NADA members at the 2008 SEMA Show,” according to aSEMA release.
In a nutshell, SEMA is inviting car dealers to see all of the cool things we in the aftermarket do so that they can do them, too.
I guess it would be different if the NADA attendees brought something to share, like data on repair procedures, TPMS, odd-ball tire/wheel sizes, instruction on how to integrate aftermarket electronics, selling and installing accessories and the such – all ofthe things thousands of independent businesses have been built upon.
But all the car dealers will be bringing are cameras and notepads.
SEMA feels this new relationship will give its core members – the independents – new opportunities to gain business from car dealers.
NADA president Phil Brady, though, seems to have another idea: “At a time when many dealers are looking for new ways to generate additional revenue and sales, this program will provide dealers with new ideas and strategies to help improve their bottom-line performance by creating profitable accessory programs," he said.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
With Neighborhood Watches Like These…
June 11, 2008
It’s a dangerous world out there, and now apparently there is no one left to trust.
Laura Shuttleworth and her husband Matthew Swarney live in quiet suburb of Toronto. A well-to-do suburb, with million-dollar homes. And it was quiet until someone took to slashing their tires. Over the past 18 months, the family SUV had been attacked some 30 times. That’s 30 new SUV tires in a year and a half.
Nobody could figure out who the culprit was. Not the neighbors, whose vehicles were never touched, nor the police, or even the Neighborhood Watch.
So the couple hired a PI, who set up a camera and recorded hours of tape.
Finally, the perp returned and was videoed in action. On July 2, police arrested 70-year-old Albert Fulton on numerous tire assault-related charges.
Now here’s the funny part. Good old Albert is coordinator of the Wychwood Park Neighborhood Watch program. Seems Albert had a bone to pick with the victims over parking in the street, which apparently is some sort of unwritten rule, but certainly not law.
Now Albert has a restraining order, which will prevent him rom watching any neighbors.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Sign Me Up
June 10, 2008
American Tire Corp., the ubiquitous OTR tire “manufacturer” that pumps out “press releases” at a near record rate, is still hot on buying Goodyear’s entire North American OTR tire business. According to its latest missive, ATC said it would hold information events for its employees, and has invited a number of senior Goodyear experts to speak at these.
ATC said it will hold these information events “on a regular basis until its purchase of Goodyear's Topeka OTR tire plant is finally realized.”
Not only that, but ATC plans to establish a negotiating team in an effort to acquire the Akron giant’s OTR biz.That may be one lonely negotiating table; to be kind, I would not expect Goodyear to attend.
Still waiting for my invitation for the groundbreaking for ATC’s $500 million radial OTR tire plant, located in a secret place somewhere in Washington state. Oddly, though, my friends on the business desk of the Seattle Post-Intelligencer, the state’s largest newspaper, have not heard of such a massive project. Apparently they just haven’t gotten any of the press releases.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
That Bang You Heard was the Sound of Money
July 9, 2008
NBC recently reported that the number of unrepaired potholes around theU.S. is increasing, primarily because of the rising cost of oil. NBC estimates that just 33% of potholes are getting proper attention.
The cost of the asphalt has gone up 70% over the last five years, and diesel fuel (which powers paving equipment) is up 63% this year alone. Then you can add revenue lost from gas taxes (which fun road work) dueto decreased driving, and tax dollars lost by local governments due to declines in employment, etc.
Could be a great time to be a tire dealer…and one who can get wheels...if you can survive this economy.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Americans Really Downsizing
July 9, 2008
The Federal Highway Administration reported that Americans drove 1.4 billion miles less in April than they did the year prior, while there was a noted surge in the use of public transport.
Through April, Americans have cut some 20 billion miles from their past behavior, which projects out to a 60 billion mile decrease for the entire year.
“We’re burning less fuel as energy costs change driving patterns, steer people toward more fuel-efficient vehicles and encourage more to use transit," said the ever vigilant Transportation Secretary Mary Peters said. "Which is exactly why we need a more effective funding source than the gas tax."
More interesting: Sales data from the FHA says midsize SUV sales through May were off 38%vs. the first five months of 2007, while sales of cars reached 57% ofall personal vehicle sales.
The times, they are a changin’.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Growing Companies Big Deal
July 14, 2008
Perhaps more than a little lost at the tail end of a July 7 news item we posted was word that Miami-based South Dade Automotive was ranked 181 in Hispanic Business magazine’s annual rundown of the Top 500 Hispanic business in the U.S. CEO Jorge Pola and his team have done a tremendous job building their business, and in being an integral part of the local community.
This honor is a pretty big deal for the company, an ACCC member, and well it should be. Any time our industry is positively recognized by a notable national publication, it is a big deal.
The magazine also listed the Top 50 Exporters for 2008, which included four tire firms: South Dade Automotive, Tire Group International, Tire Masters International and Lucy’s Tire Inc. Congrats to all!
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Time For Passenger Retreads?
July 8, 2008
A few things crossed my desk recently indicating that passenger tire retreading in North America may be up for a rebirth.
Obviously, ever rising new tire and fuel pump prices are at play here. But so is the current “Green” trend.
A recent study in Europe concluded that retreaded tires produce significantly less carbon emissions than new tires. The study showed that the manufacture of a 17.5-inch new tire produces 86.9 kg of CO2 emissions vs. 60.5 kg of CO2 for an equivalent retread, a saving of 26.4 kg or a 30% reduction in emissions.
Across the other pond, Bridgestone Corp. is leveraging its Bandag subsidiary to open a series of passenger tire retread shops/retail stores in Japan. Twenty such shops are planned in the test marketing effort.
Old friend Harvey Brodsky, head of TRIB, weighed in on the subject in one of his recent newsletters:
“Although many readers of this newsletter may think that I have lost my mind, after much thought I seriously believe that we may see a resurgence of passenger retreading in North America and other parts of the world.
“I don’t expect to see 13-inch and other small size tires being retreaded, but the larger size tires, along with light truck and high performance tires are perfect candidates, PROVIDING the casings are suitable for another useful life.
“The timing couldn’t be better since the Green movement is finally being taken seriously by public sector fleets along with a large – and growing – segment of the motoring public.
“I have been invited to make a presentation about passenger retreading at an upcoming conference in September.
“This could be a very interesting growth opportunity for our industry.
“I’ve been driving on retreads for over 30 years and back when I first got into the retread industry, one out of every five replacement tires sold in the U.S. was a retread!
“I’d really like to hear from readers regarding whether you think it is a good or bad idea, along with your reasons.”
So would I. Send your comments to Harvey at info@retread.org. Hit me up at jsmith@babcox.com.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Not on the Nitro Bandwagon
July 8, 2008
Jim,
Your pushing of the N2 program appears to be driven by advertising dollars. This whole thing is a sham propagated by equipment manufacturers.
In our neck of the woods, N2 is already being given away for free with a tire purchase. We use the Consumer Reports article to show that N2 is not the value that should make your tires more expensive. (What is better, air or dry air?)
I'm afraid that the day of the tire purchase add-ons has come and gone. Now most of us are just happy to get the sale and hope for some car repair add-on!
I have been reading your magazine for most of my career (38 years) and continue to enjoy most of it. Thanks.
Dave Hamad
Columbus, Ohio
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Your 15 Minutes Are Finally Up, Pal
July 7, 2008
Andrew Firestone finally got hitched. Finally. To a Serbian model no less.
You’ll remember Andrew from his ill-fated turn on ABC’s The Bachelor some five years ago. And since then, his name has popped up more often than most people change socks. Most notably in this industry, where he holds the distinction of being Harvey Firestone’s great, grandson.
Of course, Andrew is to the tire industry as I am to nuclear physics. Maybe now he can settle down, have a few kids and go back to fussing with his dad’s wine business.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Market Blues
June 20, 2008
Lost of talk these days about how the “market” is down. Most people look at tire shipment figures, which are, in my humble view, not really indicative of the real market, just the production/shipping side of the ledger. Still, we’re looking at consumer tire shipments being down between 5% and 7% through the first half of the year.
Our Business Barometer feature each month shows a slightly different tale. Based on real retail activity – not shipments and certainly not attitudes – retail tire sales have been in a nosedive since January, save for brief respite in April when sales showed a year-to-year bounce of about 1%.
Some dealers are having decent years, others are struggling mightily. Anecdotal evidence strongly suggests the consumer tire market at retail is off around 12% vs. 2007…and last year was NOT a great one.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Green Wave East
June 19, 2008
Couple of interesting things I learned during my recent trip to China. ‘Green’ is the in thing there, but it’s not going as well as, well, you might think.
The government recently banned the use of plastic shopping bags less than 0.025mm thick, about what our plastic grocery bags run. Shops are no longer allowed to simply give them to customers at checkout. Of course, thicker bags are allowed…and (you’ll love this) shopkeepers still have the option of selling the banned bags to customers for pennies.
The so-called “bag belt” in Guangdong, where most plastic shopping bags are produced, faces massive layoffs.
A two-year-old ban on the use of gasoline in mopeds ran into a bit of a speed bump. Next to bicycles, mopeds are the most commonly used form of in-town transport in China, and the gas ban was designed to reduced air pollution (as if millions of mopeds were the whole air pollution problem there).
Owners had to convert to LPG, requiring a small expense for a conversion kit. But recent shortages of LPG at filling stations have caused a good many to break the law and unconvert – switching back to gasoline rather than walking.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Dangerous Pursuits
June 18, 2008
Anyone who says they drive in China is either a native or plum nuts. Traffic congestion in the city is bad enough, but driving habits make it worse…at least for us Westerners who don’t quite understand the delicate balance of natural forces involved.
Lane straddling is the norm as it leaves the driver two options to go based on which lane is moving faster. Line up four or five straddlers and you've got an interesting problem.
Unexplained braking and slalom-style lane changes are all part of the experience. Side mirrors are only for decoration, it seems, as overtaking often involves nearly clipping the front fender of the slower vehicle. We're talking fractions of an inch here. City intersections are a free-for-all. Pedestrians cross wherever (and whenever) they choose, usually without even looking at oncoming traffic. Same with bikes, scooters and mopeds.
In rural Rugao, where there is far less car and truck traffic, driving means sharing beautiful boulevard-style streets with a combination of old farm wagons, bikes, foot traffic, mopeds, overloaded trucks and even motorcycles – all of which could be in the road at any time.
Driving the open freeways is actually quite nice, save for the sudden hard braking that occurs when the driver spots an active traffic camera just waiting to issue a speeding citation.
You wanna scare a teenage driver straight? Put them in a cab in Shanghai.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
More Reader Notes
June 17, 2008
Thanks for Highlight
Thank you so much for the outstanding article on Atlantic Tire & Service displayed in May’s publication of Tire Review. It really meant a lot to us to be recognized not only for our most recent award, but also for your taking the time to do an in depth story on our business.
On behalf of Anthony Blackman and myself, we sincerely thank you for spotlighting Atlantic Tire & Service in your highly respected magazine.
Amy Haverland Alexander
Chief Operating Officer
Atlantic Tire & Service
Raleigh, N.C.
No Nitro Fan Here
Come on Mr. Smith. Regarding nitrogen usage in automotive tires, the undisputed, scientifically proven advantages of nitrogen are so minuscule that there is no real advantage for the consumer. This is just another example of a "wallet flush." Or better worded, it is another opportunity to rip off the consumer.
How long have we been fighting to be respected in this industry? Eventually consumers will get wise, and nitrogen use in tires will do nothing more than give people another reason to not trust us. I find it very upsetting that a magazine as established and respected as yours would even allow such advertisements. The BS meter was pegging out as I read the quotes from the different nitrogen machine manufacturers in your article. I guess it's all just about money.
Jim Hackney
Owner
Auto Diagnosis
Amherst, Ohio
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Grey Market Blues
June 17, 2008
Thanks to the U.S. economy and the strong euro, the old grey market has been working overtime, with U.S. distributors selling branded product to contacts in Europe. Believe me, tiremakers hate grey marketing – a lot.
I have heard from more than a few people close to the action that some tiremakers are considering removing European marks from tires intended for sale in North America, making it harder for grey marketers to have a market. And you may see some OE export price adjustments made to curb profiteering in that segment.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Readers Respond
June 11, 2008
We also attended the Reifen show last month in Essen, Germany. I was looking on the Internet for some evaluation/description of the show and found your blog.
Actually I didn't Google "Reifen 2008 in media.” I used the "why Bridgestone didn't attend Reifen 2008." I'm curious about this because, from our understanding, Bridgestone, Michelin and Goodyear are major brands in tire industry. And Reifen is supposed to be the "No.1 tire show," from the organizer's description.
So I'm wondering why Bridgestone was absent for this tire party? I noticed there were lots of reports about the deal between Bridgestone and Toyo, so is there any connecting about these two things?
I like to read your tire blog and I'd like to share information about Chinese OTR tire development in the future.
Benjamin Zhang
Marketing Specialist
Techking Tires Ltd.
China
I'm giving a seminar on tread depth issues at the Automechanika show in Toronto in June. In reference to your February column “For Gatlin's Sake," (a great column incidentally) I would correct one item, to wit: Canada's tread depth law is 1.5 mm, which is less than 2/32-inch by a hair. But a hair is a hair when it comes to stopping on wet roads (2/32-inch is 1.6mm).
This government mandated depth is just not giving motorists the margins of safety required when stopping quickly on wet roads.
Another consideration that is seldom mentioned is that tread depth should be measured in all areas across the tread – not just the middle grooves as some pundits and legislations suggest. Tires could show 2/32-inch in the middle groove, be completely worn on both shoulders and be considered safe by some to drive on. Go figure!
Paul Hyatt
President
Superior Tire & Auto
Toronto
Earthquake Shakes More Than Land
June 9, 2008
Just got back from a week in China visiting with a few manufacturers there.
The biggest news in China was not the preparations for the upcoming Olympics. The news on everyone’s lips and on everyone’s minds there was the massive earthquake that rocked Sichuan Province on May 12…and the 400+ aftershocks that have hit there area since.
We cannot fathom a natural disaster of that magnitude – 70,000 people killed, mostly children, and another 20,000 still missing. Newspapers were filled with stories about survivors, the rescue efforts, the schools that collapsed, and the anger and scared residents of that area.
It has also scraed the heck out of people living thousands of miles away.
TV networks broadcast a range of telethons to raise money for disaster relief. Popular music artists hurried out songs and videos to help raise money. And common folk, most of whom don’t make even $3,000 per year there, were giving all they could to help.
Domestic tire companies like Double Coin (and its CMA U.S. unit) have donated millions, as have Michelin, Bridgestone, Yokohama and others.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Expect More ‘Massive’ Price Hikes
June 6, 2008
European market analysts are calling for “massive” tire price increases to offset the negative impact of astronomical natural rubber costs. May 2008 NR prices were up 12% vs. the month prior and 40% vs. 2007’s average price.
Apparently the Europeans aren’t watching oil prices, which have grown at a faster rate and are much more worrisome to producers around the world.
Whatever. We have seen three rounds of price increases already this year…and we’re not even six months in. And there is no reason to believe the increases will abate in either size or frequency. I suspect we’ll see at least two more rounds of hikes by Christmas.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
The Continuing Drama
June 4, 2008
If anyone can explain the Amtel-Vredstein–Sibur Russian Tyres drama, let me know.
Yes, I know it’s not that big of a deal on this continent, but it has potential impact regarding Vredestein.
Three years ago, A-V was hot number in the industry, modernizing its plants, adding new capacity and building a broad retail distribution system in stodgy old Russia. Problem was they overextended themselves – a lot – and didn’t deliver well on the sales side.
Over the last year we’ve read that A-V was trying to merge with Sibur Russian Tyres, which took advantage of –V’s troubles to become that country’s top tiremaker. The on-again, off-again talks have led nowhere to date, and now cash-strapped A-V has apparently applied to takeover Sibur Russian.
Huh???
Hey, a little soap opera never hurt anyone. This one is fin to watch, if not totally perplexing.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Tire Prices and Turbulence
May 28, 2008
Pirelli execs, say news reports out of Europe, are not ruling out additional tire price increases in both the third and fourth quarters of this year. Raw material, transportation (fuel) and energy costs are killing manufacturers in every sector.
I doubt that the situation will improve, and fully expect most (if not all) tiremakers to revisit pricing at lest twice more this year.
We’re not getting any help from anyone (re: government) at abating these ridiculous costs, especially in light of the astronomical net-net-net profits oil companies are turning. This isn’t about more drilling in North America or so-called “energy independence” – it is all about unfettered corporate greed.
Driving miles are being driven down sharply, which means tires lasting longer between replacements. Fuel costs add cost/profit pressure to your bottom lines, as well as those of your customers. Home and business heating costs next year are expected to escalate at unbelievable rates. If there is a light at the end of this economic-headache tunnel, I don’t see it.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Back to the Future
May 28, 2008
Thinking back on the recent Bridgestone-Toyo alliance announcement, I suggested that we shouldn’t read too much into that deal. I have heard some speculation that one was buying the other, or that there would be some kind of merger.
Never say never, but I still doubt that is part of the plan. Financially, both are healthy and there is no financial or competitive reason for such a tie-up.
BUT, given the state of affairs with production costs – primarily raw materials and energy – this relationship could be the shape of things to come.
The industry will certainly be looking at this arrangement with great interest. The economies of scale in raw material purchasing alone will attract attention. Think, too, of the possibilities when you consider how the deal may advance both companies’ engineering and technology, not to mention production efficiencies.
In short: This relationship may open the door to similar deals between other competitors.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Notes & Scribbles
May 27, 2008
Almost let the month get away without noting that May was the 20th anniversary of Bridgestone Corp.’s purchase of Firestone Tire & Rubber Co. for a then unheard of $2.6 billion. It was a watershed moment in tire industry history, and a huge moment in U.S. economic history. I recall the excitement in Akron when the purchase was announced, mostly from the thousands of residents (and Firestone employees) would be made millionaires in the deal. There was also a great sense of relief that the months-long bidding battle between Bridgestone and Pirelli had been settled one and for all. I recall, too, attending the Firestone shareholders meeting during which the sale was approved and sitting at the post meeting press conference when then Bridgestone chief Akira Yeiri made the ill-fated comment that the purchases was “a merger of equals.” That statement set the table for years of painful – and expensive – efforts to get the whole thing to work, primarily because both parties believed it was a merger. Anyone else remember the days when Bridgestone/Firestone Inc. claimed it was losing $1 million a day? So imagine how I cringed when at the recent Bridgestone/Firestone North American Tire Bizcon meeting BFNAT officials constantly refered to its $1 billion purchase of Bandag as a “merger.” …
Think Chinese tiremakers are abusing the U.S. market? Try being a tiremaker in India right now, where Chinese imports represent fully 91% of that country’s tire imports. Despite anti-dumping duties that were nearly doubled in the past year, the price differential between domestically produced tires (radial and bias) and those brought in from China is still between 10% and 30%...Just got a copy of a white paper “The Value of Green Tires to Corporate Profitability.” In the 32-page tome, the authors (one a consultant and the other a Rice University business school prof) flack for increased use of “engineered ultra-fine recycled rubber powder” in tire production. Neither is a rubber scientist, and it shows in some of the unverified claims they make about the benefits of using the material. I have every confidence tire companies are considering every possible option to lower raw material costs, and recycled tire rubber is certainly getting play. We just don’t need another group of inexperienced people running to the consumer media with their questionable claims…
Troubled U.S. economy has been driving trucking fleets under, most notably New Jersey’s Jevic Transportation, which suddenly closed down earlier this month. 1,900 employees have lost their jobs, and thousands of trucks and trailers sit idle. President and CEO David Gorman said the LTL carrier was the victim of rising diesel costs, decreased shipping due to the slump, increasing insurance costs and tightening credit. …Struggles between the rich and poor are not limited to our current economic dilemma. The Financial Times recently reported that citizens of Germany, France, Italy, China and the UK are more critical of the gap between the rich and poor than U.S. residents. When asked if the rich should be taxed more, less or the same than the poor, some 75% of Japanese said higher, and more than 60% of Spaniards, Germans and Americans agreed. …Not only are we gulping at the gas pump, home heating pricing is headed upward, too. Average monthly heating bills in my corner of the world are expected to double next winter. Double. Might want to consider other ways to keep your stores and bays warm…
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Random Notes from Essen
May 23, 2008
Just got back from Germany where I was able to spend a few hours at the fabled Reifen Essen, perhaps the best industry tradeshow I have ever attended. Certainly the best tire industry show. SEMA could learn a few things…570 exhibitors and more than 18,000 attendees from some 40 countries, totally focused on the tire industry…
There were separate halls for different disciplines, one for the major tire brands, one for all things retreading, one for tire service equipment and tools and so on…The remarkable thing was how quiet and business-like the show floor was. No loud banging music, overly flashy displays or dozens of half-naked models (there was one body painting job floating around, courtesy of a German wholesaler)…Most booths were placed on short risers, forcing you to step up slightly. The floor was uncluttered and clean. Halls were brightly lit and easy to maneuver. Barely any carpeting anywhere, so walking about was a little harsh after about four hours…
Among the major names, the award for the largest booth space has to go to Rema Tip Top, whose space was larger than some towns I have driven through. The multi-sectioned booth had live demonstrations of seemingly everything Rema sells, and had a comfy sit-down restaurant…Smallest booth among the big names? Had to be Cooper, whose 20x10-foot booth was wedged against the wall in the main hall…All of the familiar names were there, save for Bridgestone and Avon…Continental, our hosts for the visit, had a beautiful space and a restaurant where you could order freshly cooked food from a short menu…
Conti’s next door neighbor (whose name will be withheld as they have been embarrassed enough) suffered massive damage when large sections of their booth suddenly collapsed. Fortunately (and remarkably) no one was hurt, but the noise made when the booth shattered was tremendous and scary…Tiremaker booths were focused on tires, lots of tires. And lots of winter tires. Very few cars (and certainly no flashy, over-the-top rides like at SEMA)…Pirelli’s booth was quite cathedral-like and had a really cool rally simulator…Kumho showed its fragrance tire and a 32-inch diameter model…Goodyear affiliate Premio constructed a complete tire/service depot outdoors, featuring three full bays, showroom and all of the necessary equipment. Workers did live demos there all through the show…Goodyear was touting its German version of its Highway Hero program…
TIA president Peggy Fisher and government affairs vice president Paul Fiore were there and shared their booth with TRIB’s Harvey Brodsky…There were more than 100 exhibitors from China, including all of the familiar names…Vredestein had a beautiful large space, but Russian partner Amtel was no where to be seen…Sibur-Russian Tyres was there, though…The few booth models at the show were elegantly dressed (and I do mean dressed)…Most attendees were well-dressed, as well, with plenty of suits and ties to go around…Speaking with exhibitors, all remarked how technical Reifen Essen is; buyers (wholesalers, retailer sand retreaders) come prepared, having made purchasing plans, then go about gathering detailed information before making a final decision…Great to spend some time catching up with industry friends I hadn’t seen in awhile. Despite how small the world has gotten, physically visiting with people is still tough…
Coolest thing: rode the high speed train from Frankfort (where we were staying) to Essen. Smooth ride but the 160 mph speeds made your ears pop. More on the show and our other stops in Germany in upcoming issues of Tire Review.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Bridgestone-Toyo Tie-Up
May 16, 2008
While you can never say never, I don’t know that one should read too much into today’s announcement that Bridgestone and Toyo will buy stakes in each other.
Fact is, in order for the two companies to say more than “Good morning” to each other and not run afoul of regulators they needed to make the cross investment. The real point of the deal is to maximize efficiencies and raw material purchasing power.
If it goes beyond that, well…like I said, never say never.
In details revealed in Bridgestone’s official statement, the deal is intended to leverage their combined size to get better raw material pricing, allow co-development of new production technology and machinery, create “economies of scale” in production and distribution – perhaps even to include cross-production of each other’s products, and study other opportunities for so-called synergies.
In the deal, Toyo will issue 20 million shares (8.72% of its total outstanding), which Bridgestone will buy. Likewise, Bridgestone will issue 3.9 million treasury stocks (0.49% of its total) for Toyo to buy. The deal has been approved by both boards and will be concluded in mid-October.
As a side note: In its official announcement, Bridgestone listed the primary shareholders of both companies. Interesting to note that among Toyo’s primary stakeholders are Toyota Motor (4.56%) and Yokohama Rubber Co. (1.9%).
Welcome to the Tire Review Blog
May 16, 2008
It’s no fancy introduction to be sure, but it’s a 21st century concept that will deliver a richer view of your industry.
As with most blogs, the TR Blog will be rather informal, kind of watercooler chat with a mix of news, observations, opinion, thoughts and ideas that we hope will provide invaluable insight, a more 360-degree view of your industry.
From time to time, we will share the sights and input we experience at various industry events, our take on industry issues and activities, and reports on forces that we think will influence the industry – and your business – in the future.
Check back often because this space will be updated on an irregular schedule: sometimes once a week, sometimes multiple times a day.
If you have comments to share, send to me at jsmith@babcox.com.
– Jim Smith
Judging Books by Covers
May 15, 2008
I will freely admit that I'm not the bull riding kind of guy. So when Cooper recently invited me to join them in Chicago for the Cooper Tire Invitational, a stop on the 30-plus city Professional Bull Riders series, I contemplated my options. Like mowing the lawn, painting our barn, maybe painting my neighbor's barn, getting my teenager to do his homework. Off to the still-wintery Wndy City I went.
I will also freely admit when I am wrong. No, I am still not a mega-fan of bull riding (though I take my hat off to those guys, many of whom I met during the event, and none I would want to be when they hit age 65), but I discovered a few things that perhaps you might think about.
More than one person was left scratching their heads when Cooper announced in January that it was becoming a sponsor partner of PBR. Watching guys get tossed around like rags while trying to stay on top of 2,000-pounds of muscle and four ounces of brain does not appeal to a broad base. You might think.
Over two nights, PBR attracted more than 20,000 Chicagoans to the Rosemont Horizon – 20,000 people who wanted to be there and braved rather unspring-like weather to do so. Inside the arena was a full evening of family-oriented entertainment (including outdoor country concerts supported by Cooper), fan-friendly (and very polite) competitors, family-friendly booths by the tour's key sponsors (like Cooper) and a captivating, lively sponsor-friendly "show." No one could walk out of that building and say they had a bad time. Not even me.
Cooper has been taking dealers out to these PBR events in advance of their arrival in those dealers' markets, giving them a first-hand look at how they can leverage this sponsorship to attract customers and build awareness. It's a low pressure "Hey, we just want you to see" approach. Cooper knows its PBR sponsorship is not for everyone, but dealers should take a good hard look before pushing it off.
Like anything in marketing, you get out what you put in. What do you do when your tire suppliers bring you well-supported tie-in opportunities? Especially for something as consumer-friendly and engaging as pro bull riding? Top, successful dealers jump on these opportunities to make some hay (sorry for the pun).
– Jim Smith
Deep in the Heart of Texas
May 14, 2008
Speaking of guys with busted body parts….If you think you can drive a competition-level off-road race truck, think hard. Real, real hard.
I was just down at Continental Tire North America’s test facility in Uvalde, Texas, and learned that lesson first hand, as did the bevy of enthusiast journalists in attendance. (Side note: TR was the only tire magazine to attend the event).
Conti christened its new off-road test track – one mile of back-busting hell – by letting us inexperienced louts run modified race trucks through the course. Then, of course, we took the passenger seat as pro drivers showed us how it’s really done. Ouch!
To summarize: try driving fast while having your head and neck jarred in three directions at once.
None of us buried the race truck in the scrub brush, but, then again, none of us will be signed on to drive Baja.
The track itself is a mix of surfaces, from loose gravel to heavy silt, tire-slicing rocks to plain old dirt. Conti is using its new multi-surface circuit to test its LT tires, and its new off-road race tires. Should be sufficiently brutal to accomplish that!
BTW: I don’t care who you are, a full Nomex race suit on a 101˚ day in the Texas desert sucks. Period.
– Jim Smith
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