In the wake of the announcement of the deal between Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. to combine both tiremakers’ company-owned distribution networks into a new entity called TireHub, Tire Review sat down with TJ Higgins, president of Bridgestone’s North America Integrated Consumer Tire Group, to find out more about the joint venture, its impact on the replacement tire landscape and what tire dealers can expect.
TR: Regarding your partnership with Goodyear, how did all of this come about? Was this in response to the Michelin-Sumitomo alliance announced in January?
HIGGINS: “The entire tire marketplace has been undergoing some changes for [a] period of time. With SKU proliferation, a broader assortment [of products] is becoming more and more important, and two-step distribution, because of that broad assortment, is really important to dealers and retailers. You know, they can’t stock all of the potential tires that are going to come in and be demanded by the consumers that visit their stores. So we have been seeing that SKU proliferation has been creating some logistics and supply-chain challenges, and having access to the marketplace with [the full] breadth of product line has become very important to all manufacturers. We see that as two-step distribution or wholesale distribution has continued to grow. Looking forward, given the continuing evolution of the car parc driven by original equipment manufacturers and the tuning of their cars via technology in our tires, we continue to see a proliferation of SKUs. So I think all industry participants have been seeing this trend for a period of time. So, no, the Michelin-Sumitomo deal did not surprise us, but we had been working on this for many months in advance of that [announcement]. [Bridgestone and Goodyear] were already in conversation well in advance of that deal.”
TR: How is this new entity going to impact your existing distribution partnerships with both national distributors and even regional partners?
HIGGINS: “We see our partner network of wholesalers being very important to creating the access that we need in the marketplace. What TireHub does is compliment them. TireHub will be focused on Bridgestone and Goodyear products, having that full assortment of passenger and light truck tires so the full breadth of those tires will be available through TireHub.
“Each one of our partners in the wholesale distribution space, they make choices about what they stock, and we certainly support them in doing what’s right for their business. What we want to do is make sure that our products are available, and certainly we want to work with our partners to make sure that they’re stocking the right products for their business model. And we believe that Bridgestone and Firestone products are very important to all of our wholesalers, and we will continue to use them as a very important access point to make sure that dealers and retailers can get the products they need at the right time.
“My expectation is that strong wholesalers are going to be a critically important future part of our [TireHub] network. We see TireHub as being a compliment as stocking the full line of our products, but we also want to make sure that in the marketplace, other wholesalers that are serving other dealers and retailers have the right access to the right products as well. So we intend to have a very strong network of wholesalers long into the future.”
TR: Why Goodyear? And how are you going to protect your marketshare when partnering with an organization that’s considered to be one of your top competitors?
HIGGINS: “I see [this as providing greater] access to the market, particularly of those premium tires that may not turn as rapidly as some of the more traditional sizes. It’s really important to Bridgestone that we have our Bridgestone and Firestone, what we call ‘long tail’ items, available in the marketplace. When a unique car with a unique tire fitment comes into a dealer, we want to be able to get them that exact tire as quickly as possible so that they serve the consumer. So for us, we look at [TireHub] as really being a premium distributor – a distributor focused on that higher type of tire that we would call a Tier One and Tier Two, the Bridgestones, the Firestones, the Goodyears, the Dunlops – and we would expect that TireHub really makes sure [dealers and retailers] have that full breadth available. Now, for the wholesalers that exists, we would love them to carry our full lineup and be ready to put that into the retailers and dealers that count on them as well as looking at TireHub as a supply source.
“I think the reason why it works well with Goodyear is because we want to focus on this premium tier of tire, and that is where TireHub will certainly make its emphasis and focus.”
TR: Are you going to be offering any sort of programs, dealer incentives or other promotions that tie into the grand opening and the launch of TireHub?
HIGGINS: “Bridgestone has a program that we offer to our wholesalers… and we would intend that what we would provide to TireHub as well as to our network of wholesale partners the same type of program that we’ve had and have today.”
TR: Any chance this U.S. partnership will extend beyond the United States?
HIGGINS: “No, [TireHub] is a very defined scope. What we intend to do now is to work with regulators and get this deal approved, and then move to operational excellence in the marketplace so we start winning with dealers and retailers. So the focus is absolutely on the United States for passenger and light truck.”
TR: With the news and opinions that may circulate about this joint venture, what is it you want dealers to know about this newly formed entity?
HIGGINS: “We want the Bridgestone dealer to know that we have been working on this transaction for many, many months, being very ‘planful’ in how we are going to be introducing TireHub to the market. Our intent of TireHub and the entire network is to provide dealers with more access, more points of distribution, so that they have the products they want at the time that they need it. We have been very, very aware of making sure that we have the right supply in the right locations. Whether that’s through TireHub or through an existing wholesaler, we have been working on this for a fair amount of time to be sure that when we do get approval and when we are ready to open the doors that TireHub will be a complement to the market, an addition to the market, so there’s more access and more availability.”
TR: When do you plan to officially launch?
HIGGINS: “[It depends on approvals.] Of course the regulatory process needs to follow through it’s own path. We will work with regulators to answer their questions as quickly as we can and as fully as we can, so the timeline would be a little bit dictated by the regulatory environment. And then we’ll make sure that TireHub is ready to be successful in the marketplace. We’re going to make sure that the entity has all of its capabilities up and ready when we opened the door. So I would expect it to be mid-summer, sometime in the midyear.”
TR: When you talk about making sure TireHub has what it needs to be ready, what are some of those things, especially as you already have existing structures in place between the two original organizations that you’re bringing together in partnership? What are some of the things that need to happen in preparation?
HIGGINS: “Making sure our inventory is appropriately stocked in all of the right buildings will be very important. Secondarily, I think a very important part of this new entity is going to be the information technology that we’ve put in place. IT needs to be integrated so that a dealer can order whichever product or brand they would like with a simple, very easy web interface. So those, those are two of the most important things, I would say. Additionally, internally, we want to make sure that the new teammates that have TireHub are being treated appropriately and that we have all of the right systems in place to let that entity [successfully] serve its own teammates.”
TR: What are some of the trends that you’re seeing in the marketplace that led up to this partnership?
HIGGINS: “I think the absolute key to this is really SKU proliferation and making sure that we provide access, as I shared earlier, to the longer tail of product, those items that may not turn out as quickly as some of our more common items. We want to make sure they’re available to the marketplace. That is the absolute key. And we want to continue to let our secondary, our distribution in the replacement market, support all of the original equipment fitments that Bridgestone is winning. As you may know, we continue to grow market share with original equipment manufacturers. And as we continue to grow with original equipment, we’re going to need to make sure that the replacement market has access to that first or second replacement tire. I think that is really the main intent for us in TireHub.”
TR: There’s been some mention of operational efficiencies as a result of the partnership. So I’m curious, will any of those efficiencies and cost savings trickle down to product pricing, and what might dealers expect?
HIGGINS: “The intent of this joint venture is really about access. We’re not looking to reduce costs, or cut costs, or find operating synergies per se. Yes, we want to create operational efficiency, [and] we want to be better at serving the needs of the marketplace, to really try to raise the game for all of us so that the customer, the end user and the dealer-retailer benefit. They get the product they want when they want it, that it’s held in distribution close to the end-user marketplace so the people who come in with limited time can the product that they want on their car and get back to the business they had going on before they decided to get their tires changed.”
TR: For an independent dealer, with so many choices out there, why should they choose TireHub?
HIGGINS: “We want TireHub to be a source of inventory management excellence for that premium tire dealer, that they have the access when they want it at the speed that they need it, making it available to them so they can delight the customers that come into their stores. They should choose TireHub because TireHub is going to have a very simple website that allows them to get the visibility to the products that they need.
“We were very excited about what TireHub can provide to the market, what TireHub is. We’re excited about the product line. We’re excited about the opportunities for TireHub to be an outstanding support to their dealers and retailers and we’re excited about what TireHub does, really, I think for the whole complimentary network for Bridgestone that we’re going to have across our entire network, we’re going to have broader distribution, faster access and an opportunity to do for customers and consumers.”