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Time To Grow: New Home, New Products, New Focus Mannino Says Now is The Time

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A year ago this month, Gaetano "Guy" Mannino, 45, became president and CEO of Pirelli Tire North America, and in a whirlwind 12 months he has reshaped Pirelli’s presence in North America. New headquarters and automated manufacturing in Rome, Ga., have given PTNA a fresh start. The end of its alliance with Cooper gave it control of its own destiny. And an aggressive attitude has given it new OE opportunities and a fast-growing network of independent dealers.

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Mannino graduated from the University of Rome with a Ph.D. in chemical engineering, and earned a master’s from the Italian Institute of Foreign Commerce. He joined Pirelli SpA in 1982 in its diversified product division, and moved to its tire division in 1993. A year later, Mannino was named director of sales for PTNA, and in 1995 he became director of operations. In 1999, he was named general manager of Pirelli’s Venezuela operations before returning to the U.S. last year.

Q: What were PTNA’s sales for 2002? What is your sales goal for 2003?

A: I cannot talk about our 2002 results just yet. Our shareholder’s meeting is Feb. 18, and those numbers will be released then as part of our parent company’s information. As for our 2003 goals, we have a plan that should bring us in line with our goals and expectations. We plan to grow through our current customer base and with new customers. And we also have OE business on our side this year that we never had before which will open doors for replacement business. Consumers will see Pirelli as a more attractive brand compared to others in the marketplace. It’s a year of challenges, but we feel we should reach double digit growth in sales.

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Q: You call 2003 the year of "building a foundation." Talk about that and how the future will unfold for PTNA?

A: Take a look at what happened in 2002. We went through an enormous amount of change. We closed our headquarters in New Haven and moved to Rome, Ga. We ended the alliance with Cooper, and set up a new sales force and distribution system. We started up a new plant, hired a lot of new people in Rome and trained them. Now it is time to start taking advantage of all the things we did in 2002. There will be new accounts, and new OE business. This growth is related to the four pillars of our strategy, and we are very confident in what we are doing. One of those pillars is MIRS, which has opened the door to OE business and gained a lot of attention from dealers. In new products, we launched two new products last year and this March we will launch four more new products. With our OE business, finally after three years of hard work, it is materializing in Detroit. And, of course, with our brand communication we are attacking the market both at the dealer level and the ultimate consumer. So it’s going to be a year of building our position in the OE business, and in the replacement market.

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Q: With the tire market here is flat, and no growth expected in 2003, where will PTNA get its sales growth?

A: Overall, the market was down about 2.5% for the year. But when you have 1% marketshare, I don’t think the fact that the market is down 2.5% has much impact. The market segments where we have strong positions, like high performance and UHP and light truck/SUV, are still growing. Even if the overall market is down, the V- and Z-rated market went up almost 15 points in 2002. And it should keep going up this year. We’re pushing new accounts and we’re working for growth from our current customer base. We are also working hard on a product range that is more appealing to the marketplace.

Q: Your third MIRS module in Rome, Ga., went on-stream in December. How many modules do you plan to add there this year?

A: We now have three modules in production and our plan right now is to stabilize production for about 6-9 months and then look at additional expansion. Right now we have about 150 employees in the plant, and most of them need training, which is a major factor with MIRS. The capacity that we have at this point is fine for our requirements. After we get more experience with our plant then we’ll look at adding more modules toward the end of the year.

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Q: Last year, PTNA said it was done with mass merchants and price clubs. Do you see a time when PTNA would consider going back to such channels?

A: We exited those markets last year and we don’t have any plans to go back. We think the independent tire dealer network is the best for Pirelli, our brand image and our position in the market. Mass merchants and price clubs create disruptions in the price integrity of a brand. We decided that the dealer network is the best target for us and we’re going to focus there.

Q: You mentioned the four new tires PTNA will introduce this spring. What products are they and what markets will they cover?

A: The four lines we are launching this March include the P Zero Nero M+S, which is a tuner line and covers the requirements of this market which is growing quite rapidly in the U.S. It’s the M+S version of the P Zero Nero, and is a dedicated line for the U.S. The Scorpion Zero Asimmetrico is also a M+S tire, and is an evolution of the Scorpion Zero line typically made for the U.S. We’ll have a wheel size range from 22 to 24 inches, which covers plus sizing in the SUV market. Both of these will be made in Rome, Ga. The third line is a racing line – the P Zero Corsa. This is a slick tire that can also be used on the street, and it is a very good tire for competition. And the fourth tire is the Scorpion STR, an evolution of the Scorpion ST, which is OE on the Ford Excursion, the F-250 and the F-350. It’s a full range, all-season tire that fits the requirements of this market. These two will be made in Brazil and Europe.

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Q: Are you satisfied that PTNA has covered its target segments? If not, what areas are you looking to shore up?

A: There is always opportunity for an evolution in the tire market.A: We are focused on high performance, UHP and light truck/SUV. In those segments, there will always be a need for new sizes. We may not add a full line per se, but an enrichment of the current lines we have. We have an enormous advantage with the MIRS plant because it allows a very fast industrialization of product. That will help us out in future years because it allows us to be responsive to the marketplace very quickly. There will be new tires coming in, but at this point I’m not quite determined to add a new line. I think the lines that we have cover a majority of the touring sizes, the UHP segment, the tuner side of the market and the light truck/SUV market, both regular and high performance.

Q: You have talked about the importance of OE, and Pirelli enjoyed some success with Ford, Maserati and Saleen last year. What other U.S. OE fitments can we expect to see this year and next?

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A: We can talk and we cannot talk. We started the OE adventure three years ago. It took us almost two years to announce the first OE fitment, which was on the Ford Crown Victoria, Grand Marquis and Town Car. And then it took us three months to announce the next one, which were the Ford Excursion and F-250 and F-350. There are other OE products in the pipeline and in testing that we will be able to announce soon. But Detroit is very strict about how much you can talk about OE projects. But I can tell you there are at least three other projects that should be announced by the end of the year. All of them will have volume benefit for dealers this year. Some of the production will come from Rome.

Q: Pirelli SpA has struggled financially due to serious downturns in the cable and telecom markets. The tire side, however, showed sharp gains worldwide. Is your parent company rethinking its emphasis on non-tire operations?

A: Well, the non-tire operations are cyclical and all of the utilities have been having some problems. But we expect them to come back. I don’t think the company is moving one way or another. I think the plans that Pirelli has for its different businesses are solid, but sometimes the effects of a cycle on one business or another happen.

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Q: You have said that the Armstrong era is over, that it is time to move on. Would Pirelli consider another purchase or merger in the future? Is there any consideration to resurrecting the Armstrong brand name?

A: The Armstrong era is over. We started a brand new experience by moving to Rome, and we have a very young workforce quite determine to succeed. We have a very strong brand. The best way for us to succeed is to focus on what we are doing and forget about mergers, acquisitions and other things. I think we have done the right thing in bringing the high technology that we have to support the brand that we have and go after the replacement and OE businesses. I think we can do it on our own and have a better focus than looking at mergers and acquisitions. It would be a distortion of our focus, and we don’t have any plans for that. As for bringing back the Armstrong brand, I think if our dealers want a cheap brand, they have access to better sources than us. If they want a very good brand, Pirelli can be that and that is what we want to focus on. Sometimes trying to do too many things will get you out of focus.

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