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Editor's Notebook

Trackside Confessions

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Francesco Gori shifts nervously in his cane-back seat, carefully surveying the scenes

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around him. Behind us, 50 or so U.S. dealers take hot laps around Pirelli’s Vizzola proving grounds. In front, testy caterers are tearing down tables and trying to stack chairs, including the two we’re occupying.

The man in charge of Pirelli’s world-wide tire business knows he will have as tough a time convincing the dealers that his company finally has the right course as he is getting the caterers to leave us alone.

Product has almost never been an issue with Pirelli. Channel disruption, management direction, and sales and marketing focus have. A lot is at stake, and Pirelli has pulled out all the stops for this mid-May whirlwind dealer trip to Italy.

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Sitting just yards from Vizzola’s main garage, Gori alternately staves off the harried caterers, eyeballs the track-side action, delivers answers to my queries, and deftly shifts the conversation to surprisingly candid points he wants to make.

"In America," Gori states flatly, "we made big mistakes." One was the ill-fated purchase of Armstrong.

"Armstrong was a good company. We lost over 10 years in the U.S. trying to fix a company that was okay, and trying to meld our two very different operations into each other."

It was "a mistake to buy Armstrong and in how we handled it," he admits. "But that is the past." Leaving Armstrong’s home in New Haven for Rome, Ga., he feels, "is the last symbolic event" in the Armstrong chapter.

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"We still have, thank God, our loyal customers from the past, and we’re adding new ones," he says hopefully, nodding toward the group of dealers.

Pirelli hasn’t made it easy for them. Last year, it spent billions to become a telecom giant, sparking rumors it was selling some or all of its tire operations.

"The speculations are over," he says now, waving off the caterers for a third time. "This is an old story now. Financially we are solid, if not stronger than our competitors. We feel that Pirelli is the best owner of its tire business. Pirelli would never be Pirelli without its tire business."

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And perhaps Pirelli wouldn’t be in North America if not for Cooper. For the last three years, Cooper provided Pirelli with sales, customer service, distribution and logistics, and manufacturing and moral support. The addition of a hot performance brand gave Cooper a stronger portfolio and Pirelli high hopes for sales growth. But the needle never really moved. Cooper has great dealers, Gori found, but they hit a slightly different demographic than Pirelli’s natural target.

"Nothing specific went wrong with the alliance," Gori says. It was a good idea that "didn’t work as good as we wanted." At least it wasn’t one that had Armstrong-like consequences.

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But what Pirelli didn’t gain in sales and share, it made up for in other ways. "We learned a lot from Cooper about how to service and deliver to American customers," he admits.

And Cooper helped Pirelli re-assess its place in the market. "We would not have reached the conclusion to close the book on the Armstrong story without Cooper," Gori says. "Closing the California plant allowed us to start a new chapter and refocus."

That meant taking stock in what it was and wasn’t. The self-discovery exercise brought Pirelli to the conclusion that it could not be all things to all people, it just had to be very good at what it does best Ð high performance and light truck/SUV tires.

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"We are successful with this strategy in Europe and Japan, but it only works with OE and replacement combined," Gori asserts, shooing the caterers away yet again.

"Now Detroit is working with us," he says. While he wouldn’t name names, Gori claims Pirelli will have some new OE contracts with "Detroit" starting in 2003, deals that "make it easy for me to say we will double our sales in the U.S. within three years."

Not only will Pirelli not be all things to all people, they will not be on every street corner. "We will focus on the independent dealer channel only," he says. "We won’t go looking for new channels in the U.S."

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Pirelli’s new specialization requires "more expertise" than mass merchants or price clubs can deliver. Pirelli wants to avoid channel conflicts, Gori says, which, will help protect pricing and profitability for Pirelli and its dealers.

We finally submit to the insistent caterers and move on. Gori wanders over to a group of dealers. Comfortably in his element, he smiles broadly and begins chatting.

Now I’m the fidgety one eyeing the scene, wondering if his confessions were also part of the strategy.

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