The Sherkin family has a prominent place in the Canadian tire industry. Harry Sherkin started United Tire back in 1944 buying and selling retreads. Brothers Morris, Charles and Joseph joined the company as it grew into a major retreader, private brander and, finally, a manufacturer. The family business was sold to Pensler Capital Corp. in 1996 and met an untimely demise in March 2000.
The second generation, Bob Sherkin, started as a 10-year-old tire changer at United and eventually went his own way in the industry. Bob started tire importer Dynastar (now known as China Manufacturers Alliance) and sold the business in 1993. After selling Dynastar, he stayed on for a couple of years but decided to look for other opportunities.
Building on his industry experience and relationships, in August 1997, Sherkin started Dynamic Tire, a wholesale distributor servicing dealers in eastern Canada with lines from Pirelli, Yokohama, Kumho, Multi-Mile and National, along with Chinese makes Triangle and Runway. In 2002, Dynamic launched its PrimeX brand of OTR tires, distributed in Canada and the U.S.
With its “customer first” focus, Dynamic Tire was named one of Canada’s 50 Best Managed Companies in 2003. Sherkin and his team recently moved into a new, 130,000-square foot headquarters/warehouse facility in Brampton, Ontario. In this edition of From the Inside, Sherkin talks about Dynamic Tire’s growth and its future.
What do the next five years look like for Dynamic Tire, and how will the new facilities help meet your goals?
“In this industry, it’s about relationships and experience, and because we had a lot of experience and qualified people and a lot of long-term relationships, we were able to grow quite quickly. As our business has been continuing to grow, we needed to have proper facilities to meet the needs of our growing customer base. We think it’s very important to execute well, and to do that we needed proper facilities to be able to operate. After a number of years of trying to operate with a smaller facility, we felt the time was right and that we had enough momentum to manage the move to a larger facility.
“As far as what the next five years look like, it’s a changing world, and it seems to be changing faster and faster. So we keep trying to run faster and faster to try to stay ahead of the curve. We have done a reasonably good job at it, and we continue to work hard. Our intention is to continue to grow and develop as the marketplace and opportunities allow.”
How has your private brand business helped the distribution side, and vice versa? Long-term, how do you see these elements contributing to Dynamic’s position in the market?
“Certainly, a big part of our business is our own PrimeX brand, but we cannot meet all the needs of all our customers with that line. In order to make it an attractive buying proposition for our customers, we feel that, by utilizing other brands, the overall offering becomes better and helps promote the sales of both. We sell more PrimeX tires because we have the other lines available and we sell more of the other lines because we have PrimeX.
“We only operate as a wholesale distributor in Canada. In the U.S., we basically only sell our line of PrimeX products. We have some distribution centers in the U.S., but those are solely established to service our PrimeX dealers. At the moment, we don’t operate in the U.S. as a wholesale distributor, and, at this time, I’d say we have no intention to do so.”
You also handle a number of brands from Chinese manufacturers ®“ brands like Triangle and Runway. How have you been able to leverage those lines, and how receptive has the market been?
“I think the marketplace is changing, and it’s becoming less about where the product is made and more about what value the product can bring, not only to the dealer but to their customers. I don’t know if the major manufacturers particularly like that. But the reality is it’s just like the 1970s and 1980s when the line from the top manufacturers to the bottom manufacturers began to shrink, and there was less of a quality spread between the various brands. I think that’s happening now globally.
“Today, it’s more about execution and delivering the service level to your customer as opposed to what brands you sell. We certainly think that, by being able to offer products like Triangle and Runway, we can provide the things our customers want, like competitive buying prices so they can make a margin ®“ which the major rubber companies have forever made it difficult for them to do ®“ and having protected territories and honoring those agreements so that the dealers can build brand recognition and capitalize on those efforts.
“We take a different approach as opposed to what some of the majors do ®“ where a dealer works really hard to build up a brand, and then the tire company comes in and opens 14 points of sale in a market that can only support four. That only drives margins down, and nobody makes any money. So we don’t feel the brands are as important as servicing our customers.”
How are you looking to expand your relationships with Chinese tire manufacturers?
“We have a long history of doing business over there and have built strong relationships. We treat our suppliers with as much care and as much respect as we do our customers. If everybody walks away from the table with a smile on their face, then that’s a good thing, and people have a keen interest in working hard to develop the business to the next level. That works, not only on the selling side, but it also works well on the buying side.”
Dynamic has three distribution centers in the U.S. and four in Canada, all in the eastern half of the continent. Are you looking to expand with dedicated facilities in the western states and provinces?
“Absolutely. We are looking at it, but it’s a matter of preparation. We want to be doing a really good job in the territories we are in now before we spread ourselves thinner. It’s not a key focus at the moment because we’re not in a position to provide a level of service there that we feel is acceptable and customers want. We hope, in the near future, to be in a position to expand our facilities to be able to service those markets. Right now, we have our hands full trying to service the markets we’re already in.”
Profile, if you will, a “Dynamic Tire dealer”? What kind of tire dealer are you looking to do business with?
“I guess, for us, the first thing to look at is what we think the dealers want. We want to create a line and a range of products that dealers want ®“ the best quality with high fill rates ®“ and we try to do that at the most competitive price we can. It’s always been a tug of war between dealers and the major manufacturers in terms of being able to make the margins that a company needs in order to do well. What we want to do is provide a really good line of products with quality, variety and opportunity for the dealers, and we try to do it in a partnership arrangement where they can make a profit on the relationship they have with Dynamic Tire and PrimeX products. If a dealer can walk away from that transaction, and it can be beneficial to his company, then he has a higher propensity to sell our products vs. competing brands. We work very carefully with our dealers and build strong working relationships to make sure it works.”
Being recognized as one of Canada’s 50 Best Managed Companies is quite an achievement. How do you see this reflecting your business?
“We’re pretty excited about having participated in that process and being recognized as one of the best companies that were evaluated. To us, it’s a testament to the fact that we’re doing it right. When an outside group of consultants can review what you’re doing and come back and say you’re doing it better than most, it’s certainly quite gratifying, not only to the company as an institution, but also to all the great people that we have here who all work hard to make this thing work. We believe in situations where it’s a win for all the people involved. That philosophy has worked out quite well for us, and we intend to continue to go down that path.”
What is next for Dynamic Tire? Are there plans to become a manufacturer, expand your distribution presence, add brands or lines or extend your private label business?
“Who knows where you’re going to wind up? It’s a pretty tumultuous world, and it requires a lot of vigilance and diligence to do things right. I can say our plan is to continue to grow and bring new people into our family. As our needs grow, we’ll continue to have a larger requirement for products. But, at this stage, I don’t know exactly where that’s going to end up.”