What’s rarer at your tire dealership: tires or people? If you can’t pick one, you’re not alone. The nation’s largest commercial tire dealers are struggling with shortages on both fronts.
On the tire side, dealers do everything they can to secure the tires their customers need. They work closely with tire manufacturers to communicate their needs, research new brands to fill in the gaps, and pay sky-high shipping rates to secure orders.
At the same time, tire dealers are educating their customers about these supply chain challenges.
As for the shortage of people, the tire industry is part of a universal cry for help.
Dealerships seek workers in a number of ways and offer sign-up bonuses, higher wages, and more perks to attract workers. They also spend money on retaining workers.
This creates a difficult context, of course – selling tires, which are not readily available, with people who are not readily available. Not to mention that the costs of tires and people have both accelerated.
But the dealers have found a way.
Commercial tire dealers face supply issues every step of the way.
Brian Chase, Regional Sales Manager for Rice Tire Co., based in Frederick, Md., Says, “We rely heavily on our purchasing team to keep the tires we carry in stock. While they do a terrific job, there are several tires and sizes that are beyond our control.
“We had to sit down with the customers and let them know what’s going on in the tire world and let them know that even though we don’t have the specific tire they like to use, we’ll make sure we always have a way. to keep their fleet operational.
Kevin Good, vice president of Good Tire Services, said his Kittanning, PA-based dealership was forced to “store certain products that we didn’t have before and / or store a little heavier on certain items. “.
Don Mead, CEO of Bradenton, Fla.-Based Callaghan Tire Inc., says supply is tight across the board.
“The fill rates are between 25% and 35%, the rest being out of stock.
“The majority of backorders are completed within two to three weeks in most critical sizes and applications, but overall it’s day to day.
Rick Benton, who heads the wholesale division of Black’s Tire Service Inc., based in Whiteville, NC, calls the lack of brand name medium truck tires a “major problem,” which has been compounded by multiple price increases. (Some tire manufacturers increased prices four times in 2021.)
“It is costing dealers a lot more now to store and transport inventory. A $ 300 truck tire now costs 25% more. Imagine all the cash flow that it immobilizes.
And on top of that, import tire prices have also increased due to freight and container overloads. These imports – and the ever increasing costs associated with them – continue to be a problem.
John Ziegler Jr., vice president of Ziegler Tire & Supply Co., based in Massillon, Ohio, says pricing and supply issues have forced his company to adjust its inventory strategy.
“We hedged our orders more aggressively to try and keep the product in the pipeline.”
Look on the bright side
The inventory situation revealed some glimmers of hope. At Callaghan Tire, Mead has identified at least three.
The first is that the tire manufacturers have done well to share what is coming up, “giving us a line of sight of their expectations for the next four or five months.”
This gives the dealer time to discuss with customers the possibility of switching to another option if their preferred product is not immediately available.
And sometimes, says Mead, “we used our retreading ability to relieve their pain. “
With fewer tires available, stocks also turn faster. “Our inventory levels are naturally lower. To some extent this has been good as our turns have increased and we have been able to move excess and slower inventory. “
Walter Dealtrey, CEO and president of Bethlehem, PA-based Service Tire Truck Centers Inc., says inventory levels are helping his business finances.
“The good news is that we have less inventory to carry, which helps the balance sheet. Although it is difficult to get everything we need, our sales are still up sharply in 2019 and 2020. ”
A recruitment strategy
Tire dealers are used to working hard to find good employees.
Historically, there has been a shortage of auto technicians and other mechanical workers entering the industry. And the skill set for business affairs is even more pronounced.
But research has been exacerbated by the greater plight of the U.S. workforce as the economy rebounds from the pandemic.
Dealtrey sums up the long term effect at STTC.
“If we had more people, we could grow even more,” he says. “We do more with fewer people, but we pay more for what we have. “
When it comes to recruiting, Dealtrey says the company offers a bonus for employees who refer a new worker, as well as signing bonuses for new employees.
The research covers social media, physical signs, and personal offers to people his team meets at other businesses.
Callaghan Tire takes a similar approach. Mead says salaries for service technicians and retread technicians have increased by up to 25%.
“The recruiting efforts have been difficult,” he reveals. “We focused our research on people who are currently employed because they have already made the decision to work. Being the employer of the unemployed is a futile strategy.
Earl Colvard, president of Boulevard Tire Center, based in Deland, Fla., Says he’s still struggling to find and retain workers, “despite the fact that we’ve increased wages.”
In addition to a higher salary, Good Tire and Rice Tire have both expanded their employee benefit offerings.
The cost not only of salaries – but also of these benefits – has increased. Benton of Black’s Tire points out that “the career opportunities in the commercial services industry are tremendous.”
John McCarthy Jr., president of Wilkes-Barre, Pa., Based McCarthy Tire Service Co. Inc. says his dealership doubles his motto that “McCarthy Tire is a great place to work.”
“Our goal has been to anticipate the loss of a great teammate and take care of them before they consider leaving us.
“Although we regularly review salaries to ensure consistency and competitiveness, we have focused more on this task over the past year. We have increased the salaries of many teammates and renewed our incentives for their dedication to McCarthy Tire. “
Addition of mechanical services
One area that many dealerships are tackling is the expansion of mechanical truck services. Royal Tire, based in St. Cloud, Minnesota, performs mobile mechanical repairs in multiple locations and mobile alignments at each of its locations, President Mick Pickens said.
Tredroc Tire Service Inc., based in Elk Grove Village, Illinois, Ziegler Tire and Boulevard Tire are expanding their service options.
Updating tools and equipment is a regular part of the process for most dealers and the business side, which has also been affected by the country’s resurgence following the pandemic.
Dealers are reporting that service trucks and other equipment are out of stock.
Even though Bauer Built Tire & Service says its biggest investments over the past year were in people, the company also purchased a robotic wheel painter for its headquarters in Durand, Wisconsin.
Mike Weber, vice president of operations and manufacturing at Bauer Built, says the device “allows us to produce 50% more wheels with the same labor.”