In 1993 Kelly-Springfield introduced a record number of new products which accounted for more than one-quarter of the firm's sales and more than 30 percent of its year-end profit. This year the firm will introduce even more, including 15 aqua tire lines, according to President Lee N. Fiedler.
``It's got the same amount of fabric and material but people will pay more, because it's new,'' he said.
``This industry has to quit thinking about raising the prices of last year's dresses. Some of our competition is raising prices on products which have the same tread design for five to seven years.''
The independent dealers are looking for something they can make money on, something different, so the consumer can't really check the value with another dealer, Fiedler said.
``That's why there are so many brands,'' he said. ``So nobody can set up shop next door and say, `I can sell a Monarch cheaper.' That's what's happening to the big brands now-undercutting.''
Approximately 54 percent of the U.S. passenger tire industry is in associate and custom brands, Fiedler said. That percentage has risen from the 20-30 percent range about 20 years ago.
``The consumer is saying, `Those brands I used to buy are getting pretty pricey,' '' he said.
``I think it's going to continue. Once the consumer smokes that `Jack' cigarette and sees it's not too different from the major brand pack he's paying 75 cents more a pack for, why would he pay more?''
There's really been a boom in the private brand sector, Fiedler said, noting Kelly-Springfield is the leader in that area of the market.
``The quality gap between a high performance tire and Kelly has closed, especially in the consumers' minds,'' he said.
Major brand tire makers have a tremendous challenge in the next few years, Fiedler said. ``How do you get the customer back?''
Major brand tire makers must do more than just cut price. They must cut costs too, and this is where the problem arises, he said.
The end-of-the-year price cutting across the industry hurt Kelly-Springfield, Fiedler said.
Last year three companies in the industry made a profit: Kelly-Springfield, Cooper Tire & Rubber Co. and Goodyear-in that order, he said. Bridgestone/Firestone Inc. also reported a small operating profit in 1993. Two or three years ago the tire industry lost $4 billion.
``This industry's so crazy, if today I said tires were free, three firms would match us tomorrow,'' Fiedler said.
Yet through internal cost-cutting measures and productivity increases, the Goodyear subsidiary forged ahead.
Since 1990, Kelly-Springfield has picked up a close three points in market share. ``That's big market share in this business,'' he said.
However, the tire maker projected only 0.4-percent market share gain this year. ``Everybody knows Kelly picked up market share. Everybody's shooting at you.
``We want to maintain what we picked up, grow it slightly and do it profitably as we've done.''
Kelly-Springfield doesn't publish any financial numbers, but Fiedler said the company was the most profitable in the tire industry last year-both bottom-line and per units sold.
``Cooper was at 8.6-percent net income last year, bottom line. We were above that.
``If we just wanted market share, we could go out and take it today. But that's not our goal. Our goal is to make money. You must make money to expand, and that's big money.''
1992 was the firm's best year in terms of sales and profits to date. In 1993 the tire maker rewrote its record books, operating with a similar cost structure as 1992, yet selling more tires.
Fiedler sees a major shake up coming for the tire industry. With so many tire firms losing so many millions of dollars each year, Kelly-Springfield is poising itself for major market gains.
``I look for major shifts in the rest of the tire industry,'' he said. ``That's going to happen. There's going to be lots of opportunity and it's going to happen in the next couple of years.''