Pirelli finally has found a way to deal with its problems in the U.S. tire market. Let someone else solve them. The Italian tire maker has been the poster child for how not to run a tire business in the U.S. since buying the Armstrong Rubber Co. tire division in 1988. Pirelli received a $470 million tire business, with three factories and a fairly conspicuous brand name in farm tires. Today, Pirelli in the U.S. has $200 million in annual sales, is out of the farm tire business, has one factory left and even killed off the Armstrong brand name.
Learning why this happened could take up a considerable amount of your time. Suffice it to say it did, and move on.
That's what Pirelli now is doing—moving on. And it's doing it in a surprisingly (for Pirelli) logical fashion.
The ``strategic alliance'' will plug Pirelli into Cooper Tire's North American sales and distribution network. Cooper knows how to sell tires on its turf, so that should benefit Pirelli, and give Cooper a high-end brand to market.
Cooper also is sending ``consultants'' into Pirelli's Hanford, Calif., tire plant—perhaps the best move of all for Pirelli in the U.S.
Pirelli in the future will handle Cooper's sales in South America, where the Italian company has a strong, successful operation. That will be a big plus for Cooper.
The only odd aspect of the deal is Pirelli's hope the connection with Cooper—strictly an aftermarket company—will help it obtain original equipment contracts in North America. That's also what Pirelli said when it bought Armstrong, which also wasn't an OE supplier. The result: No OE deals.
Other than that, it looks like Pirelli has decided to act on realities, rather than dreams. Good idea.