FINDLAY, Ohio—Since taking the reigns as CEO of Hercules Tire & Rubber Co. in February, Bill Trimarco has had his work cut out for him.
Trimarco has dealt with falling tire demand, a sluggish economy and new tariffs on Chinese imports of passenger and light truck tires—all while not only learning a new company, but a new industry. He replaced Larry Seawell, Hercules president and CEO, who resigned to “pursue other opportunities” after about 15 years with the company.
Nevertheless, Trimarco said the reason he left custom picture frame maker and distributor Larson-Jule for Hercules is because he relishes a challenge, and he believes Hercules' goal should be to offer tire dealers outstanding value.
“Hercules is a company that's been around for 50 years, has a great tradition and, really, my plan has been to leverage our strengths, which include the Hercules brand,” he said.
The Findlay-based wholesaler/private brand marketer's strengths, according to Trimarco, include its personnel, its customer base and network of Tire Dealer's Warehouses—and the idea is to take those assets and leverage them.
“We're going to be focused on continually improving and updating our product assortment in order to make sure it's strong.” he said. “My philosophy is that our business model is fairly simple. The key is focus and execution.”
To that end, Hercules—a unit of New York-based capital venture firm FdG Associates L.L.C.—launched four product lines in 2009: the Raptis WR1 UHP tire; the All-Trac A/T light truck/SUV tire; the Ironman Radial AP light truck/SUV tire; and the Hercules Roadtour 655 passenger touring line.
There are plans to introduce another passenger line next year. Hercules will disclose details on that tire closer to its launch date, according to Marketing Coordinator Denise Durenberger.
The company also will add sizes to its Roadtour 655, Raptis, Terra Trac A/T and Terra Trac SUV lines in 2010, she said.
“We will continue to focus on the needs of our dealers in determining the appropriate expansion of sizes relevant to today's market,” Durenberger said.
Despite the market slowdown, Trimarco said Hercules' wholesale business remains strong. He wouldn't disclose the firm's sales, which in 2007 reached $496 million. Some changes in its tire portfolio this year included offering the Bridge- stone and Firestone brands on the West Coast this summer and the Continental brand in Canada.
The company, which was acquired by FdG in 2005, didn't open warehouses in 2009, but neither did it close any. Hercules also didn't institute across-the-board layoffs, although the staff is smaller this year because of attrition.
“We are focused on growing, getting stronger. We're not contracting,” Trimarco said, adding that Hercules is upgrading its Chicago warehouse, a project that should be completed by year-end.
Next year, Hercules plans to upgrade its TDW facility in Dallas and to expand in Canada, but Trimarco declined to discuss a location in Canada for competitive reasons.
Although a novice to the tire industry, Trimarco said his experience at Larson-Jule, where he served as president of international operations, had some surprising similarities with the tire bus- iness.
Like independent tire dealers, Trimarco said photo frame shop owners also have the challenges of getting customers into their stores, providing great service and a broad product offering.
Sourcing product domestically and from Asia, high SKU count, many customers, distribution and proliferation of product are all common issues in both the tire and picture frame industries, the executive said.
At the time Trimarco was named Hercules' CEO, Howard Romanow, managing director of FdG and a member of the Hercules board of directors, lauded Trimarco's operational and leadership skills, saying he has “experience with complex, value-added distribution, international sales and foreign sourcing,” making him “a great fit to lead Hercules.”
“My past experience has been very relevant to the needs and opportunities that have been presented here at Hercules,” Trimarco said.
Like other tire marketers, he said Hercules is feeling the pressure from the tariffs on Chinese tire imports imposed by President Obama in September. About a third of Hercules' product offering came from China, and the company responded with 10- to 15-percent price increases.
“We monitor the market on a daily basis in terms of what's happening price-wise,” he said. “We've committed to hold- ing our prices through the end of the year.”
Trimarco said he believes the tariffs and raw material prices will cause tire prices industrywide to rise again next year. The tariffs also are making it more expensive to operate a tire business, he said.
“In a segment of our business, we're taking lower margins, and this puts pressure on our company in terms of how we manage expenses, including personnel costs,” he said.
Hercules is evaluating its tire supply and is committed to building the brand, Trimarco added. Imports from China will continue, but the marketer is looking at suppliers in other parts of the world to supplement its current products, he said.