TireHub joint venture faces challenges as it grows

ATLANTA—Combining two legacy brands, such as Goodyear and Bridgestone, into a cohesive joint operation is a challenge that requires collaboration and logistics.

Just ask TireHub L.L.C. CEO Peter Gibbons, who has spent almost a year getting the wholesale joint venture off the ground, after Goodyear and Bridgestone Americas Inc. created the $600 million, stand-alone company based in Atlanta.

Since opening for business last July, TireHub has consolidated several distribution centers in certain markets where Goodyear and Bridgestone's Tire Wholesale Warehouse both had operations. TireHub also opened locations in San Diego and Baton Rouge, for a total of 68 distribution centers. The company also added employees for a workforce of more than 1,200.

One of the challenges of creating a joint venture was combining sales forces and employees loyal to one company and having them work together for the new enterprise, according to Gibbons, who said TireHub calls its employees "hubbers."

He said with such a venture, every situation is new and every situation requires collaboration, noting the cooperation from employees and customers have been "fantastic."

"We like to say, 'Hubbers deliver without being asked.' And that attitude has helped us get through that start-up phase—where everything is new, everything is a first—to grow and succeed," he said.

"We've taken the best of both worlds, taken the best of both companies, and using that to create something that is quite unique to TireHub," Silvia Wilks, TireHub's vice president of operations, added.

"We talk about saying 'yes' to our customers. We like to say yes and help our dealers grow their businesses, and we know we can do that by being approachable, adventurous, relentless and speedy. Those are the four maxims that we operate on. … We've had great energy around TireHub from the start."

She said those four pillars are what set TireHub apart from other wholesale operations.

"First and foremost, we are focusing on our customers in markets where we've got locations situated currently," Wilks said. "We're making sure that we're serving them consistently, and we're making sure we give them access to best-in-class products that they need when they need them.

"We've been working very hard to increase our deliver frequency. That delivery cadence in some geographic areas, we're now delivering to customers within a 25-mile radius four times a day. So that's our minimum standard as we're operating across the country now.

"Our focus is really on helping our dealers to win and grow their businesses. So we're looking at geographic areas where we see opportunities to better serve the customers based on the needs of the market.

"TireHub is being really great about seeing the bigger picture. This is our opportunity to change the tire distribution industry and to really do it differently and to do it our way," she said, adding, "We continue to evaluate what we need to do next that might be different, that the customers might be looking for, to improve our service and our delivery."

Growing both brands

Gibbons declined to reveal the ratio of Goodyear versus Bridgestone sales, but said overall sales are "not decreasing."

"We're a 50/50 joint venture, so we strive to grow sales for both brands," Wilks added.

During a recent conference call with analysts, Goodyear Chairman, President and CEO Richard Kramer said, "TireHub's customer transition activity orders and deliveries of Goodyear-branded product each performed in line or ahead of our expectations.

"Over the long-term, TireHub will strengthen our ability to promote our premium brands, our industry leading e-commerce solution and our strategy of targeting the industry's most profitable large room segments."

He said the tire maker didn't lose any customers.

"We've had some growing pains as we've put TireHub in place as you would with any start-up company, but we have not had any significant customer losses at all as we move ahead.

"And I would say, when we look at their inventory, they're actually running more efficient than our previous supplier. … But I would also tell you that supply in the fourth quarter in the industry is something that was a bit of a challenge. And I think if you ask around, some of our competitors had the same problem. So that issue, I think, is out there in the near term as well. But overall, I would say, in all of the things we look at, TireHub is essentially on or ahead of schedule," Kramer said.

"With Goodyear and Bridgestone, our customers get access to great, great products. What we're going to do is make that process as seamless as possible," Gibbons told Tire Business.

"So our instock availability needs to be excellent. Being able to interact with those customers online or by telephone needs to be excellent. We need to make sure our capability to deliver and get goods where they want, when they want it and done in a fashion that they appreciate and want to come back to us.

"When you think of it as making this as seamless and straightforward to do business with us as possible, that's a good starting place to think about how you want to be perceived by our dealers and customers," he said.

TireHub offers Bridgestone's and Goodyear's portfolio of brands, as well as Toyo-brand tires, which Bridgestone's Firestone Complete Auto Care retail stores have been selling for several years.

Gibbons didn't rule out adding other brands to its portfolio in the future after evaluating customer demand and other factors.

Seeking feedback

As for the reaction of dealers to the new TireHub operations, Wilks said the company has sought feedback from its customers but didn't reveal details.

"Our leadership team recently had the opportunity to meet with a large number of customers, and they were very straightforward with us. We asked them to give direct feedback telling us what's working and what we could do to improve our service to them.

"They gave us some really great feedback and that compels us to get better and better every day and continue to say yes to them every day," she said.

Gibbons noted that TireHub has been augmenting its online sales and ordering system, including integrating with dealers' point-of-sale systems, customers' e-commerce platforms and its own B2B e-commerce site.

"Sales across all platforms continue to increase," he said, adding, "We're working on optimizing and improving e-commerce and interacting with our customers."

While online sales are becoming more accepted as a way of doing business, he acknowledged there are times when customers want to talk and interact with salespeople.

Gibbons said the biggest challenge in the wholesale market is the wide range of products that dealers physically cannot stock themselves.

"They're looking for people like us to help them manage that more effectively. Their ability to store inventory is finite and so our job is to allow them to access the whole range of Goodyear and Bridgestone products and access that quickly and efficiently when they need it," he said.