Treadways Celebrates 25 Year Anniversary in Tire Business

In 1985, Treadways began as a business unit of SCOA dedicated to importing and selling Sumitomo brand tires.  As the business grew, Treadways soon established itself as a specialized tire marketing company.  This year, Treadways (now an integral part of SCOA subsidiary TBC Corporation) celebrates 25 years as a successful and growing tire business, with Sumitomo Corporation of America showing consistent support throughout the years.

During the 1990’s, Treadways diversified by acquiring Eldorado Tire, a prominent marketer of domestically manufactured private brand tires.  Broadening the company’s supplier and customer base reduced the business risk of relying on a single supplier and an imported product line.  The subsequent acquisition of the Jetzon/Telstar and Laramie brands further enhanced that diversification, and also enabled Treadways to enter the wholesale channel through the Laramie tire warehouse network serving smaller tire dealers.  The company was also exposed to an additional supplier portfolio.

Treadways success since the late 90’s encouraged SCOA to increase its commitment to the tire industry.  Sustaining that growth, however, would require Treadways to achieve the critical mass necessary to be a more relevant player in the business.  An important component of Treadways long term strategy became the development of a controlled distribution network delivering a steady and predictable sales volume, enabling the company to be a more important customer to its suppliers, and a better supplier to its own distributors.  Retail expansion emerged as the most strategic way to make Treadways a more diversified and vertically integrated company.

TBC Corporation was the largest and most effective competitor to Treadways; the two companies sold similar products into the same market space.  TBC, however, also recognized the need for diversification and growth, and had a substantial head start on Treadways in the race to develop complementary business across channels and product categories.  By the time SCOA crafted its acquisition of TBC, the core Treadways distributor business was roughly equal in scale to TBC’s Private Brands division.  However, TBC had increased its portfolio to include Carroll Tire, Big O, Tire Kingdom, NTB, and Merchant’s, thus creating a much larger company.  The logical next step was to integrate Treadways as part of TBC Wholesale, creating a market leader in the redistribution channel.

While they competed for years, Treadways and TBC shared an approach to the market focused on selling programs to long term customers, high quality products, and dealer profitability, according to Bill Hirst, Treadways Executive Vice President. 

“Synergies emerged as different brands and product categories were introduced to each other’s customers,” said Hirst. “Treadways relationship to Sumitomo Rubber has enabled all TBC entities to sell Sumitomo brand products, while TBC’s extensive network of supplier/partners opened opportunities for Treadways to expand its business by selling into additional market segments, as well as related products such as tire service equipment, wheels, and tires for commercial applications.”

“The integration of Treadways and TBC is yielding benefits beyond just products and brands.  Combining redundant distribution and back office functions is helping to control costs, often while increasing customer service.  For instance, the current project to migrate to a single ERP system for Treadways and TBC Brands will deliver market leading functionality in processing orders, managing inventory and logistics, while offering all customers a more complete view of our product offerings and programs.”

Hirst explained that the private brand tire market started as a way for tire manufacturers to operate their factories at higher volume without diluting the price of their own brands; tire manufacturing is quite capital intensive, and is only profitable at high utilization rates.  Tire distributors are attracted to private brands because they are able to enjoy more control over how such brands are sold within their own market, resulting in higher margins. 

"Forty years ago there were many more tire manufacturers in North America than remain today,” explained Richard Purol, Treadways Sales and Marketing Vice President. “Most were small to medium size companies who needed help selling enough tires to achieve efficient operating levels.  The industry focus was to drive down cost by selling high volume.  Selling private brand tires to multi-location retailers or wholesalers is a logical way to sell volume to fewer customers, increase market share, and form partnerships while reducing credit exposure.”

Purol also credits Treadways with serving a fairly diverse set of customers, basically falling into three categories.

“First, there are wholesalers who sell tires to installers such as tire dealers, car dealers, and truck stops within a defined marketing area,” Purol said. “Some are large companies who operate national or regional networks of warehouses, such as our sister company Carroll Tire Company, with its 37 locations.  Others are smaller family businesses with one or two locations serving a market radius of 100 miles. Secondly, there are larger retailers who sell enough volume meet our shipping requirements. Lastly, we have commercial tire dealers who sell truck tires, retreads, and related services to the trucking industry.”

As tire manufacturing has evolved to the point where a handful of very large companies dominate the market with their well known consumer brands, the basic niche for private brand marketers has become more important.  Tire factories still want volume, but they want it in a profitable mix.  More than ever, tire distributors need the value and margin they earn by promoting a brand they can control.  Treadways brings value to the chain in two ways; firstly, by maintaining strong, mutually profitable relationships with its suppliers, and secondly, by enhancing the value of its brands in the market by managing the mix of product, promotional programs, and efficient distribution.

Hirst also credits SCOA’s concepts of integrated corporate strength as a contributor to Treadways’ success.

“For many years the reputation and resources of SCOA has opened doors for Treadways among large customers and suppliers,” Hirst said. “Treadways management has been able to act entrepreneurially with a nimbleness our larger competitors can not match.”

Purol adds that today, as a member of TBC, Treadways still enjoys the backing of SCOA, with Treadways holding a unique position of strength and perspective under the TBC banner. 

“TBC is the leading marketer of replacement tires in North America,” Purol indicated. “Our partnership with TBC has enabled Treadways to build stronger brands, enhance our supply chain systems, provide our employees with greater opportunities, and deliver even more outstanding value to our customers while assisting our other corporate entities to expand their business through a coordinated effort.”

Hirst stated, “Treadways, as part of the SCOA/TBC family, is able to offer our suppliers and customers the opportunity to continue to maximize market share.”

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