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VOL. 126 | NO. 230 | Thursday, November 24, 2011

Gaining Traction

Del-Nat bolsters co-op model with new line of tires

By Bill Dries

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It’s not uncommon for cooperatives of independent booksellers and music stores to launch campaigns in hopes of attracting consumers.

Memphis and Shelby County officials earlier this month joined Chinese manufacturers for a tour of the Del-Nat Tires distribution center.

(Photo: Brandon Dill)

But when Del-Nat Tire Corp. started in 1989, the similar idea of forming a cooperative of independent tire dealers and distributors wasn’t given much of a chance by some in the tire business.

The company was formed in tumultuous times for an industry defined by automakers and well-established American tire brands that went on those new cars.

“We are the only tire co-op in the United States,” said Randy Gaetz, Del-Nat’s vice president of sales and marketing. “Over time, there’s just been an evolution and change of the distribution footprint. Now we’re to the point where we’re at 75 (dealers) and we still have areas of the country that are open for stockholders. Hopefully in the next year or so we can fill more of those spaces and try to have 100 percent of the United States and Canada covered.”

The Del-Nat brand names are Delta and National passenger, light truck and SUV tires, Chaparral light truck tires and commercial tires across the truck, agriculture, off-the-road and trailer sectors under the AKURET brand.

Del-Nat president Jim Mayfield came to the business two years ago with a resume that included work with the Michelin, Continental and Yokohama brands.

“Del-Nat’s focus for the past two years and for the future will be to provide products and marketing areas to our stockholders that allow independent tire dealers to be truly independent,” Mayfield said in a written statement.

Executives at Qingdao Doublestar Industrial Co. Limited of China were in Memphis earlier this month to tour the South Memphis facility and sign an agreement that makes Del-Nat the first North American distributor of its medium-sized steel radial heavy duty truck tires, adding the Doublestar brand to the co-op.

The agreement also means Del-Nat has a manufacturer to complete its AKURET brand of commercial tires.

“It helps Doublestar get established here in the United States. But we also have an agreement with them to manufacture our private brand of truck tire under the AKURET brand,” Gaetz said. “The AKURET brand is the brand we use for all our stockholders to denote any commercial products whether it be truck, agricultural tires, industrial, off the road – anything to do with commercial products is branded AKURET. The last piece we needed to be branded AKURET was our commercial truck tires. They’ve agreed to do it for us.”

Most of Del-Nat’s revenues are from passenger and light truck tire sales. The company posts annual sales of more than $200 million.

Part of the reason behind the growth is the continuing recession and consumers looking for new tires for older cars at a lower price than the big-name brands that have seen a lot of changes in the last 30 years.

During the 1980s, half of the companies in the U.S. tire industry were bought and sold.

That included such well-known American brands as Firestone, Uniroyal and General Tire becoming the property of foreign companies.

The U.S.-based companies were latecomers to radial tires – much later than European markets where American-made cars were often equipped with radials for that market but not for the U.S. market.

The tire industry has been tied to auto manufacturing with a carmaker’s choice of a tire brand translating to sales beyond the showroom.

The business is still competitive, Gaetz said. But the co-op offers tire dealers carrying the Del-Nat brands an exclusive market to sell in.

“In the tire business today, there aren’t any companies that offer their customers their own territories with their own brands to sell without fearing that anybody else is going to come into that marketplace and sell those tires and try to undercut them,” he said. “Or in the case of a lot of the big manufacturers … that they’ll come in and introduce company owned distribution in the same market where they’re asking their independent tire dealers to sell the same products. That really is the real draw to people who want to join Del-Nat.”

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