Denman Files Chapter 7. It is officially over for Denman
Tire Co. Denman filed for Chapter 7 bankruptcy in the
U.S. Bankruptcy Court Northern District of Ohio early
Wednesday afternoon, ending an almost two-year struggle
to stay afloat in the face of a brutal economy and heavy
pressure from imported tires. The OTR and industrial
tiremaker had celebrated its 90th anniversary last year. Now
its offices and production plant in Leavittsburg, Ohio – and
a warehouse in nearby Austintown – lie vacant, waiting for
court-ordered liquidation to begin. The company ceased
operations on Feb. 23, giving its required 60-day closure
notice as required by federal law. While Denman officials
said they were continuing to seek additional funding or a
buyer, those efforts apparently fell short, forcing today’s
bankruptcy announcement. Over the last several months,
smaller groups of employees were laid off in increments.
In early February, production workers were sent home
from work and told not to return until further notice. A
subsequent meeting of USW members revealed that the
Denman’s bank had refused to extend any more credit to
the tiremaker. In all, Denman’s closure meant some 270
lost jobs. Sandy Pensler, the president of Pensler Capital
Corp. and Denman CEO, offered no public comment on
the filing. His Pensler Capital is majority owner of Denman
Tire, with 76.%. Also listed as equity owners was Interco
Investment Group of Rayne, La., with 20%. A Handful of
individuals, including retire Denman President Charles
Wright, held stakes of 1% or less. Pensler Capital bought
its stake in Denman in 1996. The Chapter 7 filing means
the court will set a liquidation of all of Denman’s property
and assets, and manage the distribution of proceeds to its
creditors.
Dealer Hit for Installing Aged, Recalled Tire. A
Southern California dealer was hit with an $18 million
judgment last week, with the jury finding in favor of an
11-year-old boy killed in a crash attributed to a previously
recalled Firestone tire. American Tire Depot was found
negligent for installing the 12-year-old tire – the vehicle’s
spare tire – on the Ford Explorer involved in the accident.
The May 2006 accident happened on a freeway near
Riverside, Calif., when the tire allegedly suffered a tread
separation. The family claimed they took the Explorer
to the dealer for two new tires, but the American Tire
Depot location sold them one tire and installed the spare, a
recalled Firestone Radial ATX, on the other wheel position.
The jury found the tire dealer was 85% liable for the boy’s
death. The Moreno family had previously settled their case
against Bridgestone Americas.
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ATD Sold to Equity Group in $1.3 Billion Deal.North America’s largest independent tire distributor has
a new owner as equity company TPG Capital is acquiring
American Tire Distributors in a $1.3 billion deal. The
deal, announced in April, is expected to close by mid-2010.
Additional terms of the deal were not announced. “This
is an exciting time in the evolution of our company,” said
William Berry, ATD president and CEO. “We welcome
our new partners at TPG, who share the same vision
we do for the continued growth of the American Tire
Distributors brand as significant growth opportunities
remain and we continue to seize opportunities such as
geographic expansion and online sales.” The sale effectively
ended ATD’s previously announced plan to go public
with a stock sale. In February, the company had filed the
necessary paperwork with the SEC, with plans to raise
some $230 million by trading on the New York Stock
Exchange under the symbol ATD. The sale to TPG Capital
will end ATD’s ownership by a consortium of Investcorp,
Berkshire Partners and Greenbriar Equity Group, which
bought ATD in 2005 for an estimated $500 million. ATD,
in its fiscal 2009 10-K filing, reported sales of $2.17 billion,
up from 2008’s $1.96 billion. Net profits came in at $4.93million for 2009, down from a profit of $9.67 million in
2008, the company reported. ATD owns and operates 83
distribution centers and services dealers in 37 states.
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TIA Creates Environmental Advisory Council. The Tire
Industry Association (TIA) has formed an Environmental
Advisory Council (EAC) to provide strategic information,
advisory services, educational programs and governmental
assistance to promote “green” operations and environmental
awareness throughout the tire industry. The EAC replaces
the Tire and Rubber Recycling Industry Council (TRRAC),
and expands on TRRAC’s mission by including all facets of
the tire industry, TIA said. The new council will encourage
TIA members and others in the industry to examine every
aspect of their businesses to be energy efficient, reduce
waste, ensure safety and reuse, repair or recycle tires as
much as possible, the association said. Tire dealers and the
tire industry need to take a broader, more holistic approach
to establishing “green” concepts and practices in their
operations, TIA President Wayne Mr. Croswell said. TIA
Secretary Larry Brandt, of MSB Tires L.L.C., and TIA
board member Dick Gust, of Liberty Tire Recycling, will
be the first co-chairmen of the 12-member EAC, according
to TIA. Other TIA board members on the council are:
Michael Baggett, Yokohama Tire Corp.; Chip Huber,
Q Fix Truck Service; Brett Matschke, Richlonn’s Tire &
Service Centers; Glen Nicholson, Tire Kingdom; and Jim
Pangle, Fountain Tire. Additional council members are:
Charles Astafan, general manager, Columbus McKinnon;
Kevin Kendrick, president, Modified Asphalt Solutions;
Robert Moyer, director, Costco Cost Centers; Tim Bent,
director-environmental affairs, Bridgestone Americas; and
Mary Sikora, principal, Recycling Research Institute. For
EAC events and updates, check www.tireindustry.org
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Firm Forecasts Rubber Demand. Global rubber demand
will rise at 4.3 percent annually through 2013, helped in
part by a recovery in vehicle production in the U.S., Canada
and France, according to a new report. Consumption will
grow to 27.9 million metric tons by 2013, according to
Cleveland-based market research firm Freedonia Group
Inc. China will account for more than one-third of world
demand by that date. The company predicts non-tire
rubber demand will grow faster than tire rubber use in
the time period, fueled by increasing industrialization in
developing countries. Natural rubber will show a slightly
high growth rate than synthetic rubber. Freedonia expects
the Asia/Pacific region-which accounted for 57 percent
of world rubber demand in 2008-to continue to show the
strongest growth. While North America and Western
Europe are forecast to grow at a slower pace than other
regions, both should see improvement from the declines
experienced in the 2003-2008 period.
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RMA Says Shipments Up - on OE Side. RMA sees
modest recovery in tire shipments for 2010, predicting an
overall 3% increase for the year and setting the stage for
further growth in 2011. That 3%, RMA said, would bring
another 7 million tires to market, for an overall total of 267
million units. Total shipments in 2009 fell 8%, RMA said,
down to 259.7 million units. But, most of RMAS expected
increase is on the OE side, with P-metric and LT-metric
replacement shipments expected to be off about 1 % each
in 2010. By market segment, RMA sees: OE P-metric -
up 21% to nearly 30 million units; OE LT-metric - up
nearly 10% to more than 3 million units; OE Medium
Truck - up nearly 8% or approximately 180,000 additional
units; Replacement P-metric - up 1% or 1. 7 million units;
Replacement LT-metric - down 1% to approximately
27.3 million units; Replacement Medium Truck - up
approximately 600,000 units.
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NHTSA Issues ‘Final’ Fuel Efficiency Regs. NHTSA
issued its “final” regulations on the testing and labeling
of new consumer tires, but left open certain key aspects.
The 195-page document was issued Mar. 25, just one
day before NHTSA held public hearings regarding the
consumer education portion of the new regulations. It
was that portion of the Congressionally mandated tire fuel
efficiency regulations that was among areas left incomplete
by NHTSA. Once fully enacted, the new rule will require
tiremakers to test and grade their replacement market
P-metric tires for rolling resistance, traction and tread
wear, and display those grades on a label affixed to each
tire. The exact label design has also not been set. However,
for the most part NHTSA nailed down other aspects of
the regulations, including setting a firm testing system,
what tires are covered under the regulations, tiremaker
responsibilities and the future of UTQG. Here are some
key points in the semi-final rule: • Testing and labeling
will cover rolling resistance, “safety” (as measured by wet
traction), and tread wear. The exact presentation of grading
is expected to follow a 1 to 100 scale. • NHTSA specified
that tire rolling resistance will be measured using ISO
28580, and that a tire’s fuel efficiency rating will be based
on rolling resistance force rather than rolling resistance
coefficient, which Europe uses. • The “safety” and tread
wear elements of the grading will follow current UTQG
test procedures. In fact, NHTSA is retaining the entire
UTQG testing and reporting program. • The program
includes bias-ply and radial passenger tires, but only those
carrying P-metric or euro-metric sizes. LT-metric tires are
excluded, as are winter tires, “space-saver” spares, limited
production tires, tires with a wheel diameter of 12 inches
or less, or tires specifically designed for use on trailers. • The regulations cover only replacement tires, but this
includes OE tires sold into the replacement market, such
as OE downstreams, or those sold to car dealers as directOE replacements. • NHTSA said it was not necessary
to require every single tire SKU to be tested. Rather,
tiremakers could estimate the test values across a specific
brand and/or product line based in testing of a handful of
SKUs within that brand and/or line. • The semi-final rule
does not require that labels be affixed to tires in existing
inventory, only those produced after the rule goes into
effect. For more information or to download a PDF of the
complete document, visit tirereview.com.
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Bridgestone Files Infringement Suit. Bridgestone
Americas has filed a trademark infringement suit against
Commerce Max Inc., a company that sells “Amberstone”
brand medium truck and OTR tires. Based in Pflugerville,
Texas, Commerce Max, according to its Web site, sells a
wide range of tire brands, including Michelin, Bridgestone,
Goodyear, Yokohama, General and Firestone. The
Amberstone brand tires it offers are produced in China
by an unnamed manufacturer. The suit was filed March
12 in the u.s. District Court for the Middle District of
Tennessee, and demands Commerce Max pay damages,
discontinue sales of the Amberstone lines, destroy all
associated marketing materials, inform its customers
that the brand is not affiliated with Bridgestone, pay to
Bridgestone any profits made from the sale of Amberstone
brand tires, and cover Bridgestone’s legal fees. “Commerce
Max is infringing the iconic, federally registered and
incontestable Bridgestone and Firestone trademarks by
using the ‘Amberstone’ brand to sell tires,” Bridgestone
Americas said in a statement. “Commerce Max’s use
of a similar brand that trades off our ‘stone’ suffix runs
afoul of federal and state trademark, unfair competition,
and consumer-protection laws. This lawsuit was filed to
prevent consumer confusion. Specifically, when consumers
encounter Commerce Max’s ‘Amberstone’ tire brand, they
are likely to believe that the tire is made by, associated with
or licensed by our company.”
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