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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