Denman Tire Corp. operates on the fringes.
Literally.
It’s only manufacturing operation is east of Warren in Leavittsburg, Ohio, about a mile from Lucky Pete’s Tavern on Ohio Highway 5, down a thin, forgettable road and past a trailer park. You almost need a few of its trademark Ground Hawg tires to master the gravel road to the plant’s doorway.
But Denman seems to be doing fine on the fringes of the $18 billion market for replacement tires. It’s not a major tiremaker like Goodyear or Bridgestone/Firestone, and it doesn’t want to be.
Denman makes more than 1,200 types of specialty tires in those unglamorous, no-nonsense surroundings. Its tires can reach a man’s waistline and fit on a tractor trailer or span a ruler and propel an all-terrain vehicle.
“It picks up the specialty tire niches that bigger tiremakers ignore,” says Lloyd Stoyer, editor of Modern Tire Dealer, an industry publication. Those niches include tires for antique vehicles, Post Office vehicles (the company won a $3 million contract with the U.S. government last year) and giant off-road trucks.
“The larger tiremakers make a commodity,” says Denman’s president and chief executive, Charles R. Wright. “We make something specialized.”
It doesn’t make economic sense for the big tiremakers to fiddle with Denman’s products. “That’s pretty much a low-volume business,” says Dave Wilkins, a spokesman for Goodyear Tire & Rubber Co. “We try to work in larger volumes to consequently keep the cost per tire down.”
Yet Denman’s niches seem to be expanding. And the company, celebrating its 75th year, appears ready to exploit them.
That wasn’t true a few years ago.
James G. Pearl, Denman’s executive vice president for sales and marketing, says the company was poorly run. “The people who were running things weren’t tire people, so they didn’t know about the business.”
The company’s sales organization was nonexistent: “They were willing to sit by the phone and wait for orders.”
Sales volume fell and costs rose.
The company hiked prices, causing lower volumes. “It was a spiral that had to be corrected,” Pearl says.
Plus, the Denman brand appeared to be heading toward oblivion. By 1992, only 15 percent of the tires sold came under the Denman name; the rest were sold to private label customers.
Today, the mix of Denman and private label sales is about 50-50, Pearl says. “In spite of everything, the brand name still has a good reputation.”
To correct the problems, Denman’s parent company, Eagle Industries Inc. of Chicago, made several management changes. The two new officials the company brought in have connections with the tire company Pirelli Armstrong. Pearl was in charge of Pirelli’s $200 million account with Sears, Roebuck and Co., and Wright spent his career in manufacturing at Pirelli, most recently as general manager of its radial passenger tire plant in Nashville.
Since then, the company also has beefed up its sales efforts. It now has three salesmen, one in Las Vegas to handle the western part of the county, and another in Indianapolis to canvass the east. Pearl fills in the gaps from Ohio.
Denman’s salesmen travel lots of miles. “One of our salesmen has racked up 75,000 miles on his Ford Explorer so far this year,” Pearl says proudly, noting the small sales force has approached many “cold door knobs.”
The company also exports about 20 percent of its products from places as close as Canada and as far-flung as Saudi Arabia. And, it imports a small amount of specialty tires from Mexico, China and India, “so we can broaden our product offering for our customers,” Pearl said.
“Overall, the product quality and performance have been good, and we’ve been dealing with the company since the late 1960s,” says John Kelsey, president of Kelsey Tire Co. of Camdenton, Mo. Kelsey distributes Goodyear-brand antique and classic tires made by Denman.
The efforts appeared to have paid off, Pearl says, noting the company’s sales increased by 19 percent in 1992, 31 percent in 1993 and about 8 percent this year. He would not release exact sales figures, however.
And all of those factors have led to more job security for Denman’s 400 employees, Pearl says. In times past, the company would routinely lay off the bulk of its manufacturing work force just before Thanksgiving and keep them out of work into the following year.
Pearl says workers are now working three shifts, five days a week, year-round. “Last year we worked every Saturday and every other Sunday, on a voluntary basis for the second half of the year,” he said.
Denman has shaped up enough that Eagle has invested new money in the plant. In the last year, it has spent $400,000 for a new tread extruder and $300,000 for two tire building machines.
As he walks through the plant, Pearl talks of the improvements made in recent years. “Believe me, this looks 100 percent better than it used to look. And you have to keep in mind that a lot of this plant is 75 years old.”
The plant is cavernous and marked by pockets of machinery. Unformed doughnuts of rubber, “green” tires, are “cooked” in molds and then cooled. The process seems remarkably easy-and it pumps out about 2,600 tires a day.
“That tire there is still cooking!” Pearl exclaims, as a worker rolls a steaming tire to a pile.
To a layman, the plant appears dark and noisy. But one person familiar with the company said the environs are remarkably improved. “Used to be, you’d walk in there and they’d have a few 40-watt bulbs hanging from the ceiling.
“Years ago,” he continued, “you would approach the plant and there was no sign, no landscaping. Weeds were growing all over the parking lot, which was unpaved, and the building itself was painted maybe three different colors.
“They’ve come a long way.”
Despite its still-unobtrusive appearance, Denman has some high-profile kin.
Eagle Industries is a subsidiary of Great American Management and Investment Inc., a holding company owned by investor Sam Zell.
Zell and his investment fund made their Northeast Ohio debut in 1992 when they backed Twinsburg, Ohio-based Revco with $250 million, allowing the drugstore chain to emerge from bankruptcy on its own footing.
Because Eagle Industries is privately held, little information is available about its operations. Analysts don’t follow the company because it is not publicly traded-or even terribly noticeable in the tire industry.
Gus Athas, a senior vice president for Eagle, said the company reported about $1.2 billion in sales last year. A conglomerate, Eagle’s companies make building, electrical and automotive products.
