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UPDATE: ATD reorganizes, eliminates 100 positions, adds 40 others

HUNTERSVILLE, N.C. — American Tire Distributors Inc. (ATD), North America’s largest tire distributor, has restructured its operations as part of a new strategic plan that it said is designed to make “customers become even more successful.”

As part of the restructuring, ATD will:

  • Eliminate approximately 100 positions at its Field Support Center (FSC) in Huntersville. ATD employs around 5,000 associates in North America.
  • Reinvest in 40 new positions, called retail account managers (RAM), who will help the company “better serve our manufacturer partners and customers.”
  • Assign two senior team members to focus entirely on the company’s Tire Pros franchise program in an effort to increase the number of new franchisees. There are 745 Tire Pros locations across the U.S.

According to a source, the reorganization is expected to generate $20 million in annual savings.

The moves come weeks after two of ATD’s largest customers, Bridgestone Americas Inc. and Goodyear, announced they were discontinuing most or all their supply relationship with the tire distributor.

Bridgestone and Goodyear formed their own distribution joint venture, TireHub L.L.C., that began operations on July 3.

ATD said it has no plans at this time to court any potential buyers, close any warehouses, reduce delivery frequency or sell any assets, such as Hercules Tire & Rubber Co., which the company described as “valuable.”

TPG Capital and Ares Management L.P.’s Private Equity Group own ATD jointly.

A spokesman for ATD indicated that no further reductions in staff are imminent.

“ATD has been an industry leader for more than 80 years due to our commitment and ability to constantly adapt to changes in the industry,” the spokesman said.

“We have continuously evaluated our capabilities to ensure that they align with our strategy. We feel confident that we’re in the right place today and are certain that the path that we’re on will help ATD and its customers become even more successful.

“This reorganization was difficult, but it delivers on our strategy and our promise to win for our manufacturer partners and customers.”

Senior members of ATD’s leadership team held a series of townhall meetings with FSC employees on July 26 to explain the moves and answer any questions.

“By taking a look at how to further improve our field support functions, which includes Tire Pros, ATD will continue to deliver results for manufacturer partners, customers and Tire Pros franchisees,” the spokesman said.

The RAM role is designed to bring together best-in-class marketing services and distinctive operational advisory services, ATD said.

“This is a specialized skill set within our organization,” the spokesman said, “and we believe it is a compelling position both internally and externally.”

The spokesman called ATD’s commitment to the independent dealer in general and Tire Pros franchisee in particular “unwavering,” as evidenced, he said, by ATD’s strategic investments, including the senior members assigned to grow the business unit.

“As part of our strategic plan, we are confident these dedicated senior leaders will help accelerate the number of new franchisees joining Tire Pros,” the spokesman said. “This is a strategy that is leveraged across many franchise organizations — we now have dedicated groups focused on growing our franchise via acquisition and growing our existing business via franchise support across marketing and operations.”

The moves first came to light on the afternoon of July 25, when ATD President and CEO Stuart Schuette emailed a signed letter to ATD associates, thanking those affected by the workforce reductions for their work and maintaining ATD’s commitment to becoming “the most connected and insightful automotive solutions provider, and every decision that we have made — and will make — is grounded in realizing this vision.”

Mr. Schuette hinted that more moves are on the horizon.

“We have a plan that we are working through with our sponsors, and over the course of the next few months through all of our efforts we will pave the road ahead of us,” he wrote. “We look forward to sharing this with you as it becomes finalized. We will remain the industry leader in every respect.”

Ron Sinclair, president of Tire Pros and senior vice president, retail strategy and partnerships for ATD, informed the Tire Pros network of the moves with a letter emailed to dealers on July 26. Mr. Sinclair wrote that RAMs will be responsible “for unlocking all the value of the franchise and make it easier to do business with Tire Pros and ATD.”

“This team will have dedicated support from both Tire Pros and ATD in order to provide integrated marketing support and digital tools developed to grow your business.”

Mr. Sinclair said the company is “committed to helping you grow your business, building the Tire Pros franchise and ensuring that working with Tire Pros and ATD is hassle-free. These changes are effective immediately. Your new retail account manager will be in touch soon to discuss the new support structure and the many opportunities it will offer.

Mr. Sinclair said he is confident the two new senior members “will accelerate the number of new franchisees joining Tire Pros.

“We work hard every day to enhance our Tire Pros tools, services and support to deliver on the goals of driving traffic to your stores, enhancing your operations and optimizing your overall profitability,” Mr. Sinclair said.

ATD said the move is part of its ongoing transformation begun nearly two years ago that is “anchored in new technologies, analytics and digital capabilities.”

With the help of its mission-based councils, composed of dealers and Tire Pros executives, Tire Pros recently launched a marketing campaign built around a simple message: “Hassle-Free. Guaranteed.”

In the aftermath of losing two major customers, Moody’s Investor Service INc. issued a bleak forecast for ATD’s future, questioning whether ATD has sufficient cash reserves to cover certain projected interest payments and maintenance costs in the near future.

Moody’s said ATD must cut a significant amount of its cost, while replacing 40 percent of the revenue lost from the departures of Goodyear and Bridgestone, in order to cover projected annual interest payments and maintenance investments of $243 million.

ATD said it will continue to look for additional business opportunities that align with its strategy as it looks to recoup some of the losses felt by the Bridgestone and Goodyear departures.

“Several of our suppliers recognize current events as a tremendous opportunity for their growth,” the spokesman said. “We have many strong remaining supplier partnerships and several new customer partnerships in the works right now.”

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