Goodyear and Bridgestone Form Tire Distribution Network: TireHub

Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. are joining forces. The two tire manufacturers have formed TireHub LLC, one of the largest tire distribution joint ventures in the United States.

In a filing with the U.S. Securities and Exchange Commission, Goodyear says the total estimated fair value of the joint venture is approximately $600 million. No cash is being exchanged as part of the deal.

TireHub will provide U.S. tire dealers and retailers "with a comprehensive range of passenger and light truck tires from two of the world’s leading tire companies, with an emphasis on satisfying rapidly growing demand for larger rim diameter premium tires," says Goodyear in an official press release.

TireHub will combine Goodyear’s company-owned wholesale distribution network with Bridgestone-owned Tire Wholesale Warehouse (TWW). The transaction "will enable Bridgestone and Goodyear to grow their respective tire businesses and capture enhanced value for their brands."

Initially, the companies expect TireHub sales to include approximately 10 million units a year — that's the combined, existing volume from Goodyear's company-owned distribution and TWW.

The transaction is subject to customary approvals and is expected to close mid-year.

"It’s critical for U.S. tire dealers and retailers to be able to get the right tires on time to meet the needs and expectations of their customers," says TJ Higgins, president, integrated consumer tire group, U.S. and Canada, Bridgestone Americas. "TireHub will help position dealers to win in today’s dynamic and increasingly complex environment by giving them much needed access to a deeper and broader range of passenger and light truck tires from Bridgestone."

"With the ability to deliver the full portfolio of Goodyear products and a dedicated focus on driving logistics and customer service excellence, TireHub creates a winning proposition for us, our customers, Goodyear’s company-owned retail outlets and consumers, whose expectations and shopping patterns continue to evolve," says Steve McClellan, president of Goodyear Americas.

TireHub will be a 50-50 joint venture between Goodyear and Bridgestone and will be managed by an independent management team led by CEO Peter Gibbons. Gibbons is a veteran business and supply chain executive, with 25 years of experience leading manufacturing and supply chain activities in the consumer, retail and specialty chemicals industries. While in senior leadership roles at both Mattel and Starbucks, Gibbons led customer-centric efforts to transform both companies’ supply chains, improving fulfillment and speed to market.

Start-up costs are estimated at $40 million and will be shared equally between both tire companies. Those costs are primarily related to "information technology infrastructure, initial staffing requirements and other administrative costs."

Both companies say at launch, TireHub "will have the scale to reach the vast majority of retail locations in the U.S. daily." The new distribution company "will complement both companies’ networks of existing third-party distributors and provide a superior, fully integrated distribution, warehousing, sales and delivery solution immediately following completion of the transaction."

The press release also says the following:

"TireHub is uniquely positioned to meet the needs of tire dealers and retailers, as well as the consumers they serve. Both Bridgestone and Goodyear expect that TireHub will provide enhanced fill rates and turnaround times to ensure dealers can quickly access the products they need. TireHub will deliver a best-in-class customer experience through a single sales force and new online ordering portal that integrates easily with dealers’ point-of-sale systems.

"TireHub also will help Goodyear and Bridgestone customers manage growing complexity in the tire business, driven by SKU proliferation. The new distributor will provide on-demand access to the full array of products from both companies, which is critical for their customers, who typically have limited inventory space at their locations."

TireHub, which will be headquartered in Atlanta, initially will have more than 80 distribution centers and warehouse locations throughout the nation. The company’s physical assets at launch will be a combination of legacy Bridgestone TWW and Goodyear facilities.

The joint venture announcement comes less than four months after Michelin North America Inc. and Sumitomo Corporation of Americas (SCOA) agreed to combine their respective North American replacement tire distribution and related service operations into their own 50-50 joint venture. By combining Michelin’s more than 85 Tire Centers LLC (TCi) distribution centers with TBC’s 59 Carroll Tire distribution centers and forming NTW, Michelin and SCOA created the second largest tire wholesaler in the U.S. in terms of market share behind American Tire Distributors Inc. (ATD).