News Column

Miami's "Big Wheels" Keep Latin America Rolling

July/August 2007, HISPANIC BUSINESS Magazine

Frank Nelson

Luis Ramirez started Tire Masters International in 2001.
Luis Ramirez started Tire Masters International in 2001.

>> Download the 2007 Top 50 Exporters List

When the rubber meets the road in Latin America and the Caribbean a region where highways and streets are some of the worst in the world the rubber takes a real beating.

That's one of the main reasons why finding four tire companies, all based in Miami, among the Hispanic Business Top 50 Exporters comes as no surprise to Susana Alvarez-Diaz.

"The infrastructure in Latin America is not as developed as in the U.S.," says the adjunct professor at the School of Business, North Campus, Miami Dade College, where she teaches marketing, import/export, and management.

"Vehicle tires suffer considerably more wear and tear than in the U.S. and need to be replaced much more often as dirt roads and poorly maintained streets eat away at tires and shock absorbers."

And when it comes to supplying auto parts and accessories to all those less developed countries, Miami has a lot going for it, says Ms. Alvarez-Diaz, founder and president of the Alvarez Diaz Group, a Miami-based public relations and marketing firm.

While the city's exporters enjoy a geographic advantage being so near Latin America, that's not all.

"Being close to the port of Miami and finding skilled labor in the export industry are major factors," she says. "Logistics companies here are experts at getting product to different countries in Latin America and are well versed in the intricacies of customs and necessary documentation for ease of doing business. The proliferation of these logistics companies creates competition, translating into cost advantages for the exporters located in Miami."

Tire Group International CEO Tony Gonzalez, whose company is No. 8 on our top exporters list, believes Hispanic companies in Miami have two huge advantages: They operate at the gateway to Latin America and they share the same language and cultural background as most of their clients.

His company carries brands such as the heavy-duty MRF, which is made in India but unknown here. Those tires are intended for what he calls "the very abusive conditions" of some Third World roads, especially in places such as Haiti.

Last year, Tire Group posted revenues of $36 million, more than two-thirds of that from exports. Mr. Gonzalez is predicting revenues of around $45 million for 2007, most again from offshore sales. While Latin America, especially Mexico and Peru, represents the core market, Tire Group sells in more than 70 countries.

The company sources tires from around the world, including India, China, Korea, Japan, and the United States. But as impressive as all the statistics may be, Mr. Gonzalez says they could be even better maybe $10 million more in revenues last year alone if the company could get the supply of tires it needs.

"Five years ago the problem was finding customers. Now the problem is finding supply," he says, blaming the imbalance on runaway global demand outpacing a supply chain dogged by a shortage of raw materials and escalating commodity prices.

Jorge Pola, CEO of South Dade Automotive Inc., believes much of that worldwide demand is driven by China and India, whose insatiable economies have created similar scarcities and price spikes for commodities such as steel and cement. Established in 1991, South Dade lays claim to being the only Miami distributor for the giant German manufacturer, Continental AG. Mr. Pola says his company has clients through Central and South America, taking advantage of cheaper shipping from Miami.

According to the company's Web site, South Dade supplies tires for vehicles of all kinds, from passenger cars and light trucks to industrial and agricultural. Last year, revenues were $28 million; almost half of that came from exports, a jump of 18 percent in overseas sales compared with 2005.

Another sign of South Dade's growth came in the first quarter of 2007 when a second warehouse and distribution center opened in Tampa. The company now has a staff of 10 there, in addition to 31 in Miami.

Luis Ramirez, CEO of Tire Masters International LLC, has been in the tire business for 35 years, but it was not until 2001 that, with partners Carlos Agudelo and Angel Gomez, he started his own company.

"I should have done it a long time ago," he says a little ruefully. "I wish I'd started 20 years ago." Not that it's an easy business to be in, especially in Miami.

"Each year we're growing a little bit but each year it's getting harder. There's so much competition," says Mr. Ramirez, whose company focuses on tires for trucks and big rigs though this year they are also moving more into tractor tires. The company, which posted $10.5 million in revenues last year, more than half from exports, sells mainly to Venezuela and Colombia, with other clients in Ecuador, Suriname, Dominican Republic, and parts of the Caribbean.

A partnership with Autofax, the largest Bridgestone/Firestone distributors in Colombia, has helped boost sales in South America. "We sell a lot of their truck tires," Mr. Ramirez says.

For tire exporters in Miami, the difficulties of doing business don't stop at the U.S. border. "Venezuela is becoming very tough to deal with," says Mr. Ramirez, who blames the antipathy of President Hugo Chavez toward the United States.

Delays in approving import licenses, currency restrictions, and corruption are among the obstacles exporters must overcome. Mr. Gonzalez puts a price on such measures, saying his company's trade with Venezuela has shrunk from about $6 million to less than $1 million in the last three years.

Venezuela has also become a thorn in the side of the leading Hispanic-owned tire exporter, Lucy's Tire Inc., a company that has been around since 1985 and is named for the wife of CEO Jose Rios.

The company deals mainly in tires for trucks, farm vehicles, and other off-road machines. It also recently expanded its warehouse and servicing facilities into four buildings together covering 150,000 square feet.

Mr. Rios says regulations preventing people in Venezuela from obtaining import licenses have effectively pinched off tire exports for the last eight months. At the same time, U.S. exporters are feeling the heat as Asian countries establish a firmer foothold in Latin America.

"Competition from China and India is hurting a little," says Mr. Rios, whose solution to all these challenges is to beef up exports to other countries, especially Mexico, Ecuador, Peru, and Guatemala, and seek out new markets. "You have to keep moving forward."

He's confident that his strategy will help overcome political problems and competition, domestic and foreign, enabling Lucy's Tire to beat last year's revenues of just over $51 million and keep well clear of its rivals.



Source: HISPANIC BUSINESS Magazine and Hispanicbusiness.com, Copyright (c) 2007 All Rights Reserved.


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