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The Kelly-Springfield Tire Company

 


Address:
12501 Willow Brook Rd.
Cumberland,
MD
21502-2599 U.S.A.
Telephone: (301) 777-6000
Fax: (301) 777-6290


Statistics:
Wholly-Owned Subsidiary of The Goodyear Tire & Rubber Co.
Incorporated: 1894 as the Consolidated Rubber Tire Co.
Employees: 7,000
Sales: &Dollar;850.50 million
SICs: 3011 Tires


Company History:

The Kelly-Springfield Tire Company, which became a wholly owned subsidiary of The Goodyear Tire and Rubber Company in 1935, is one of the oldest continuously operating tire companies in the nation. The company has the distinction of being the first to develop and manufacture solid rubber tires for carriages and the early automobile. Currently a manufacturer of at least 54 brands of tires for cars, trucks, and farm vehicles, Kelly-Springfield distributes to private dealers and store chains throughout the country. Kelly-Springfield is the country's most important manufacturer of custom brand tires and the world's top producer of farm tires. The company owns and operates the world's largest tire manufacturing plant in Fayetteville, North Carolina.

As with countless American firms, Kelly-Springfield was founded by a young, dynamic entrepreneur, Edwin S. Kelly. A native of Springfield, Ohio, he established The Rubber Tire Wheel Company in 1894. Rubber (named by British scientist Joseph Priestly in the early 19th century because it "rubbed out" pencil marks) was relatively new, especially vulcanized rubber, which was a treated rubber that was processed to stay firm under heat. Charles Goodyear was the first to develop vulcanization, a process he patented in 1844. Thereafter, the demand for rubber was insatiable.

At the time Edwin S. Kelly was growing up, carriages had gone unpadded for centuries. Carriage rides were uncomfortable, slow, and often unsafe. One of the first applications of vulcanized rubber was to cushion wheels. Only the wealthy could afford rubber padding, which took years to perfect and often fell off the wheel when the carriage turned. American entrepreneurs began tinkering with solutions to this problem. One of these was Arthur W. Grant of Springfield, Ohio, a superintendent in the Tricycle Manufacturing Company. In 1893, Grant approached Edwin Kelly with a blueprint of his new and superior solid rubber carriage tire, with two internal wires and a specially designed rim. The two entrepreneurs had not yet gone into business together to form The Rubber Tire Wheel Company. Hence Kelly took the blueprint to the B.F. Goodrich Company, where the product was manufactured and tested.

The test passed with flying colors. Grant (who would receive a patent for his invention in 1896) and Kelly pooled their resources and in 1894, established their new tire company in Springfield, Ohio. Considering the tremendous consumer demand for rubber--heightened by the bicycle craze that had erupted in the late 1880s--the new firm flourished. It did not manufacture the newfangled rubber tires, however. Rubber tires were procured from the Goodrich company in rolls; Grant himself would cut and fit the tires according to his blueprint. Soon the Rubber Tire Wheel Company was making tires for a world market.

Perhaps it is surprising that only five years after Grant and Kelly had opened their company for business, they decided to put it up for sale. Though the new solid rubber carriage tire was selling well, the owners had financed start-up costs with loans. Selling the firm to the McMillin Company in 1899 for one million dollars cleared them both of debt. While Grant decided to leave the tire business, Kelly stayed on as general manager and vice president of the renamed firm, the Consolidated Rubber Tire Company (which changed its name for the last time in 1914 to the Kelly-Springfield Tire Company). It continued to sell the "Kelly" tire, which would be the company's dole brand name tire until the 1930s.

Hence the Rubber Tire Wheel Company was not disbanded, but remained under new ownership and with a new name. Edwin Kelly remained manager and vice president of the Consolidate Rubber Tire Company until 1905. He had proved receptive to Grant's new and superior solid rubber tire in 1893, and likewise was ahead of his time when in came to recognizing the potential of the new horseless carriage.

As vice president, Kelly set about to provide a manufacturing base for Kelly tires, and purchased the Buckeye Rubber Company in New Jersey for this purpose. More importantly, he became the driving force behind the acquisition of the Columbia Pneumatic Wagon Wheel Company, thus established a foothold in a revolutionary and still new invention: the compressed air, or pneumatic, tire.

The advent of bicycles in the 1880s had given further stimulus to the evolution of rubber tires. Solid rubber tires did not work well on bicycles. Air compressed (pneumatic) tires were first developed for the bicycle in the late 1880s, giving the biker a smooth, gentle ride, fast speeds, and maneuverability. These innovative tires would serve as the prototype for horse-drawn carriages and the future horseless carriage. The Consolidated Rubber Tire Company took a conservative approach to the revolutionary new tire, however. The company continued to manufacture the solid rubber tire for cars, in which it had the largest world market share, well into the 1920s. In 1909 it also came out with the solid rubber tire specifically designed for trucks, called the Caterpillar. It quickly became the number one brand of truck tire in the world.

The company did not begin manufacturing pneumatic auto tires until 1908. While other companies had entered the pneumatic tire business earlier, cars were not yet being mass-produced and were a luxury that only the rich could afford. The market for pneumatic car tires therefore remained small until Henry Ford's mass assembly lines churned out Model-Ts at more affordable prices. The First World War tremendously escalated the demand for tires of all types, creating a world market for pneumatic auto tires by 1918.

By then, the Consolidated Rubber Tire Company had changed its name to the Kelly-Springfield Tire Company, whose corporate headquarters were located in New York City. Wartime profits enable company managers to plan the construction of the biggest and most modern tire manufacturing facility in the world in Cumberland, Maryland, which was in close proximity to the company's distribution centers. Begun in 1917, the facility was not completed until 1921, during a severe postwar recession. While hard times would give way to boom years, Kelly-Springfield rarely made a profit throughout the prosperous 1920s. The succeeding Depression had a devastating effect on the firm, which soon went bankrupt. Had in not been for the emergence of a dynamic new company leader, Kelly-Springfield might have closed its doors forever.

A born salesman, Edmund S. Burke because president of Kelly-Springfield in 1935, and remained at the helm until 1959. Under his management, streamlining and consolidation took place, all sales offices were moved to Cumberland, and Goodyear Tire and Rubber Company was persuaded to purchase Kelly-Springfield as a wholly owned subsidiary. Having barely survived the Depression, Goodyear was skeptical at first and cash was tight. Nevertheless an agreement was signed that year, and The Kelly-Springfield Company ("The" officially was affixed to the company name in 1932) became part of the Goodyear family of business enterprises. By then, the worst of the Depression was over and the turnaround in Kelly-Springfield's fortunes had begun.

Burke's philosophy was modern, but still highly conservative. Only one new tire brand (the "Vogue") emerged and no expansion followed, his belief being that small was best. One innovation that he tolerated was the growing trend of selling products in gasoline stations. Burke approved he sale of Kelly tires in the proliferating gas stations of the 1930s, which considerably boosted company sales and profitability for the first time since the end of the First World War.

Advertising was the one area in which no expense was too great. Since its earliest days, Kelly-Springfield's predecessors had advertised heavily and imaginatively, in all major glossy magazines of the day. From 1915 to 1930, Kelly-Springfield sponsored Broadway shows, entitling the company to be advertised during intermissions. If a prominent person bought Kelly tires, the company felt free to advertise that fact, while famous names in sports and theater were actively recruited to promote tires. Burke kept up the barrage of advertising, including the most spectacular and expensive, like the huge electric sign displays in New York's Times Square and other major cities. Even during World War II, when Kelly-Springfield was not producing tires, tire advertising continued unabated.

The onset of the Second World War brought the first major crisis in the rubber industry: a dearth of natural rubber. The U.S. government began strictly rationing rubber, even ordering the shutdown of small rubber companies. The Kelly-Springfield Tire Company, under Burke's helm, sensed that it was on the list, and acted quickly. In November 1941, the company switched from producing tires to munitions, although no one in the company had experience in this "product." Nevertheless the conversion turned out to be a success; in the last month of munitions production, July, 1943, The Kelly-Springfield Company churned out over 23 million eight-inch explosive shells. By then, synthetic rubber had been invented, and the government ordered the company to return to tires, of which there was a dire shortage.

The company prospered during and after the war, but no new brand of tire came on the market, nor did Burke revise his philosophy that "small was best." When he retired in 1959 the company was 60 years old and had changed little over the years. In 1959 there was only one custom brand tire, the "Vogue," while 25 years later there would be thousands of different custom brands and sizes of tires. Over the same period the company expanded from only one plant in Cumberland, Maryland, to plants throughout the nation, including the largest in the world. While quality was at an all time high in 1959, attention to consumer preferences was just beginning.

Although Kelly-Springfield continued as a subsidiary of Goodyear Tire and Rubber Company, it operated with wide latitude, even acquiring its own subsidiaries in the course of its relationship with Goodyear. In 1962, Kelly-Springfield acquired the Star Rubber Company (a company that originally devised the first radial tires), along with three other corporations connected to Star: the Hick's Rubber Company, Richmond Rubber Company, and Richmond Tire & Rubber Company. At the time of their acquisition, Star and the Richmond companies had long ceased manufacturing tires, preferring to distribute tires and inner tubes wholesale. In 1975, these subsidiaries merged as divisions within Kelly-Springfield. Likewise, in 1987, The Lee Tire & Rubber Company was acquired by Kelly-Springfield as a subsidiary, also merging with Kelly-Springfield several years later (the company has no subsidiaries in the early 1990s). Goodyear relies on Kelly-Springfield's wide distribution network and sets its targets; research and development, manufacturing and sales are up to Kelly-Springfield.

Since Burke's retirement, expansion and growth and an explosion of new custom brand tires have become the pattern at Kelly-Springfield, as well as growing profits (its first &Dollar;1 billion in sales was achieved in the late 1980s). Still exclusively a tire manufacturer, Kelly-Springfield also branched into farm equipment tires and distributes its products through every major store chain--including Sears, WalMart, and K-Mart--as well as through thousands of private dealers. Production of its tires has soared with the construction of additional facilities under Burke's successor, President and CEO George B. Newman. In 1961, the Tyler, Texas plant was built, followed quickly by new facilities in Freeport, Illinois and finally, the largest tire manufacturing plant in the world, in Fayetteville, North Carolina, constructed in 1969. The overseas market has not been neglected. Approximately 70 countries currently market Kelly-Springfield tires, thanks in part to Goodyear's international distribution network.

On the eve of the 21st century, Kelly-Springfield has become a large, modern, profitable tire company that manufactures over 50 Kelly-Springfield brands of tires and thousands of custom brand tires. Competition is intense, and Kelly-Springfield's parent company, Goodyear, is the only major American tire company that has survived takeover bids from foreign concerns.

Mr. Lee N. Fiedler, president and CEO of Kelly-Springfield in the early 1990s, is faced with an array of challenges, probably the greatest of which is environmental. As a subsidiary of Goodyear, Kelly-Springfield complies with Goodyear's environmental guidelines, such as converting used tires, which in the past ended up in huge scrap heaps, into reusable energy, primarily for use by electric utility companies. In the 1980s, Kelly-Springfield made the switch from imported oil to coal in its manufacturing facilities, installing expensive effluent emissions controls in all factories to reduce emissions 50 percent by 1995.

While high performance and private brand tires sold well even during the 1990s recession, stricter environmental laws mean that the tire of the future will have to be more energy efficient, lending itself not to greater but to lower (55 mph) speed limits. The 1992 Invicta GFE auto tire that saves fuel by reducing the rate of friction and thus reducing gas use by 4 percent, is an example of "the tire of the futures." In order to remain a major player in the &Dollar;40 billion dollar worldwide tire industry, Goodyear and its subsidiary, Kelly-Springfield will have to develop many more environmentally friendly tires.





Further Reading:


"The Bounce is Back at Goodyear," Fortune, September 7, 1992, pp. 70-72.
The Goodyear Tire & Rubber Company Annual Reports, Akron, OH: The Goodyear Tire & Rubber Company, 1991-1992.
Jackson, Kenneth A., The Kelly-Springfield Story, Cumberland, MD: The Kelly-Springfield Tire Company, 1988.
"Kelly-Springfield Tire (Lee/Star division renamed Associate Brand)," Rubber World, May 1992, p. 18.
"Marketer of the Month: You'll Find Lee Fiedler Where the Rubber Meets the Road," Sales & Marketing Management, December 1992, pp. 36-37.
"Why Tiremakers Are Still Spinning Their Wheels," Business Week (Industrial/Technology Edition), February 26, 1990.

Source: International Directory of Company Histories, Vol. 8. St. James Press, 1994.




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