Manufacturing & Technology and Technology and Sports Business

Hoosier Tire still racing: For nearly a half-century, Lakeville company has competed with the big boys

December 11, 2006

When the rubber meets the road, auto racing experts say there are few-if any-companies that outperform Lakeville-based Hoosier Racing Tire.

Hoosier tires, industry sources said, are equal to their better-known brethren in racing-related sales and on-track performance.

"This company has gone head-to-head with Goodyear on the biggest of all racing circuits," said Dick Berggren, editor of Speedway Illustrated and a retired racer. "I can't think of a business where the costs of entry are steeper or the level of technology needed to succeed is higher, and Hoosier Tire has come in and taken on all comers."

At its headquarters eight miles south of South Bend, Hoosier quietly cranks out hundreds of thousands of racing-specific tires annually.

Company founder Robert Newton, a former dirt-track racer, declined to talk about sales, Hoosier's employee count and the square footage of his corporate headquarters and distribution facility in Lakeville and manufacturing plant in Plymouth.

But Dennis Sherman, Hoosier's vice president of marketing, thinks the firm sells more racing tires than any other company worldwide. That's a big boast.

Goodyear officials said they make 500,000 racing tires annually-more than 160,000 for the NASCAR Nextel Cup series alone.

Hoosier's sales have grown 10-percent-plus year-over-year for the last decade, Sherman said.

"This was our biggest year ever, and we expect 2007 to be even bigger yet," he said.

With Hoosier tires' retail prices ranging from $50 to $400 apiece, it doesn't take much to realize the company's revenue has to be deep into eight digits.

"When you really take a good look at that company, it has to be doing $50 million in sales easily," said Tim Frost, president of Chicago-based Frost Motorsports, a consulting firm specializing in motorsports. "They're really an unbelievable success story because they've built this company from nothing, and done everything below the radar."

Hoosier tires are sold nationwide, and the company is also taking off in the United Kingdom, Australia, New Zealand, South America and Asia, Sherman said. Currently, only 5 percent of Hoosier's sales are outside the United States, but Sherman sees lots of international potential.

Several new global distribution plants are in the works, and the company recently signed deals as supplier for several overseas race circuits.

The reason Hoosier flies so far below the radar despite its 49-year history is that the company doesn't target the general consumer market and doesn't strive to be involved in the highly publicized, televised series such as NASCAR's Nextel Cup or the locally based Indy Racing League.

Instead, Hoosier makes tires for gokarts, dirt-track cars and myriad other series that only the most ardent motorsports fans follow.

"That doesn't mean Hoosier can't compete along with the Goodyears, Firestones and Michelins; they've simply chosen a different business strategy," said Dennis McAlpine, a New York-based motorsports analyst.

"They're still in some pretty big circuits, like ARCA, World of Outlaws and Grand Am, but I guess people don't spend a lot of time looking at tires," Berggren said.

But the importance of tires in racing shouldn't be underestimated, he said.

"They're the single most important element in the performance of a car," Berggren said. "All the horsepower of an engine, all the grip and torque is driven through the tires. And tires are absolutely critical to handling. They're the only part of the race car coming in contact with the track."

Hoosier has proven it can compete at NASCAR's highest level. That niche simply didn't prove to be as profitable as company officials had hoped.

In 1988, Hoosier went Winston Cup racing, and in its first year landed in the winner's circle nine times. In 1989, Darrell Waltrip drove Hoosier tires to victory in the granddaddy of all NASCAR races, the Daytona 500.

In the mid-1990s, however, Hoosier pulled out of NASCAR due to a series rule that required all tire manufacturers to bring enough tires to every race to supply the needs of all the cars in the field.

Starting in 1989, Hoosier also made forays into the consumer tire sector. But in the face of competition from cheap import brands, especially from China, those efforts were abandoned in 2002.

With Goodyear workers currently on strike, Berggren thinks Hoosier might be pondering another run at NASCAR's top level. Hoosier currently supplies tires for some of the stock car circuit's support series.

"If that strike isn't resolved, Hoosier would be the one company that could pick up where Goodyear left off," Berggren said.

Hoosier's Sherman is playing down that notion for now. Instead, he emphasized Hoosier's push into go-kart racing.

"We want to catch racers when they first start racing and introduce them to our dealers and distributors," Sherman said.

Racing industry experts credit Hoosier's founder with much of the success for the company still owned by his family.

It all began back in the early 1950s when Robert "Bob" Newton, along with his wife, Joyce, began a successful racing career on the small asphalt tracks of northern Indiana. Bob, like many drivers, was not satisfied with driving on street tires with limited sizing options and uniformly hard tread compounds. It was during these days of "eating bologna sandwiches and sleeping on a creeper under his racer" that Newton said he had a vision to produce his own tires specifically designed for racing.

In 1957, Bob and Joyce decided to begin producing race tires by retreading street tires with softer compounds. They began their business in an abandoned South Bend horse barn, selling their wares to local racers.

The Hoosier name was chosen for their company to reflect the origin of Bob's racing roots on Midwest short tracks. The company color of purple came from Bob's No. 4 race car.

As the fledgling company began to master the available tire-making technologies, Newton set his sights in the 1960s on producing Hoosier's first tire specifically designed for racing.

With Newton, 79, edging closer to retirement, there seems to be another generation ready to keep the company rolling.

"With Robert's [four children], this company will be in good hands," Berggren said. "This company was built from nothing to rivaling the biggest players in the business. And I don't see that slowing down now."
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