It’s better to invest in a local company than pay plant-closing benefits to workers, an

By Don Shilling

It’s better to invest in a local company than pay plant-closing benefits to workers, an official said.

A 90-year-old tire maNUFACTURER in Leavittsburg said it will be out of business soon unless it receives a federal bailout loan or some government contracts.

Denman Tire Corp. said it has a plan to turn around its money-losing business but needs $3 million to buy new equipment.

The federal government will pay one way or another, said Sandy Pensler, president of the company on Diehl South Road just outside Warren.

Either the government issues the loan or buys tires, or it will be paying unemployment compensation and other benefits to workers who lose their jobs, he said.

Denman Tire has about 190 hourly and salaried workers, plus about 85 who are laid off. Pensler said the company is losing $10,000 a day and won’t make it to the end of the year at current revenue levels.

Pensler said U.S. Rep. Tim Ryan of Niles, D-17th, has offered his help. Pat Lowry, a spokesman for Ryan, said he couldn’t reach the staffer who has been working with Denman.

Pensler, who owns a New Jersey investment company, said Denman Tire’s plea for cash isn’t like those made by banks or automakers.

He noted that he hasn’t taken any money himself out of the company for five years, and that employees agreed in 2007 to freeze pensions and reduce health-care benefits for retirees.

“There’s no one at Denman, including the managers, who makes over $100,000 a year. The CEO isn’t making any money, and the employees already took concessions,” he said.

The U.S. Treasury said Thursday that it will provide $5 billion in funds to auto suppliers as part of its bailout effort.

U.S. Sen. Sherrod Brown, a Democrat from Avon, welcomed the help for suppliers, but a spokeswoman said the money is only available to companies who directly supply automakers.

Denman doesn’t provide tires to automakers, but Pensler said he thinks his business should qualify for a loan because it’s a viable business that can’t get credit.

It wants to buy extruding equipment so that it can make radial, white-walled tires for antique cars at its local factory. It now buys them from a Mexican supplier because its current equipment can only produce bias-ply white-walls.

Bias-ply tires were standard issue on many antique cars, but drivers often prefer radials.

Denman also wants to buy new presses so that it can make larger off-road tires. It produces tires for the construction and mining industries, as well as for everyday drivers who want to go off-road.

In the past, the company couldn’t compete in the larger sizes because of low-cost tires offered by Chinese companies, Pensler said. Last year, however, tariffs were placed on Chinese imports because of improper trade subsidies, so domestic companies have a new opportunity, he said.

Besides a government loan, Denman could also access enough cash for these purchases if the government would buy its tires, Pensler said.

The military stopped buying the local company’s tires five years ago when it named Michelin as its only supplier for off-road vehicles, he said. Denman is unable to become certified as a Michelin supplier because the company’s testing procedures are too expensive to implement, he said.

Pensler admitted that the company has had its own problems. He said he brought in new management several years ago, and the company’s operating costs rose too high. Previous managers were brought back, and the company’s cost structure is now back in line, he said.

After the company put its own house in order, the economy fell into a recession, he said.

Denman Tire had been making 135,000 pounds of tires a day, but that has fallen to 72,000 pounds a day. It needs volumes of at least 80,000 pounds a day to break even, Pensler said.

Before the union’s concessions, it needed daily production of 120,000 pounds.

Pensler said he isn’t expecting any more concessions out of the workers, who make an average of $18 an hour.

He said the company now has annual revenues of $70 million and has been losing money for two years.

Pensler, who also owns detergent-making factories, has owned Denman for 11 years. He said it was profitable every month during the first eight years of his ownership.

shilling@vindy.com