NEWS & RECORD

EXCLUSIVEWILSON - Cash-strapped school districts are paying thousands of dollars extra every year in questioned, additional charges for recycled school bus tires provided by a state contractor.

The issue is not small potatoes: Last school year alone, Guilford County Schools spent $160,423 on retreaded bus tires, more than $48,000 of that for debatable repairs.

Similarly, in 2004, Winston-Salem/Forsyth Schools spent $115,910 on retreaded tires, $37,477 for alleged defects known in the industry as "spots."

A vaguely worded state contract allows its holder , White's Tire & Rubber Co. of Wilson, to add a $36.21 surcharge for three "spot repairs" to nearly every recycled bus tire it produces. The contract is worth an estimated $4 million per year in gross sales.

The repairs, many of which are invisible and impossible to verify once the tire gets new tread, are controversial because other tire contractors say such surcharges are excessive and outside industry norms.

"School bus tires are clean," said Russ Hunt, an executive at Snider Tire in Greensboro and a competitor for the bus tire business. "You just don't find that many spots on them."

Some Piedmont Triad school districts are shifting their business away from the Wilson company, located 125 miles east of Greensboro, because of the consistent repair surcharges and other issues.

"It's too coincidental for my comfort zone for you to bill me for three spot repairs on every tire," said Rhonda Fleming, operations manager for the transportation department of Forsyth County's schools. "I just don't have money to blow . ... We run on a very tight budget."

The state contract does not define a spot repair. In fact, its only policy on spot repairs is that the contractor should charge for no more than necessary with a limit of three per tire - even if more are done. The contract permits a charge of $12.07 per spot repair.

School transportation officials say they have routinely received invoices from White's Tire charging them an additional $36.21 for three repairs on nearly every tire. That charge was in addition to the company's base price of $81.19 or $71.70 for the two types of retreaded tires used most often by school systems.

Until last year, state law required school districts to buy from statewide contractors such as White's Tire, which has held at least part of the bus-tire contract for 29 years. That law was changed last year, despite efforts by legislators from the Wilson area to drop bus tires from the list of items that school systems may buy locally.

In addition to Forsyth County, school systems in Davidson and Rockingham counties are using retreaded tires - also known as "retreads" or "recaps" - from other suppliers with an eye toward saving money but not sacrificing quality.

Guilford has moved more slowly to examine its options. The system did not make any of its transportation officials available for interview in the past three weeks despite repeated requests for comment.

The district did send an e-mail from a purchasing officer who suggested Guilford officials are thinking about seeking bids from a variety of suppliers for retreaded tires.

School systems in Alamance and Randolph counties say they are satisfied with White's Tire.

"We haven't had a problem," said Al Smith, transportation director for the Alamance-Burlington School System .

Ed White, CEO and president of White's Tire , said in a recent interview that nearly all the used bus tires coming through his plant need at least three spot repairs.

"They go up to three spot jobs. That's the maximum," he said of the state contract. "I'd say that 98 percent of our tires will have three spot jobs."

Those repairs are necessary to preserve the integrity of the tire casing and to prevent the recap from blowing out or failing for other reasons, said White and other company executives.

"I've always catered to the state in retreads and in trying to give the best and safest retread for the transportation of school children," White said.

Unlike most other tire retreaders in America, White's Tire uses a recapping process called "mold cure," which remakes the tire in a tub-shaped press. That includes applying new rubber to all parts of the casing, from one base or "bead' to the other, including the sidewall.

Most companies that recap tires leave the sidewall largely intact and simply retread the top of the casing.

White's Tire makes spot repairs as it readies tire casings for new tread, cutting open the damaged area and then filling the opening with replacement rubber. That is necessary to ensure new tread adheres properly and to remove defects, such as rust on the tire's metal belts, White's Tire believes.

"We're like a doctor of tires. If you do the right preparation, then you'll have a good retread," said Robert White, the owner's son and company vice president.

But state Sen. Kay Hagan, of Greensboro, whose family has strong ties to the tire industry, said White Tire's consistent billing for three spot repairs per tire does not ring true.

"I think that is statistically unsound. As a state legislator, I find it offensive," said Hagan, whose father worked for tire manufacturer BF Goodrich before opening his own tire store in Lakeland, Fla. Growing up, she worked in the office of the tire store, which dealt in retreaded tires.

Hagan was instrumental in defeating efforts this summer by some legislators to put a line in the state budget requiring that "tires for the student transportation system shall be purchased from the statewide term contract."

That would have exempted bus tires from the 2004 law that allows school districts to buy products outside the network of state contracts, as long as they meet state specifications in such areas as safety and quality.

In Rockingham County, schools' transportation chief Robert Gauldin said he is testing a competitive, retread that costs about $91 per tire , a substantial savings over the standard, White's "bead-to-bead" tire - when three spot repairs are added.

"We started out asking the question, 'Why does every tire come up with three spot repairs?' " Gauldin said of his search for a new supplier.

Jay Temple, Davidson County's school transportation director, said every tire retreader makes some of the same repairs as White's Tire - they just don't bill for them when hidden under new tread.

"I really did some in-depth research on this," Temple said. "In my investigation, I found that the industry standard is that you don't charge for anything you don't see."

Like the various school districts, the Greensboro Transit Authority uses recaps on the rear wheels of its bus fleet, said Tim Williamson, the authority's maintenance director. To his knowledge, the authority has never been billed for recapped tires that needed that many repairs, even though city buses generally are driven harder and longer per day than school vehicles.

"I send out 30, 40, 50 tires at a time," Williamson said. "The most I've ever got back is six or seven (repairs)."

School districts have been charged so routinely by White's Tire for multiple spot repairs it's possible to miss an overcharge. For example, in February, the company charged Randolph County Schools for 72 spot repairs on 14 bus tires, more than five per tire at a cost of $869.

That was an overcharge of $362 because it violated the state contract's three-spot limit. After the News & Record noted the discrepancy, Randolph officials contacted White's Tire and received credit for the overcharge, they said.

Mike Thomas, a former parts supervisor for the Guilford schools' transportation program, said the district ran a test several years ago in which White's Tire finished third in performance of three brands being tested.

Thomas left his job with the Guilford district last spring to work in private auto-parts sales.

Thomas, who said tires were the district's second-largest transportation expense, behind only fuel, thinks White's Tire has an unfair business advantage because of the contract.

"I seriously would love to have a business where the state of North Carolina funneled money into my pocket, " he said.

The multimillion-dollar tire contract is for state and local governments that use large tires on trucks, construction equipment or buses. Major users are the state's 115 school systems and the N.C. Department of Transportation.

State policy is to recap tires as long as the casing can be safely fitted with new tread. That approach is part of an effort to conserve resources by recycling a costly product and delaying its disposal in a landfill.

Before being trashed or recycled again for some other use, school bus tires usually can be recapped at least once or twice over a period of five years, the normal useful life of the casing.

Federal law limits the use of recaps to the rear wheels, mandating first-use tires for the steering axle.

The state's tire contract has generated controversy for years, said Bob Rhinehardt, who helps oversee the contract for the state Department of Administration.

The state considered not allowing any charge for spot repairs when the contract was put out for bids in 1998, but the industry objected vigorously to that, he said.

He and other administrators in the Department of Administration say the tire industry can't seem to agree on a reasonable policy or concise terminology for tire damage that qualifies as a necessary, chargeable spot repair.

"The same issue has been coming up year after year," said Mike Mangum, state purchasing officer. "Nobody has come up with a way to resolve the issue."

The contract with White's Tire will expire next year. Mangum said he hopes to settle the issue of spot repairs before it's put out for bid again.



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