Firestone Tire & Rubber Co., the nation's second largest tire manufacturer, will lease 300 auto service centers formerly operated by J.C. Penney Co. Inc.
Nine of the shops are in Maryland and Virginia.
Firestone's takeover of the auto shops is part of a diversification strategy, designed to help the tiremaker offset huge losses from declining tire sales.
The plan might also provide work for many Penney employes who received layoff notices last January when Penney announced its departure from the auto repair business. About 5,000 people were employed in the 300 shops being leased by Firestone.
One of the affected auto service centers is in Frederick, Md., two are in Baltimore and one is in Hagerstown. In Virginia, Firestone will take over two Penney auto service centers in Richmond, one in Norfolk, and two in Roanoke.
Penney has closed, or is in the process of closing, 400 auto repair shops nationwide. Only Penney's freestanding service centers--those physically separate from the department stores--will be leased by Firestone.
"We're going to do it gradually, taking over 100 stores a month, beginning March 31st," said Firestone U.S. spokesman Bob Troyer. He said Firestone "expects to hire most of the Penney employes." But he said that the hiring of Penney workers "will not be automatic."
"Our hiring will be based on employe qualifications and our needs. Penney had about 5,000 people working in the stores we're getting. We may need about the same number. But that isn't certain," Troyer said.
The Firestone "Mastercare" service centers will be highly automated, said Troyer. "We're putting in what we call our 'Mastermind' diagnostic computer. It's the most efficient piece of diagnostic equipment on the market.
Firestone also will install computerized wheel-alignment systems in its new shops, Troyer said. He said the tire company will spend about $50 million to refurbish the Penney stores. But he declined to give the cost of the leasing agreement.
Firestone's profits in its 1982 fiscal year fell by 96 percent to $6 million (11 cents a share) from $152 million ($2.63) in 1981. The sharply reduced earnings largely were the result of declining tire sales, which reflected the downturn in domestic car sales. Firestone's sales dropped to $3.9 billion in 1982 from $4.4 billion a year earlier.
Firestone, like other auto supply companies, has been investing in new businesses in an attempt to restructure its revenue base. The auto repair industry represents a good opportunity for diversification, largely because Americans are keeping their old cars longer and repairing them more often, according to auto industry analysts.
Automotive services and products have been big moneymakers for Sears, the nation's largest retailer and Penney's most direct competitor. But Penney officials said profits from the chain's automotive, applliance and hardware departments were "unsatisfactory." Penney, as a result, jettisoned those departments in favor of concentrating on clothing and soft-goods, its strongest sellers.