Goodyear Exiting ‘Certain Segments’ of Private Label Business

(Akron/Tire Review) Goodyear Tire & Rubber Co. announced that it is withdrawing from certain segments of the private label tyre business in North America. Approximately 10 private label brands currently manufactured by Goodyear and sold by wholesale customers to tyre retailers will be affected by the decision. In 2005, this segment represented approximately $300 million in sales and about 8 million units manufactured in five North American plants, or approximately one-third of the company’s overall private label business.

Over the next year, the company will work with affected customers to help them transition to alternative Goodyear products or other sources of supply. The decision will require a corresponding reduction in Goodyear’s tyre manufacturing capacity in North America, according to Jonathan D. Rich, president of Goodyear’s North American Tire business.

The announcement, said Rich, “is part of our continuing strategy to focus selectively on the more profitable segments of the business. Our intention is to build upon the market strength we have established in our branded and retailer-specific product lines.

“While our branded replacement business remains strong, the overall environment, including a very weak industry and continued raw material price escalation, likely will result in full year operating income for North America below 2005 levels,” Rich added.

Robert J. Keegan, Goodyear chairman and CEO, however, is optimistic about the overall strategic direction of the business. “We remain confident that the strategic actions we are taking in North America will allow us to achieve 5 per cent operating margins, consistent with the three-to-five-year, next-stage metrics announced to investors last September,” he said.

“These strategic actions include selectivity in the private label and original equipment businesses, expected margin improvements from new products and effective marketing, and cost improvements from expected capacity reductions, a new union contract, and reductions to selling, administrative and general expenses.”