New Captain Steers Steady Ship

As Cooper Tire’s motorsports season ramps up, Tyres & Accessories met with Cooper Tire & Rubber Europe managing director, Julian Baldwin. Since taking over the role as part of a normal pre-prepared succession plan following Ron Shield’s retirement last August, Julian Baldwin has settled into the role and is geared up to the European and global challenges that now face him. As part of this month’s Manufacturing Focus, Tyres & Accessories interviewed Baldwin but with a particular eye on developments in the manufacturing side of the business.

The sleepy Wiltshire town of Melksham might not be the first place you think of when you consider tyre manufacturing operations but Cooper’s UK and European production base plays a very important part in the wider organisation. Of the six distribution centres and five sales offices Cooper runs in Europe Melksham represents the region’s only manufacturing centre and basically half of what Cooper refers to as International Tire Operations. Cooper Tire & Rubber Europe run subsidiaries in France, Germany, Italy, Spain and Switzerland for marketing its products in continental Europe. (The other “half of the segment is the two administrative offices, two production facilities, and a sales office in China).

The Melksham plant produces significant numbers of passenger car, light truck, racing and motorcycle tyres and markets these products primarily to dealers in the replacement markets in the United Kingdom, continental Europe and Scandinavia. The recent addition of a European Technical Centre to the Melksham can only increase the centre’s value.

The fact that Roy Armes visited Melksham within 5/6 weeks of taking over as CEO in Findlay demonstrates this value. Described as “impressive and down to earth” Armes’ positive influence, even at these early stages of his tenure, has been reflected in the company’s share price. At the time of the interview (April 2007) shares had risen to over $18 from a low of $9. Financial analysts at banks like Deutsche Bank are also optimistic. In one report earlier in 2007, the analysts described the new CEO as “staying on the plan” and urged confidence in the company’s stock by raising the bank’s recommendation to buy. The rating was later reduced to hold, but without any obvious negative comment from the analytical community.

Armes has indicated he is committed to the $170 million global profit improvement plan initiated under interim CEO Byron Pond, and that the company will maintain the increased level of disclosure and tracking initiated by Pond.

But it has not all been plain sailing on for the bosses on either side of the pond – as there have been some “interruptions” to production in both the UK and US. In the US Cooper suffered from overproduction as a result of what was a generally slow US replacement market in 2006. According to Julian Baldwin, the UK production halt was “even more inoculous” – there was simply too much static stock and the company wanted to bring its working capital down. “Our fill rates are actually very good,” Baldwin explained.

Following our interview, and as T&A began its tour of the Melksham facility, Julian Baldwin was preparing to depart for his first first-quarter board meeting in Findlay. Baldwin explains that he tends to prefer to video conference and make better use of the seven hours he would otherwise have to spend on a plane to Ohio. However, as careful as he is not to reveal any specific details, Baldwin suggests that there are positive results to be published in the company’s first quarter statement.

Manufacturing

The Melksham plant is situated on a 33 acre site, half of which is taken up by production machinery. The factory also produces up to 300 tonnes of finished rubber a day.

With the river Avon and the town penning the facility in, space is at a premium here. Despite this, the operation makes the most of all the available space and, in addition to the production teams, Melksham is also home to a significant number of Cooper Tire Europe sales, marketing, administration and soon research and development staff.

T&A visited the plant in April, just before the large scale cold-weather tyre production that the factory has taken on in recent years got into full swing; however, a number of these high value products could still be seen on the production line. The Melksham plant produces tyres from 12 – 20 inch in diameter, but management has been aware of the need to produce as many of the high value products at the UK factory as possible. That’s why it is also a specialist motorsport and motorbike tyre production centre, producing around 1200 bike products a day. In fact all of the global company’s motorbike tyres and many high profile motorsport tyres (A1GP products for example) are exclusively produced in Melksham.

The importance of motorsport tyre sales to the overall effectiveness of the plant is demonstrated in the fact that they use some of the factory’s most modern machinery. Roughly a dozen curing presses run alongside new duplex extruders and tyre builders, installed in the last two years. According to T&A guides this department uses up to 1000 different rubber compound recipes on the motorsport tyres alone.

Unlike the other main UK factories, Cooper has not made any alternative power generation plans public, but one representative told Tyres & Accessories that while it is not in next year’s business model, there is no reason why this wouldn’t be considered in the future.
Quality control comes in the form of shearography, x-ray and visual inspection techniques. Finished goods are warehoused at a main store three miles away.

In February Tyres & Accessories reported that Melksham will also soon be the home of a new European Technical Centre (ETC) that will be the hub of the company’s European activities. The ETC will be responsible for all elements of the design and development of products manufactured at Melksham, primarily high-performance passenger vehicle tyres in both Cooper and Avon brands. This will be headed up by Marcus Hancock, who had previously spent time as part of Cooper’s US R&D department. Hancock will be supported by tyre applications development manager, Paul Sketchley, and technical services manager, Gavin Edwards.

Export strategy

For now Melksham continues to produce Avon branded PCR and an increasing number of 4×4 and cold weather products. In addition motorcycle, motorsport, van tyre and remoulding materials are all produced at the factory. As you would expect with the current exchange rate situation, the company also imports tyres from the US, but interestingly some of Cooper Europe’s passenger car UHP tyres are also exported to the states.

Recently exports have been growing in an easterly direction, Julian Baldwin explained: “We have been doing a fair amount of business in the Danubean markets, but we are willing to go as far east as possible.” He continued: “The influence of Russia and the Eastern markets cannot be ignored. We can’t wait five years to get there, we have to be in on it now.” As a result of this business philosophy, Cooper already employs a fair number of Russian and Eastern European language speakers.

Closer to home, Cooper Tire Europe operates a very targeted strategy. “Unlike some companies we are not going gung-ho about the volume alone. So we have a reorganised sales force and changed our sales borders.” For Baldwin growth is about looking to particular areas where increasing sales volume really “makes sense” to the company. Fleet sales are one example of this, as was shown at the end of 2006 when Cooper Tires was confirmed as the sole supplier to Western Power Distribution’s fleet of 80 Ford Ranger 4×4 vehicles, Cooper’s first fleet contract with a major UK utility company. According to Baldwin, the company operates similar targeted programmes in the other major European markets.

2006 also saw Cooper launch a new corporate identity, a move that signalled the logo’s first real update since it was designed in the 1930s. Cooper and Avon distributors are said to have reacted positively, describing it as a good image “refreshment”. Looking at the two images side by side really shows just how important it has been for Cooper to upgrade “the look.”
The new corporate identity was published at the same time as a revamped online presence, which saw the company incorporate slick “Flash” animation into its site for the first time. According to company representatives, a new site is being designed for implementation on this side of the Atlantic. While this is expected to be a definite step up from the current one, Cooper Tire Europe has reportedly decided not to use as much of the “flash” graphic as the US corporate site. However, the new web presence will maintain the “family look.”