Goodyear EMEA, Latin America Growth to Continue

Changes are afoot within Goodyear Tire & Rubber’s European agricultural tyre business. Last September, the company signed a non-binding letter of intent with Titan International to sell its European agricultural tyre assets, including the Goodyear Dunlop Tires France Amiens North factory. In December Tyres & Accessories discussed this deal with Alessandro Coggi, managing director Farm and Industrial Tires, Goodyear Dunlop Europe.

“Currently Goodyear is indeed in the process of evaluating a divestiture of its farm operations in EMEA and Latin America,” Coggi confirms. “Titan has expressed interest and has signed a non-binding agreement subject to the satisfactory completion of a social plan related to the consumer tyre activity at the Amiens North manufacturing facility. Negotiations are continuing and the timing of any transaction is linked to the completion of the Amiens social plan.”

Should negotiations with Titan International reach a successful conclusion, the deal will echo Titan’s acquisition of Goodyear’s US based agricultural tyre business, along with its Freeport, Illinois factory, in 2005. Although Coggi refrains from commenting directly about how much progress has been made with Titan or whether any other options for Goodyear’s European agricultural business remain, the Luxembourg based managing director makes it clear Goodyear is only interested in dealing with a buyer “who is interested in investing and growing the presence of the Goodyear farm brand in EMEA and Latin America.” The region in question, Coggi elaborates, covers South Africa and Brazil but excludes the farm operation in Asia. Management of agricultural tyre operations in Asia is under the Regional Goodyear Asia team.

In Europe, Goodyear has for some time successfully marketed two brands of agricultural tyre – Goodyear, which has a strong OE sector presence, and the mid-price Fulda, which is focused on the replacement market. The budget end of the market has been left to imported tyres, such as those from India. This is a strategy where Alessandro Coggi does not anticipate any changes in the short term. “Goodyear has been one of pioneers of brand and product segmentation, even in farm,” he comments. “This is witnessed by the very successful Goodyear Optitrac range of seven products for all your needs and the Fulda Pionier radial range. Trying to be and do everything for all customer segments with one brand range is not possible. Therefore we offer Goodyear as premium brand and Fulda as value range brand. This strategy results in lowest tyre cost per hour for our customers in both customer segments. This successful multi-brand strategy has been in a way confirmed by several of our competitors who now follow a similar track. 

“Trying to compete in the so-called ‘budget’ segment is only possible if your unique selling proposition is based largely on low price,” Coggi continues. “At Goodyear we want to safeguard our investments in research and development, new technology and new high tech products, [therefore] we cannot afford to operate in this segment. We realise that this budget segment does attract a certain customer group and that it does grow especially in uncertain times as these, but we plan to focus on meeting the needs of the sophisticated, premium and value customer who knows that cheap is very often expensive in the long term. 

Agricultural tyres for the European market, and indeed for all of Goodyear’s global brands outside of North America (where the responsibility for products is shared with Titan), are the responsibility of the Goodyear Innovation Center in Colmar Berg, Luxembourg. “Consequently, our team of engineers issues and monitors a large amount of laboratory and circle tests in Luxembourg and a multitude of field evaluations for new and exciting tyres all over the world,” Coggi exclaims. “This year, the hard work and dedication of numerous engineers has resulted in several new sizes in our top of the range Optitrac R+ line, a new DT818 High Speed range, a new industrial tyre IT620 T for telehandlers and a totally new tyre, the Goodyear BioTred 2, in which processing oils have been replaced with palm oil.”

According to Coggi, the responsibilities taken on by the Luxembourg centre “align very well” with both the global agricultural market and Goodyear’s OE customers. “Europe requires farm tyres that operate in the field as well as on the road, drive at higher speeds, protect the soil mostly on single fitment, while in the USA the trend is still for large machines to work mainly in the field on dual tyre fitments,” he explains. “Also, In Europe the radial content is still significantly larger than in North America.”

Although both Goodyear’s agricultural and OTR tyre businesses here are handled by the Colmar Berg office, these two varieties of off-road tyre are the responsibility of different business units. Coggi explains the rationale behind this arrangement: “The separation of farm/industrial and OTR activities allows us to be better focused and react faster to market and customer trends,” he explains. “Obviously, we do work closely together with the OTR business unit when we have common OE customers. Customer satisfaction for our dealers and end-users is what we strive for and this is a common theme in Farm, OTR and all our other business units. As a result, our investments, product and sales strategies are different and support the long-term visions and plans of each of these business units.”

European agricultural tyre customers are predominantly supplied from Goodyear’s factory in Amiens, 100 kilometres north of Paris, yet the company remains open to supplying tyres from elsewhere. “From Amiens we can deliver most of our sales organisations, dealers and OE customers between 24 and 48 hours,” Coggi says. “We do however, constantly review and tune our manufacturing footprint to make sure that we are best aligned to our customer needs.  In certain cases this does mean that an off-take is the best compromise. Also, stringent global Goodyear quality standards guarantee that a product has same performance regardless of where it is produced so that the decision of what tyre is produced where is merely a consideration of cost, logistics and available tyre manufacturing equipment.

Until 2008, Coggi reports, Goodyear maintained a “very healthy” balance between OE and replacement market sales, even though the ratio did vary from country to country and by region. “Unfortunately, in 2009 this situation has changed and currently our OE supplies have been reduced because of the global economic crisis and reduced demand,” he adds. “Our replacement sales however have held up very well and although most of our markets are down, our sales have held up fairly well and we have gained significant market share in key segments. Especially in many East European countries we are growing our sales steadily.”

The agricultural business in the fifty or so sales or national organisations within the EMEA region fall mostly under the umbrella of Goodyear’s commercial tyre division. “Goodyear feels that in terms of customers, services, tyre types and logistics it is best to separate the consumer and light truck tyres from the truck, farm and OTR tyres,” Coggi explains. “Having a commercial tyre team in each of the countries provides the farm business unit with valuable technical expertise, back-office operations and logistics services. This allows our specialised farm tyre sales force and account managers to fully concentrate on meeting customers and to provide the full range of our technical competence our customers come to expect from Goodyear.

Reflecting on these numerous operations and their contribution to the success of the Goodyear and Fulda brands in each respective market, Alessandro Coggi says: In all EMEA sales organisations we aim to have the best people, equipped with the best tools and skills working for us. Without, excellent, dedicated and well skilled people you cannot be successful in the hi-tech farm tyre industry. Goodyear spends significant training, coaching and mentoring resources making sure our people meet the highest qualifications. We would not be as strong and successful in the European farm tyre arena if it was not for our sales people.”