Goodyear Dunlop Regaining Lost UK Truck Tyre Market Share

2009 was a difficult year for the whole tyre business, but those selling commercial vehicle tyres had a particularly rough ride. With operators running fewer vehicles less often, and with the credit crunch biting at the heels of haulage companies already under pressure from sky-high fuel prices, there was considerable price pressure on premium tyre companies. As a result, last year saw the total UK truck tyre market shrink and some key changes take place in terms of market share. One key decline in unit share saw Goodyear Dunlop slip from 20 per cent in 2007 (third place) to estimated 9 per cent in 2009 (fifth place). With this in mind and in the context of the appointment of a new managing director at Tyre Fort, Tyres & Accessories visited Goodyear Dunlop’s UK headquarters for an exclusive interview with Nigel Sowerby, director commercial vehicle and off-the-road tyres.

Nigel Sowerby refused to confirm or deny the veracity of the 2009 UK CV tyre market share figures T&A put to him during our interview. For him the point is not how many tyres you sell, but the service a company like Goodyear Dunlop provides and how viable this business is in the long run: “Our previous level of market share was very good, but not so sustainable. Now sustainability is our priority.” This shows that simply occupying market share isn’t the company’s top priority. It also goes a long way to explaining why there was such a dramatic change in the face of the market in 2009.

“In 2008 we exited unprofitable business,” Sowerby added, explaining this move itself came off the back of some significant structural changes in the way the company sold its tyres. However, following this period of restructuring during 2008 and a recessional 2009, Sowerby reports that the company has already experienced significant gains in the first quarter of 2010. And when you consider that the overall truck and bus tyre market was actually lower in January/February 2010 than in the same period last year this also means the re-growth of some degree of market share – albeit on a completely different basis than before.

Sowerby put the situation in 2009 in the context of two “unusual” years in 2007 and 2008, which saw Goodyear Dunlop separate its HiQ retail operation into a passenger division and a new Truck Force equity and independent dealer network. Set against this backdrop, what happened in 2009 is said to have been “very unusual” because the economic environment saw the culmination of a number of aggravating factors that made business particularly difficult for premium and truck tyre suppliers like Goodyear Dunlop. In a recessionary period price point becomes a much more influential factor. Operators, squeezed by the credit crunch, tend to look for immediate cost savings over longer term savings and value and therefore lower budget products, “but that is not our proposition,” Sowerby explained. The fact that the general economic state meant business and consumers were buying less and consequently there was less road haulage and fewer new truck sales only served to compound the effect of any trend towards cheaper products.

In addition to a number of new appointments within the company’s truck tyre team (which Sowerby says have “come in at the right time”) the cv tyre director is confident that Goodyear Dunlop’s (and other premium tyremakers’) fortunes will improve in 2010 and beyond. Firstly s-mark legislation introduced at the beginning of the year and tyre labelling rules set to be introduced in the not too distant future mean the benefits of premium tyres, which are already operating at these standards, will become more apparent. And this is a trend that is expected to be particularly clear with regard to labelling as, by its very nature, it graphically represents the differences between products. In addition the general economy, which was a catalyst for the particularly tough times in the truck tyre business, will have the reverse effect with its recovery. Rather than less road haulage and operators mothballing vehicles, a rebound in the economy could lead to the reactivation of these vehicles, more miles driven and therefore a need for new tyres.

At this stage in the year it is difficult to gauge too much in general terms but, taking the development of the new Truck Force hub and spoke network and back office setup into account, Sowerby says 2010’s results will provide “the first true comparisons” for the newly restructured Goodyear Dunlop UK truck and bus tyre operations.

The first signs of growth come in the form of Goodyear Dunlop winning back (in the first quarter of 2010) some of the business it had previously lost including “three national fleets.” These are said to have returned because “overall cost” is better and because the back office and reporting systems are better than anything else the customers have been offered.

When asked what effect all the recent staff changes, particularly Mark Brickhill’s recent departure to a position within the European company, will have on the department, Sowerby was clear that any disruption will be limited: “Goodyear Dunlop’s strategic plans are aligned not only nationally but regionally [across Europe], limiting the effects of any repercussions of change. Under Mark Brickhill the UK has made a significant transformation change and we will continue to do that. Furthermore the truck tyre team UK is now more stable than ever and we are very clear about the strategy [for the future].” Moving forward, the company says it is committed to its ongoing plans and its goals of “outstanding service, backup and reporting,” resulting in “lower total cost.” “Outstanding brands and production” are said to be the toolkit for doing that.

Goodyear Wolverhampton returns to normal production levels

At the end of February, Goodyear Dunlop Tyres UK reinstated the “Guaranteed Working Week” at its Bushbury, Wolverhampton tyre retreading and compounding plant. The company reportedly met with Unions and employee representatives in the few days and says the decision will result in all full-time employees being guaranteed a full 42 hour week with immediate effect. Goodyear Wolverhampton changed shift patterns and moved to reduced hours, dropping the Guaranteed Working Week in December 2008, during the early stages of the economic downturn. At the time this was said to be in response to severely reduced demand for car and truck tyres.

“In December 2008, this approach allowed us to balance our inventories in line with demand while at the same time minimizing disruption to the work schedule for our associates. Our teams did a superb job in managing shift staffing in a way that ensured that lay-offs were kept to the lowest possible level,” production director, Ian Taylor, said in a statement.

“The commitment of our team has been outstanding, implementing new working practices and adapting to reduced working hours. We appreciate that 2009 was a difficult year for our team at Wolverhampton. However, we exit the recession with a similar sized workforce to the beginning of the downturn, and this was due to the flexibility and proactive attitude of our team. We are confident that our innovative new tyres that help fleets improve vehicle efficiency will help grow demand for our Wolverhampton manufactured range.” Taylor added.

Goodyear manufactures rubber compound and retreaded truck tyres at the Bushbury Lane site which employs over 300 people. The site’s retreading plant has the capacity to produce 100,000 retreads a year at full production. In 2009 the company invested in new technology which was used in the launch of the Goodyear TreadMax truck tyre range, which is now used by leading fleets across Europe.

Back to the subject of legislation, and in reference to the restarting of “normal” production at the Wolverhampton plant, Sowerby pointed out that truck tyre retreads are not currently covered by the s-marking rules. And furthermore the forthcoming tyre labelling legislation (tabled for introduction in 2012) doesn’t cover retreaded truck tyres. According to Nigel Sowerby, Goodyear is lobbying for the inclusion of this product segment in the legislation on two fronts – both through the company’s membership of European Tyre Manufacturers Association (ETRMA) and independently.

With this in mind, you can bet that the raft of new tyre products Goodyear Dunlop is expected to release this year, including new long-haul, trailer and mixed service tyres, and the retreads that will be made from them, already comply with the above.