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15076

Region with potential for the Goodyear Group

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Jarro F. Kaplan, a Goodyear employee since 1986, is already in his second year as President Eastern Europe and is responsible for the region that includes Eastern Europe, South Africa, and the Middle East as well as some other countries in Asia. Before that he was General Manager Deutsche Goodyear in Cologne for two years and earlier in his career he held General Manager positions in the UK and Turkey. The region he is now responsible for is – measured by turnover – relatively small, but is becoming increasingly important due to the fact that the group is running highly competitive factories in Poland, Slovenia and Turkey. The income of the workers in those countries is not comparable with that of countries in Western Europe and will not become so for the next decade.

The biggest factory within the production network of the Goodyear Group in the whole of Europe is the Polish factory in Debica. The production is focused on passenger car tyres, mostly S/T rated. The Debica brand dominates, but many Fulda tyres are also produced there. And the Goodyear brand? “Not yet” says Kaplan. Debica has a production capacity of 40,000 tyres a day and there are already concrete plans drawn up to expand this. Plus it should not be forgotten that the Debica factory also produces some agricultural tyres as well as commercial tyres.

South Africa also belongs to Kaplan’s “Empire”. Goodyear has a big factory there and also its own equity with about 150 outlets, plus it is building and expanding a franchise-system.

Starting from South Africa, Goodyear is interested in doing more business in countries like Botswana, Sierra Leone, Kenya and some other countries. The company’s own equity in South Africa is doing a good job delivering tyres in the shortest possible time to customers. But it is absolutely clear that in the long run Goodyear must have its own people in those countries on which the company can rely; it can no longer leave everything in the hands of distributors. Kaplan: “You need to have your own people on the ground.”

Kaplan is travelling much more. For example to Dubai; from here Goodyear is defending its interests in countries like Israel as well as Palestine, in Iraq, Iran and so on. He travels to the north of Africa as well as to Pakistan. Pakistan belongs to his region. He who knows world politics can imagine that it might be impossible to bring India and Pakistan together under the one umbrella of Goodyear Asia.

To summarise: The Eastern Region is active in 95 different countries, with 52 different languages, which forces all managers to be sensitive and to respect the varied cultures.

15077

Toyo doubles capacity

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T&A talks to Martin Sutherland, general manager at Toyo in the UK, for an update on the company development.

Toyo is perhaps one of the most recognised mid-market brands in the UK. A series of targeted media campaigns both above and below the line have gone a long way to establishing the brand as the performance tyre of choice for many driving enthusiasts. In spite of the success of the UK operation it remains answerable to Toyo Reifen in Germany, so there is no UK managing director, the head of the chain of command in the UK is Martin Sutherland. Martin Sutherland has been with Toyo in the UK for the past 21 years, joining the company from Pirelli; so he knows a thing or two about the market in the UK.

Toyo has recently moved premises at Rushden. The re-location was only about 100 yards up the road, but the new premises have doubled the available storage space allowing Toyo to improve its stock capacity and as consequentially improve its service to its customers. Martin Sutherland says, “We have virtually doubled our stock capacity by moving to this unit. It offers us 70,000 square feet, which is twice the area of the old unit. However, we have managed to relocate without too great a disruption to our service or distribution. In fact, in the past we used to hold stock at the dockside and at one point had as many as 70 containers sitting in storage. All that stock is now held here, and we still have room to expand.

“One of the limitations we had on developing the business was the warehouse capacity and our restriction on turning stock around. That is no longer an issue and that allows us to offer a full width of patterns and sizes in all ranges. That gives us the potential to further build the business and we have the capacity here to grow considerably in all areas.”

The wholesale and distribution side of the tyre trade is going through a period of expansion and we could point to a number of companies investing considerable sums in new premises and expanding coverage. Toyo, though, is probably one of the few manufacturers talking so positively of expansion. What makes Toyo such a strong developer at this stage?

“There are probably a number of contributory factors,” says Martin Sutherland, “In the last fiscal year to 2003 we had our best ever results in terms of income and in terms of unit sales. In a market said to have declined by 2 per cent we saw an across the board increase of 12 per cent. That includes passenger car, 4×4, light truck and truck tyres. In high performance car tyres we saw a 37 per cent increase in sales.”

Winning volume and value in today’s tyre market is an uphill struggle, competing against established brands and in some sectors having to fend off price-led competition from the far east means that a 12 per cent increase is no mean feat. What do you attribute the success to?

“Without doubt,” says Martin Sutherland, “Much of our success is due to the quality of the marketing campaigns we have established over the years. Mike Rignall came to Toyo with the remit to redevelop our marketing and to increase brand awareness and he has done an excellent job in raising our profile in the trade and with the consumer. The way we have marketed the brand is now paying dividends for us. We established a policy of exclusivity for dealers and we have stuck to that policy and we have ensured that our availability is good.”

15078

California passes tyre efficiency law

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In California, car tyres fitted as OE have to conform to federal fuel economy standards. However, the state argues that this should also apply to replacement tyres and has passed a law requiring the California Energy Commission (CEC) to develop efficiency standards, measured by rolling resistance. These standards will be in place by July 2007 and take effect a year later. Individual tyres will not have to be labelled, but retail stores will have to display efficiency lists.

15080

Goodyear claims to achieve flexibility, cost goals with USWA Pact

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The Goodyear Tire & Rubber Company has stated that its new labour contract with the United Steelworkers of America (USWA) meets the operational flexibility and cost-savings goals established prior to the negotiations. “Our goal for these negotiations was to achieve what some thought was impossible: a fair agreement that contributed approximately 1 billion dollars in cost savings and cost avoidance over its three-year term without a work stoppage,” said Robert J. Keegan, Goodyear chairman and chief executive officer.

15081

New Pirelli Plant in Brazil

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Pirelli has opened its new Feira de Santana factory in Bahia, Brazil. With a primary investment that amounts to about 120 million US dollars, the plant has 32,000 square metres of constructed area. The initial daily production is of to 2,500 high performance radial tyres, which will be destined to the domestic and Latin-American markets, as well as the American and European ones. In 2005, when the factory will be at full operating capacity, approximately 7,500 tyres will be manufactured a day. On a second phase, investments of more than 80 million US dollars are already proposed, which will allow the increase of the capacity of production to 13 thousand tyres a day.

15082

Rethink Retreads gets Welsh support

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CWMre, the Welsh Market Development Initiative for recyclate managed by The Wales Environment Trust aims to develop economically and environmentally sustainable markets for recyclate.

15083

US Consumer Magazine Rates Pirelli As “Best Buys”

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“Consumers Digest”, a US magazine, has chosen Pirelli tyres as “best buys” in three categories. The P6000 Sport Veloce was named a premium BB in the All-Season category, the P400 was an economy BB in the Touring category and the Scorpion Zero was an economy BB in the light truck/SUV section.

15084

Bridgestone Fire “Will Impact On Earnings”

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Although the fire at Bridgestone’s factory in Kuroiso City is now under control, the after-effects are only now becoming apparent. Production has been halted indefinitely until the extent of the damage has been assessed. Spokeswoman Setsuko Ozaki, quoted on the Automotive News website, said “we have no idea when production will resume or how big a blow the fire will have on our earnings, but with an incident this big, there’s bound to be some impact.” Analysts suggest any impact on earnings would be small, but this didn’t prevent Bridgestone shares falling seven per cent on the Tokyo Stock Exchange at one point, against a market that rose two per cent overall. Shares in rival tyre manufacturers Yokohama and Sumitomo Rubber Industries rose by more than five per cent.

15085

Vredestein Tops In Auto Express Test

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The Vredestein Hi-Trac came out tops in the annual tyre test conducted by motoring magazine Auto Express. Ten H-rated tyres were put through a demanding series of wet and dry handling tests and the Hi-Trac emerged in first place, narrowly ahead of the Continental ContiEcoContact3 and the third-placed Toyo Roadpro R610.

15086

Tyre manufacturers report first half results

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A number of tyre companies have published financial results for the first half of the year, with figures varying from not-so-good to impressive. These are analysed in detail in the magazine, but some brief highlights are as follows:

Michelin: Sales were down 6 per cent to 7.348 billion Euro, but excluding currency effects, this would be a rise of 4.4 per cent. Operating profit rose one per cent to 578 million Euro and net income was 165 million Euro; below what was expected, but this was almost entirely due to charges of 178 million Euro for restructuring in Spain, where 1,200 jobs will go over the next three years.
At an analyst meeting, Michelin executives were extremely cautious concerning the outlook for the rest of the year, forecasting a drop in volume for the second half and only a slight improvement in the impact of currency fluctuations. Other obstacles to improvement are the continuing high costs of raw materials and the continuing losses of the recently-acquired Viborg chain. The acquisition was a major factor in the 0.1 billion Euro increase in Michelin’s debt, to 3.9 billion Euro.

Goodyear: Second quarter (Q2) figures reveal that the company lost $73.6 million, compared to a net income in Q2 last year of $28.9 m. Sales were up nearly 8 per cent at $3.8 billion (3.5 bn), but volumes were down half a million units to 52.8 million pieces. The single most important factor in the deterioration of operating performance was an increase in raw material costs of around, $124 million, said Goodyear, even though this was offset in part by cost reductions, improved price and mix and a positive currency translation benefit of some $9 million.
The net loss for the first six months of the year was $236.9 million (1H 2002: $34.3 million loss). The 2003 figures included a rationalisation charge of $78.6 million to cater for staff reductions, while the 2002 figures were boosted by an income benefit of around £10 million as a result of the Ford tyre replacement programme. Sales for the first six months of 2003 reached $7.3 billion; 7.6 per cent up on the 1H 2002 figure of $6.8 billion. Tyre unit volume was down at 105.4 million units (106.3 m).

Continental: 2Q results exceeded the forecasts of industry experts. Compared with 2Q 2002, turnover was down 3.4 per cent to 2.825 billion Euro (2.925 bn), but operating income rose 11.3 per cent to 216 million Euro (194 m), against a forecast of 187 million Euro.
Of the four divisions, Car Tyres, Truck Tyres and Continental Automotive Systems (CAS) all showed slight reductions in turnover compared with 2Q last year, while ContiTech was up slightly. When it came to operating income, however, Truck Tyres was the only sector to show a decrease, while the best performance came from Car Tyres, which posted a 44.2 per cent improvement.
The group’s operating margin was 7.6 per cent and, while the car tyre and truck tyre divisions were slightly below this (6.7 and 7.4 per cent). ContiTech and CAS achieved 8.5 and 9.0 per cent respectively. Industry analysts were pleased at the figures, saying that the group is exhibiting “improving internal dynamics and a favourable mix of businesses with some growth and some cash flow contributors.”

Trelleborg Wheel Systems: TWS achieved sales for the first half of the year of 1,470 million Swedish Kroner (SEK), or 160.2 million Euro. Operating profit was up 33 per cent to SEK 84 million (9.15 m Euro), compared with last year’s first half figure of SEK 63 million (6.87 m Euro). During the second quarter, turnover was SEK 713 million (77.7 m Euro) and operating profit was SEK 39 million (4.25 m Euro).
Operating profit was favourably affected by the company’s restructuring programme, an improved product mix and increased productivity. High raw material prices were partially offset by price increases, especially in farm tyres.

15087

Marangoni Tread success in Brazil

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A success story for Marangoni is its activities in Brazil, thousands of miles from its European activities. Marangoni’s involvement in Brazil began in the early 90s as a partnership with Brazilian market leader UNISA for the transfer of technology for the manufacture and marketing of the Ringtread product. At its height, there was a network of 15 authorised RTS dealers in Brazil.

However, the serious economic downturn saw UNISA go bankrupt, threatening Marangoni’s progress in Brazil, but the operation in that country was kept alive by the determination of a group of former directors of UNISA, headed by Mr. Dary Fernando Figueiredo. The reason that Marangoni was so keen to remain established in Brazil is that the country is the world’s second largest market for retreads, with a monthly consumption of 12,000 tonnes of rubber, which corresponds to some 10 million retreaded truck tyres annually.

In 1998, Mr. Dary Fernando Figueiredo founded a new company with its head office in Sao Paulo, which had a small warehouse and just one customer. This eventually became Marangoni do Brasil and, in April 2001, a new facility was opened for the production of precured treads, representing an investment equivalent to nearly 12.6 million Euro at current exchange rates and covering an area of 53,000 square metres. Growth was rapid and, in 2002, the volume of treads produced reached 220,000, for 30 customers. The key to this success lies in the close partnership established between authorised dealers and Marangoni do Brasil; a relationship focused on the distribution of the product and the commercial assistance provided to the dealers in their work in the fleet market.

As far as Marangoni is concerned, the story is far from over, as future sales objectives involve a portfolio of more than 50 customers and sales of 550,000 retreads by the year 2005.

15088

US Court Rejects Tyre Monitoring System Regulation

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In the USA, a panel of three federal judges has rejected a proposed tyre pressure monitoring system (TPMS) as it allowed too great a margin for error. TPMS was made compulsory in new cars following the Ford Explorer/Firestone tyre episode. The National Highway Traffic Safety Administration was ordered to come up with a TPMS for cars and it offered two systems – one which required a sensor on all four tyres (direct system) and one which used existing technology systems, such as ABS, to estimate pressure (indirect system). Consumer groups claimed that the second system was not effective all the time, and thus did not meet the law’s requirements, and the judges agreed, ordering the NHTSA to formulate a new rule.

The argument of the consumer groups was that indirect TPMS works by comparing the speeds of two diagonal wheels with the other two diagonal wheels and, as such, cannot tell whether all four tyres are under-inflated or whether two tyres on the same axle or the same side of the vehicle are under-inflated. The judges accepted this view and one of them, Robert D. Sack, said “The record discloses that the added cost for a system that worked all the time, rather than half of the time, was less than $10 per car.”

A possible beneficiary of the ruling could be Goodyear Tire & Rubber, which has developed a direct monitoring system in partnership with Siemens VDO, whereby a computer chip embedded in the tyre warns the driver of air pressure loss via radio signals to a dashboard display. The system is currently being tested by several vehicle manufacturers for their 2006 models. A Goodyear spokesperson said “we think the debate will continue between the automotive industry and consumer groups for a while. Either way, we support tyre pressure monitoring systems.”

Consumer groups were less diplomatic, hailing the decision as “perfect”. Clarence Ditlow, executive director of the Center for Auto Safety – a frequent critic of the auto industry – made his position plain when he said “This decision will block the pro-industry, anti-consumer, deregulatory campaign of the Bush administration”. This is a reference to the fact that it was the White House’s Office of Management and Budget, which had wanted a TPMS that was less costly than direct monitoring.

For the vehicle makers, a spokesperson for the lobbying group the Alliance of Automobile Manufacturers said that the AAM prefers a system that would allow auto manufacturers to choose between technologies. The spokesperson added: “the cost gap between the direct and indirect systems appeared to be wider than that cited in the ruling”, which would appear to be an indication that we may not yet have heard the last word on the subject.

15089

Motorsports point the way for Kumho

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While not one of the world’s giant tyre manufacturers, Kumho is in the top ten and the company realised some time ago that it needed to concentrate on its overseas activities if it were to grow, but this is easier said than done. There is no doubt that established brands have a terrific advantage – everybody knows their name and they have decades of history behind them. Of course, this has not been achieved overnight and is the result of many years of effort and considerable financial outlay and it is a daunting task for a comparative newcomer into a market to try to get its name known, especially when the target is a considerably shorter time frame than decades.

So the question is how to boost awareness in a number of diverse markets across the globe in a manner which makes economic sense? Different countries have differing cultures and tyre requirements, but Kumho realised that a common factor – and one popular in most countries – was that of motorsports. Thus it was that, in the 1990s, Kumho began to develop its involvement in international motorsports, in a strategy that was to become central to the worldwide marketing of the Kumho brand.

This strategy is by no means unique – after all, the Yokohama brand established a reputation for high performance in the UK after cars shod with its tyres won four consecutive British Touring Car championships from 1990 to 1993. However, the biggest pitfall in such a strategy is that, if you are going to go down the motorsports route, then you have to be sure that you are going to be good at it and you need implicit faith in the product. You also need to divert considerable resources towards R&D and to provide the technical back-up that so many motorsports events require nowadays – the tyre manufacturer has to do so much more than merely provide tyres.

This, then, was the route that Kumho decided to pursue and the quality of the racing product has been proved in competition over the years. Perhaps the highest-profile recognition came when Kumho ECSTA S700 tyres were adopted as the control tyre for the Formula 3 Euroseries, which is a series of 10 races, taking place in five different countries (Germany, France, Italy, Austria and The Netherlands).

Further recognition came in 2002, when Kumho signed a five year contract as the official tyre supplier to the Marlboro Masters of Formula 3, which brings together the best drivers from various European national championships. Last year Kumho was the control tyre for the first time and the lap record at Zandvoort in The Netherlands was broken – a dream start for the Korean company.

This year’s Marlboro Masters was contested by 49 drivers from 20 countries and for some of them (notably those from the British and Italian championships, which use another make of tyre) this was their first experience of racing on Kumho tyres. The race took place on a blisteringly-hot day at the Zandvoort track, attended by 55,000 spectators. Kumho branding was much in evidence and, indeed, the company has a very close association with the venue, having adopted a corner at the circuit in order to capitalise on the estimated TV audience of up to 800 million for last year’s event.

15090

Bridgestone back at the IAA

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Bridgestone will return to the Frankfurt IAA in 2003, after a 12-year absence, with an innovative display of its latest tyre technology and achievements. The 310 m2 booth will be located in Hall 8, nr. A18. The famous red Formula One Ferrari catches the eye, but there’s more to the stand than motorsport glitter. “We wanted to show that Bridgestone develops world-class tyre technology”, says Mr Günter Unterhauser, Managing Director of Bridgestone Germany. “The IAA is one of the most prestigious motor shows in the world and certainly the top show in Germany. It is not only for end users. It gives us the chance to invite loyal dealers and our First Stop partners, to convey the message that we are a high tech company and to show them the new range.”

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