Dr. Rainer Schieben, who used to be managing director of Pneumant-Reifenwerke GmbH, is now managing all associated brands under the umbrella of Goodyear-Dunlop Tires Europe BV. His successor in Fürstenwalde is Mr. M. Bald. Dr. Schieben has also been elected as Chairman of the Pneumant Supervisory Board.
After the STW race series, the new European Roadster Challenge (EUROC) is also under threat. As it seems that the German Touring Car Championship (Deutsche Tourenwagen Meisterschaft) will be successfully revived this year, well-known drivers anticipated to take part in EUROC have begun to look elsewhere at the last minute. Who will be equipping the Touring Car Championship teams with tyres is also not yet clear, although an exclusive contract is talked of, with auto motor und sport magazine already naming Dunlop. On the other hand the involvement of the Michelin subsidiary BFGoodrich in the EUROC series seems to have come to nothing even before the first race, unless Bernie Ecclestone can be persuaded to allow these cars, in which immense sums have already been invested, to take part in the Formula One circus.
Cosmetic cracks found in the sidewalls of Bridgestone/Firestone tyres fitted to Toyota Tundra and Sequoia trucks have resulted in more attention for the troubled tyre giant. Cracks were discovered by workers at Toyota’s Indiana plant and 2001 model Sequoias not yet delivered to dealers have been fitted with Dunlop tyres as a precautionary measure. Toyota plan to resume using Firestones shortly, and Firestone has given assurances that the cosmetic cracks do not in any way affect safety. The tyres were manufactured at their Wilson North Carolina plant, where Steeltex brand tyres, under investigation by the National Highway Traffic Safety Administration are also manufactured. However, Spokesperson for Firestone , Christine Karbiwiak said, “There is no reason to believe there is a defect at the Wilson plant”.
Paul Harrell, the MD of Dunlop-owned retail chain Motorway, has been appointed General Manager, Retail operations UK by the Goodyear group. In his new role he will be responsible for the operations of both Motorway and Goodyear’s Hi-Q retail chain.
Dr. Volker Wingefeld (49), Finance Director of Dunlop GmbH, is leaving the company within the next few weeks to join the board of Buderus AG, responsible for finance. Dr. Manfred Gerresheim (61), board member responsible for technical development and Robert Schäfer (61), chief executive of Dunlop, are considering leaving at the end of this year. The Dunlop management team is completed by its fourth member, Hans-Jürgen Wagner and, during the 90s, was very successful, turning in several record profits in a row.
Imagine the scene; Goodyear chairman Sam Gibara addresses an audience of 144 leading managers from around the world, telling them of Goodyear’s ambition to be not only the world’s biggest tyre manufacturer, but also the most profitable. He tells them of the reasons behind the Dunlop joint ventures and spells out the goals for which the Goodyear ‘family’ has to strive to achieve the company’s aims. What lies in store for Goodyear? Does size matter? What changes are needed in management attitudes, distribution policy and brand strategies if Goodyear is to be the best? How important is the adoption of a mullet-brand strategy in the various world-wide markets? These and other thought-provoking questions are discussed at length. As we said earlier, imagine the scene. The truth is there was no meeting in Hawaii and Mr. Gibara did not make the speech – but he certainly could have. The article can be downloaded in full length as PDF file (size: 2.84 Mbyte, Adobe Acrobat Reader required).
There was much celebration when Goodyear announced its “joint venture” with Dunlop, designed to make the group the biggest in the world. Since then, things not been going according to plan, with Goodyear’s share price plummeting. A new president has been appointed and an in-depth article in our January issue which can be downloaded in full length as PDF file (size: 1.20 Mbytes, Adobe Acrobat Reader required) argues that the group desperately needs to reorganise and change the way that decisions are made, to get closer to the market and to re-define areas of responsibility. An increase in size has brought inflexibility and a slowness to react, which is stifling the company’s chances of future growth. Our article suggests one possible solution to this problem, but it is one which will involve a radical change of philosophy and methods of operation.
Goodyear reports a net profit of 97.2 million US $ for the third quarter of 1999 compared with 185 million US $ in the third quarter of 1998. The turnover achieved in the third quarter of 1999 was 3.3 billion US $, 100 million US $ more than in the same period last year. The turnover contribution of its recent acquisition, Dunlop, amounted to 200 million US $ worldwide.
The differentiation within the Goodyear brand, which has been most conspicuous in North America, will soon be a thing of the past. On Thursday Gibara declared in front of analysts in New York that the Goodyear brand will in future only be a premium brand; the group’s range will be complemented by Dunlop (medium brand) and Kelly (economy/budget brand).
Goodyear has told bank analysts that it will close a large factory in Italy that produces six million tyres a year. Goodyear produced about 55 million tyres in Europe this year and intends to reduce the production capacity from 72 million tyres (after the Dunlop take-over) to about 62 million by 2002. After Goodyear’s shares lost more than 40 per cent of their value, they announced plans to close more than one factory and increase production in the remaining European plants by introducing a seven day operation.
The Fürstenwalde production base of Pneumant Reifen GmbH is under threat in the long term, Dr. Rainer Schieben, Commercial Managing Director, announced at the Pneumant head office in Fürstenwalde at the beginning of September. As early as this autumn the company will draw winter tyres from the Japanese production for cost reasons, and part of the summer tyre production will also be transferred to Japan. And, according to Schieben, the new owner, The Goodyear Tire & Rubber Company, has already cut the production planning for the year 2000 by 200,000 tyres, which cannot be without repercussions on investment and employment. Schieben gave too high energy costs at Fürstenwalde as the reason for the problems. The current price per megawatt hour for the process temperature is roughly three times higher than in similar factories of the Dunlop parent company in Germany. By international comparison within the Goodyear group the high energy price has become even less justifiable. Pneumant employs a workforce of 550 plus 40 apprentices at the Fürstenwalde production base. 325 people are employed at the company’s second factory in Riesa. The tyre manufacturer is one of the few former GDR companies to have survived successfully. Thanks to an investment volume of 250 million marks since 1996 by the Dunlop parent company Pneumant possesses the most modern production facilities in Europe. In the car tyre replacement market the company is the clear market leader in the new federal states.
Michelin wants to speed up the globalisation process and has its back to the wall. Once again cost reduction programmes and job cuts are necessary. In the struggle between the “Big Three” Michelin may have been dealt the worst hand. Bridgestone’s and Goodyear/Dunlop’s pressure on the home market of the French is growing. Bridgestone with its immensely strong financial power is considered capable of becoming the clear number one in the global tyre market.
Dunlop’s SP Sport 200 E has been given the “Blue Angel” quality seal of approval for nine sizes. The “Blue Angel” adheres to very strict guidelines and is especially for environment-friendly products and processes whose user qualities and safety aspects are in no way inferior to conventional products. Recipients are chosen by independent institutions. This new car tyre (speed indices H and V) is awarded the eco seal for qualities such as low noise level, the light weight of the product, fuel saving and reduced emissions thanks to its optimised rolling resistance. Dunlop’s winter tyre SP Winter Sport M 2 is currently being tested for exceptional environment-friendliness.
September is show time in Frankfurt. This year we have just seen the IAA for cars and motorcycles, the 58th such event. Almost 1,200 exhibitors from 43 countries displayed the whole width and breadth of automotive progress on 225,000 square metres of indoor and outdoor exhibition space. The theme of this year’s exhibition, “Auto: Treffpunkt Zukunft” (“Car – Meeting-Place: The Future”) must also be understood as the industry’s programme: Car manufacturers alone offered 51 world premières, eight European and 38 German premières, not counting the numerous innovations of vehicle component suppliers, the motor manufacturers’ development partners. Apart from new production-line cars, futuristic concept cars, motorcycles and special vehicles Frankfurt showed trailers, parts and accessories, tuning products, aids for vehicle maintenance, protective clothing, traffic guidance and information systems. Tyre manufacturers with IAA stands of their own were Michelin, Continental, Dunlop and Pneumant. The second part of the 58th IAA – the commercial vehicle side – will take place from 23rd to 30th September 2000 under the theme “Nutzfahrzeuge: Für alle auf Achse” (“Commercial Vehicles: For Everybody on the Move”) and also be held at Frankfurt/Main. The organisation will also be in the hands of the Association of the Motor Manufacturing Industry (VDA).
The current winner in the American car tyre replacement business is Michelin. On the one hand, the French profit from the catastrophic supply situation of their two main competitors, Goodyear and Bridgestone, which achieve so-called “fill rates” of 60 p.c. or even less, but they also reap the benefits of the successful introduction and implementation of their multi-brand strategy, which has made a “demand management” possible. In contrast to their big competitors the French have a very clear brand policy with no further differentiation within a brand, and they no longer produce private brands, all of which considerably shortens the reaction time to changed market conditions. Goodyear and Bridgestone cannot achieve Michelin prices. The groups will not improve their unsatisfactory “fill rates” as long as they also manufacture large quantities of private brands. The Japanese cannot develop a multi-brand strategy since they lack a strong leading brand – Bridgestone not being blessed with a high degree of brand awareness everywhere in the USA. For a long time the Americans differentiated very strongly within the Goodyear brand; now they have to position Dunlop tyres as well. That will also mean the need for significant investment in the brands. Furthermore, Goodyear managers in particular are currently confronted by a hostile gut reaction from the trade, whether capable of rational explanation is neither here nor there.
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