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GM recalls about 824,000 cars in North America

General Motors (GM) said Monday it is recalling about 824,000 cars built from January 1996 through October 1997 to fix a possible power steering problem. The world’s largest automaker said models affected by the problem include the 1996 Buick Regal, the 1997 Oldsmobile Cutlass Supreme, the 1997-98 Oldsmobile Cutlass, Chevrolet Lumina, Monte Carlo, Malibu, and the 1998 Oldsmobile Intrigue cars. Some 1996 Pontiac Grand Prix and Oldsmobile Cutlass Supremes and 1997-98 Buick Regal cars were also affected, GM said. It said about 750,000 of the vehicles subject to the recall were in the United States while most of the rest were sold in Canada. In some of the vehicles a lower pinion bearing in the power steering gear may separate, causing the driver to experience an intermittent loss of power steering assist or unintended power assist, according to GM. It said there had been reports of eight injuries that may be related to the problem but no fatalities.

13th January 2004/by Tyrepress Editors

Continental Tire to raise prices

According to American media reports Continental Tire North America will raise prices for its Continental, General and private brand passenger car and light truck tyres in February. Prices will increase from three to six per cent.

12th January 2004/by Tyrepress Editors

Michelin and Pirelli to enter OE contracts

At the Detroit Auto Show the Michelin and Pirelli have both announced new OE contracts with Ford. Michelin will deliver the BFGoodrich g-Force T/A KDW (18 inch) and BFGoodrich all-season Traction T/A (16 inch) to equip Ford’s Mustang GT. Pirelli Tire North America will also deliver tyres for the new Mustang GT, namely the P Zero Nero. For the new Mercury Montego, the Ford Focus ST, and the Ford Freestyle Pirelli will deliver its P6 Four Season tyre into Ford’s OE.

12th January 2004/by Tyrepress Editors

Michelin NA to eliminate communications position

Michelin North America Inc. has downsized its communications department since January 1, 2004. The decision was taken under the Call to Action initiative, says the company. “This decision was taken only after serious consideration and conclusion that the functions of the position should be redistributed among the rest of the team to optimise efficiency and effectiveness.” In line with the change, Kondria Woods, manager for communications operations and measurement, departed Michelin North America as of December 31.

12th January 2004/by Tyrepress Editors

Goodyear’s Pension Funded Status worrying

While the US- Automobile Industry and most of the suppliers could improve their pension fund positions, Goodyear is, according to analysts, an exception. Compared with liabilities of 2.2 billion US-Dollars at the year end 2002; those could now have risen to 3 billion US-Dollars. Analysts from Deutsche Bank do not see potential for Goodyear shares and recommend a
cautious stance. They still have doubts that Goodyear can manage the long awaited turnaround in North America this year despite the fact that the
markets as well as the tyre replacement market have shown strong improvements.

7th January 2004/by Tyrepress Editors

Goodyear majors with Volvo

The Goodyear Tire & Rubber Company has announced that it has reached global supply agreements to become a major tyre supplier to the Volvo Group in Europe and Brazil. Last month, Goodyear was named standard equipment tyre supplier for the Volvo Group’s Volvo and Mack truck operations in North America. Goodyear, with the three-year contracts, will now be a key supplier to the Volvo Group’s three major truck brands – Mack, Renault and Volvo – on three continents. “Reaching this global agreement with a world-class customer such as Volvo is a major accomplishment and a testament to Goodyear’s product quality, technology and customer service – not only on one continent, but on three,” said Robert J. Keegan, Goodyear’s chairman and chief executive officer.

19th December 2003/by Tyrepress Editors

Freightliner LLC Selects Goodyear as Standard Supplier

The Goodyear Tire & Rubber Company announces that Freightliner LLC, North America’s largest manufacturer of heavy-duty trucks, has named Goodyear as its standard tyre supplier. Officials of Goodyear and Freightliner recently signed the agreement, and Freightliner has begun communicating this decision to its network of truck dealers. “Being awarded new business is a testament to what Goodyear offers, in terms of products, service and a network of commercial outlets. And having a customer like Freightliner choose Goodyear to be its standard tyre supplier really makes us proud,” said Steve McClellan, Goodyear’s vice president of commercial tyre systems. Goodyear is supplying a variety of truck tyres for Freightliner LLC’s various commercial vehicle needs. This includes supply to the company’s commercial vehicle brands Freightliner, Sterling, Western Star, American LaFrance and Thomas Built Buses.

16th December 2003/by Tyrepress Editors

Michelin Signs 8-Year Partnership Agreement With IBM

Michelin and IBM have announced that they have signed a partnership agreement valued at 1 billion euros. According to this 8-year agreement, IBM will take over the management and maintenance of Michelin’s IT infrastructure in North America and Europe. This commitment includes a focus on achieving optimal financial results through the application of best practices in terms of technology adoption and utilisation as well as access to the best skills available in the domain of information technology. Around 600 current Michelin employees will join IBM in 2004. Under the terms of this agreement, IBM will be responsible for the following Michelin IT infrastructure activities: IT production operations and management, user support, technical support, solution industrialisation and distribution of servers, workstations, PCs, software and production applications.

12th December 2003/by Tyrepress Editors

Bridgestone to phase out bias truck tires in North America

As “Modern Tire Dealer” reports, in response to reduced demand Bridgestone is to stop supplying bias medium truck and bus tyres to the United States and Canada by the end of 2006.

12th December 2003/by Tyrepress Editors

Michelin has seized the opportunity in North America

Times have changed dramatically in the North American tyre industry. Nowadays there is no such thing as a one-brand dealer. The seemingly inexorable way to ever more private brands ceased with Firestone’s tyre recall. Now tyres have penetrated more than before into the consciousness of the consumers. One expected a “flight to quality”, which is a little misleading, because the house brands manufactured by large tyre companies do not have quality deficiency. The hoped for trend is directed to brands, toward brand image, and on brand contents. With this we arrive automatically at Michelin. No tyre manufacturer, in economically good as well as bad times, did as much for the structure of its tire brand as Michelin. Michelin was not the inventor of the steel-belted radial tyre, but the French tyre maker marketed it world-wide with a persistence which is worth admiration. There is no alternative to the steel-belted radial tyre. The French did not invent the multi-brand strategy, either. But they filled this operation with content and brought it into the market in such a way that an alternative was impossible. Nevertheless, Michelin puts its stamp on the markets of this world and in particular on the American market in a completely unmistakable form when it comes to multi-brand strategy.

Las Vegas is for Michelin a good and important meeting place, but the events and meetings outside of the fair hold themselves within clearly smaller frameworks than, for example, those of Bridgestone/Firestone. Michelin has attained clear advantages in the last three years in the American market. Was Michelin now the winner, or were Bridgestone (Firestone recall) and Goodyear (continuous large company losses) only the losers? One would underestimate the French if one would attribute their advances only to the weaknesses of the competitors. Anyone who analyses the American market can come to the conclusion, that the French would have asserted themselves in any case, although perhaps not as quickly. Anyhow, in North America they do ride on a wave of success, although this market has not yet recovered completely from the dramatic break-downs of “9/11”.

10th December 2003/by Tyrepress Editors

Pirelli takes up the challenges in the United States

Although the results of the Pirelli group have improved during the first nine months of this year, it is the tyre business that really shines. What was taunted by analysts as the “old economy” two years ago now represents the pearl of the company. That tyres participate in the company’s turnover with “only” around 45 per cent, but with an EBIT of 174 million Euro for the first nine months in the face of expected 194 million EBIT for the company as a whole says it all. As in previous years Pirelli’s General Manager Tyres Francesco Gori travelled to Las Vegas in order to deepen contacts to the market, from which the Italian tyre manufacturer still expects a lot in the future.

On the largest tyre market of the world, the USA, Pirelli was not very lucky during the last 20 years. From all of this nothing is left. There is nothing in common and the two keep out of each others’ way. Nevertheless, Pirelli did not give up the US market. After the MIRS factory started in Rome/Georgia earlier this year, ever more strongly, the Italians will generate a turnover of approximately 250 million Euro this year with American customers and for the second time in a row will end a financial year in Northern America with a profit. This is all the more remarkable as that the initial costs of the MIRS factory are to be borne. This time Pirelli is taking the difficult and time-consuming route into the market via the OE manufacturers. But a glance on Pirelli’s OE business, which shines with high growth rates, is worth while: here Pirelli proceeds rather selectively; anyway, the Italians do not supply bread and butter tyres with weak margins. On the one hand it concerns high-quality ultra high performance and expensive Off-Road tyres, which are manufactured in Rome, and on the other hand the company supplies tyres from the Brazilian factories into the American original equipment to customers such as Ford and Chrysler. Beginning next year, Gori says, a considerable volume will also come from the newly built Brazilian tyre factory in Salvador (Feira de Santana, Bahia). This factory is considered as particularly efficient and economical, so that the OE business in Northern America might be good fun not only under volume criteria, but will be profitable as well. And concerning sales prospects Pirelli shouldn’t have any real worries, because right now there are dozens of dimensions that are homologated with General Motors, these will be followed by orders. Thus the growth in the North American OE market will continue.

However, also on the American replacement market Gori has set himself and his staff ambitious goals. According to Gori the tyre manufacturer succeeded in finding new dealers, that were interested in Pirelli, and these in sufficient numbers. Tyre dealers observe the market very closely and notice quickly, in which direction trends go and with whom they should form a coalition, in line with Gori’s perception. The good position within the OE business, in addition with predominantly high-quality tyres, let Pirelli become ever more a valuable partner for the replacement business. In the last few years Pirelli grew in North America annually by almost 20 per cent and this is what Gori wants to realise for the coming years, too. However, with all optimism Gori refers to the extremely hard competition in North America, where each manufacturer wants to maintain ground. Pirelli could improve drastically all services, delivery speed, etc., and even concerning the prices the tyre manufacturer was able to position the brand better than last year. “But,” acknowledges Gori, “we are still far away from what we want and what we have to reach.”

North America is the big challenge for Pirelli, here the Italians find larger growth prospects even over years, which must be exhausted. The termination of the co-operation with Cooper was in reality, at least it looks that way today, a completely new beginning in Northern America. Concerning the costs of distribution and services over the whole of the continent, Gori calms down: there was no problem, everything is on schedule.

10th December 2003/by Tyrepress Editors

Continental struggles for turn-around on North American tyre market

Earlier this year it was clear that the CTNA (Continental Tires North America, previously General Tire) would again have to report a three-figure million loss. In the meantime it seeped through that this number is closer to 150 million Euro than “only” around 100 million Euro. This frighteningly high loss shows: In the European tyre business the company makes huge earnings and if the American losses have finally come to an end, the tyre section is not just strongest in turn-over (despite the expected next year’s higher growth in the Automotive business unit), but also the yield-strongest. Tyres still have good expectations in the company; among other things this assumption was underpinned by the majority purchase of the tyre business of the Malaysian company Sime Darby Berhad with two tyre factories with an already existing production capacity of four million passenger car, one million small truck as well as 300,000 heavy truck tyres.

Talking to T&A at the SEMA Show in Las Vegas, Manfred Wennemer (55) and Martien de Louw (57), who is responsible for Continental’s passenger car tyre unit as well as CTNA, affirmed that the American tyre business will reach break-even by the end of 2005. Wennemer specifies: “With the CTNA we will reach break-even in the last quarter of 2005 even though naturally we would be pleased, if we could reach it even earlier.”

Continental was not represented at the SEMA show with its own stand, unlike Bridgestone/ Firestone, Cooper, Goodyear, Michelin and Pirelli and other competitors, probably a cost-based decision. All too tragically this might not have been, because more important than meetings in the company’s booths at the show are meetings accompanying the SEMA show in the surrounding luxury hotels of the craziest city of the world. Martien de Louw and his executive team had invited the customers to an evening in the Mandalay Bay hotel, where hundreds of Continental’s “Best Friends” arrived. De Louw used this opportunity to present his complete executive team. Manfred Wennemer, who travelled to Las Vegas, too, was accessible “on the floor” for everyone, without pushing his colleague de Louw into the background. Optimism was noticeable in Las Vegas; but in order to see that the distance remaining to be covered remains rough and stony, requires no clairvoyance.

10th December 2003/by Tyrepress Editors

Bridgestone appears in good shape again in America

Bridgestone/Firestone has survived the largest tyre recall in the history of the tyre industry in North America, and yet has switched again into forward gear. Under the guidance of its charismatic boss John Lampe, the company is now working hard on an improvement of the results, so that the record loss extending far beyond a billion dollars for 2001 will soon be forgotten.

Two years ago Lampe succeeded at Las Vegas in bringing around 4,000 tyre dealers on the side of his company and the brands Bridgestone and Firestone. And he has lost none of his persuasive power. At this year’s SEMA Show in Las Vegas Lampe presented to thousands of dealers new Firestone products and advertising campaigns, aimed to affect these Firestone customers emotionally. It became clear that the new rise of the tyre brand Firestone cannot be stopped, not even in North America.

Talking to T&A, Lampe briefly reminded us of the tough times. At the peak of the crisis the company counter-steered with the brand Bridgestone. But then again Lampe doesn’t want to hear, that Bridgestone has been made a cheaper tyre brand as planned: “A more differentiated view is necessary. With a volume line we were cheaper, because we wanted to absorb Firestone decreases, but for example with the Potenza, which represents the top line, we have always held the price and could hold it. Since the Firestone recall we carried out changes, with which we can annually sell eight million additional Bridgestone tyres by now. Today we sell more Bridgestone and Firestone tyres than before.” Before and after! Talking to John Lampe that is to be heard several times. In Lampe’s world this means: before and after the tyre recall. During the last three years a change took place towards the brands Bridgestone, Firestone and Dayton. 65 per cent of all tyres sold carry a Bridgestone or a Firestone signature; today already predominantly that of Bridgestone. And that will continue, because nowadays the OE business is exclusively carried out with Bridgestone tyres and in the longer term this should affect the company’s replacement business. Approximately 40 per cent of all passenger car and 4 x 4 tyres, that are sold in America, went “before” into the OE business. Today there is only about 30 per cent. Lampe: “Three years ago we were in a rather despairing financial situation and had to do something for relaxation. The OE business was profitable at no time. And of course we could not afford to always produce volume to whatever costs, but we have very much paid attention to profitability. Our market share is now lower than “before,” but we have the more profitable dimensions. Also Michelin acted very selectively, and into these gaps pushed some European and Asian manufacturers.”

10th December 2003/by Tyrepress Editors

Goodyear: Nobody knows what the future has in store

Because of the continuing market weakness and on-going high losses in North America, Goodyear’s situation in “Bob” Keegan’s 25 months as COO and president and in the 11 months as CEO remains extremely serious and worrying. Unlike competitors such as Michelin, Goodyear could not even increase market share by capitalising on the Firestone disaster.

Even worse: Bridgestone, with Firestone – a tyre brand that many predicted would not survive the crisis – is back on the road and advancing strongly. Cooper, during the third quarter 2003, added around almost ten per cent, while Goodyear could increase sales by only approximately four per cent, while the total market grew by more than six per cent. Also Goodyear’s figures continue to be under pressure, because the sporadic price increases could not compensate for past rises in raw material prices, margins remained lower than expected and the fixed costs “moved in the wrong direction” despite all restructuring measures, says Rod Lache, Analyst at the Deutsche Bank in New York.

Also the sales development in North America is not satisfactory: in 2002 Goodyear sold eight million tyres fewer in the US market compared with the year before, and in 2003 everything points to a further sales reduction of more than two million tyres. This is a clear sign of continuing acceptance problems on the market. Following this it is no surprise that analysts still do not recognise any signs of a turnaround in the recently submitted business figures for the first nine months of this year and that the visible trends give further reasons for concern regarding the future of the company.

Talking to Tyres & Accessories, Bob Keegan was still optimistic. It cannot be denied that fewer tyres than before have been sold. The biggest challenge is to generate growth in the highest market segment. This is the goal of the strategy “How Do We Win” with its seven quintessential points and its personnel policy that has already been explained to analysts in the early summer. Keegan: “I took a few good decisions concerning executive positions in order to be able to realise the necessary changes. My goal was not merely one of only bringing in outsiders. In all areas of the company we have a good mixture of old and newly-hired, high-level personnel. Jon Rich, who has to bear the load of the turnaround, has the same pattern of thinking as me.” Keegan was convinced that he has now brought together the correct executive team. “Managers who led the company into the crisis, are not necessarily the right staff to lead it out again. We needed a change of course, in order to be able to win. I feel very comfortable with the people, who now carry this responsibility along with me.”

10th December 2003/by Tyrepress Editors

Michelin to supply Volvo and Mack

Michelin North America has announced a three-year supply agreement Volvo Trucks North America and Mack Trucks. As a result of this continuing relationship, Michelin fleet customers will be able to specify the Michelin line-haul products they value on every Mack line-haul truck and Volvo VN highway tractors.

10th December 2003/by Tyrepress Editors