North America
The Akron Beacon Journal (ABJ) reports that Goodyear plans to cut 15 per cent of its North American tyre production capacity and move production to low cost centre countries. The source was an internal company newsletter distributed to employees on Wednesday.
Business newspapers in France and England are commenting on a paper from the french analysts Gaetan Toulemonde and Alexis Boyer both from DB Global Equities are recommending Michelin shares as a clear “buy”. The share price – at about 31 Euros at present – has, according to the analysts, the potential to rise to 50 Euros within 12 months. Michelin is seen by them as “the BMW in the tyre industry” with strong brands and an excellent brand strategy. It is expected that Michelin will announce in a press conference at the end of February a turnover for 2002 of about 15.7 bn Euro and an operating profit of 1.1 bn Euro. For this year the company is aiming for a turnover of more than 17 bn Euro and an operating profit of more than 1.2 bn Euro. The stock capitalisation at present is 4.6 bn Euro.
Although reductions in staff had been expected, the news item still fell like a bombshell: Goodyear, the tyre manufacturer, is sending more than 700 salaried staff home, 350 of these from the company headquarters in Akron, Ohio, alone. The press releases on the subject refer to a "restructuring", holding that the move was necessary to strengthen attempts to accelerate Goodyear's turnaround. With this measure, it is said, Goodyear can remain competitive, and CEO Keegan even demands something like a "winners' attitude" from the remaining associates. This may go down well in America, yet to the ears of staff hit by the cuts, who have not been charged with having done anything wrong, it must sound almost cynical. Meanwhile, Thursday January 16th , Akron witnessed moving scenes among staff. For one thing, no one expected such serious staff cuts; and for another, it looked as if someone had simply gone through the ranks with a rake, plucking out staff members who never even dreamed of being dismissed. The entire proceeding bears a certain handwriting and leads one to suspect that top and higher-echelon management made the decisions more or less on their own, and that middle management, presumably was not involved in the matter and now lives in fear of a loss of functionality. In the end, the work to be done has neither gone away nor even lessened. Instead, it must be carried out by the employees still holding their positions.
The Goodyear Tire & Rubber Company has announced restructuring actions in its corporate headquarters and North American Tire operations that will eliminate more than 700 salaried staff positions. The action is being taken to improve the company’s fixed cost structure.
As reported in T&A RFID tyre identification systems are about to become an element of tyre production and management. After testing on truck and earthmover tyres, Michelin has begun fleet testing of Radio Frequency Identification tagging on passenger car and light truck tyres. The technology allows the tyre identification number to be associated with the vehicle identification number (VIN) making the tyres uniquely identifiable with an individual vehicle, telling when and where the tyre was made, maximum inflation pressure, tyre size, etc.. The ability to identify and track individual tyres through their life cycle has attractions for tyre management services, but ultimately may have applications in the control of the tyre life cycle, including retreading and recovery.
Titan Technologies (Albuquerque/USA) has announced that its ability to generate electricity by using the gas and carbon black byproducts generated by its tyre recycling process has sparked considerable interest from tyre shredding operations across North America. Titan had been researching the use of its plants to generate electrical power. Titan addressing costs and developing scrubbers to eliminate emissions from combustion of the oil, gas and carbon black produced by the process. Once these costs have been determined, Titan will develop an electrical generation business pro forma for different locations. At this time, Titan believes that a TRTM plant is an economically viable electrical generation system. Ronald L. Wilder, Titan’s president, added, “All cities and countries have major waste tyre problems and most, if not all, will need additional electrical generation. There can be special benefits if additional power comes from recyclable waste tyres”. Titan’s current claim is that the BTU output of a Titan Technologies tyre recycling plant processing 100 tons of scrap tyres per day is almost 3 billion BTU/day in excess of the energy required to operate the recycling plant. This excess will generate approximately 20 mega watts of continuous electrical power.
Cooper Tire & Rubber has reported its third quarter figures. Net sales were up 6 per cent to $839 million (3Q 2001: $791 m). Operating profit was $55 million and net income was $23 million, 28 per cent up on the 3Q 2001 figure of $18 million. Comparing the first nine months with the same period last year, net income rose 87 percent, from $47 m to $88 m, while operating profit was $195 m, compared to $137 m. Cooper’s tyre sales in North America declined by one per cent during 3Q, but this compared to an industry decline of nearly 8 per cent. Operating profit for the tyre group in 3Q was $27 m. This compares to a loss in 3Q 2001 of $9 m, but this figure was affected by charges related to a proposed class action litigation settlement.
Bridgestone/Firestone North America is raising prices from 1st January because of increased raw material costs. The increases – up to 5 per cent – will apply to car and light truck tyres for the Bridgestone, Firestone and Dayton brands, as well as associate and private brands. Bridgestone, Firestone and Dayton heavy-duty and medium-duty truck tyres will rise by 3-4 per cent. The move follows similar increases in the US by Goodyear, Michelin and Cooper.
Goodyear’s North American Tire region has been recommended for certification to ISO 14001 environmental standard. The standard requires an organisation to identify and reduce its impact on the environment beyond legal requirements.
Pirelli is to be sole supplier of tyres and tyre technology to Maserati, the Ferrari-owned sports car maker. Next year Pirelli P Zero tyres will be fitted to Maserati cars competing in the Maserati trophy and, the following year, to Maserati cars competing on the GT race circuit. Maserati’s Spider and Coupe sell for around $100,000 and the brand was named as a “must-have” for affluent Americans in two lifestyle magazines. Maserati is concentrating on the US market and by 2006, hopes to sell 45 per cent of its global total of 10,000 vehicles in North America.
Pirelli posted a net loss for the third quarter of 325 million Euros, compared with a profit of 15 m Euros in 3Q last year. Chairman Marco Tronchetti Provera revealed that the company will close six factories and lay off 2,400 staff, representing 6 per cent of the workforce. Of the factories to close, three make telecommunications cables and three make energy cables. Tyre division results were good and the energy unit broke even, but neither could compensate for the poor performance of the telecommunications.
In the USA, Pirelli has introduced a new tyre, the P6 Four Seasons. As the name suggests, it is an all-season tyre, which is already OE fitment on a number of European vehicles. In North America, OE contracts have been signed for the Lincoln Town Car and Ford Crown Victoria. The tyre is also undergoing homologation on new models from Jaguar, DaimlerChrysler and BMW. It will be available in 23 sizes for wheels from 15″ to 17″, aspect ratios from 65 to 45 and H, V and W speed ratings.
In the United States, analysts UBS Warburg have downgraded Goodyear stocks from “Hold” to “Reduce” and the price target per share from $8 to $5.50. The analysts accept that the company’s sales performance overseas is improving, but Goodyear is struggling in the US and the analysts cite five reasons why it might be difficult to make further progress in this market.
Goodyear has published its results for the third quarter. Net income more than tripled to $33.7 million (3Q 2001: $9.3 m), while worldwide sales were down slightly at $3.5 bn ($3.7 bn). Currency movements had an estimated $4 m negative effect on sales and $10 m on earnings. For the first nine months, Goodyear posted a loss of $0.6 million, compared with a loss of $29.6 m for the same period last year. Sales were down too, at $10.3 bn ($10.7 bn), while tyre volumes slipped 2.5 per cent to 160.7 million units. Sam Gibara said that economic conditions in key markets and rising raw material costs are a concern, but Goodyear will continue to concentrate on reducing working capital.
Automotive consultants Autopolis pinpoint Asia as “critical” to the world’s car and truck manufacturers in the coming years. While sales are expected to continue falling in Europe and North America, over the next decade sales in Asia (excluding Japan) will grow at over seven times the global average, autopolis predicts, with the fastest growth in China and Thailand. Sales of vehicles in China for the year 2010 are predicted to be 4.75 million; more than double the figure for the year 2000.
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