North America
Mark D. Ponton (50) has been appointed vice president of materials management for Goodyear in the USA. The post entails looking after Goodyear’s initiatives in warehousing and distribution in North America.
Michelin North America has announced that it will cut 2,000 of its 26,500 workforce. The cuts will target the whole company, not just specific job classifications, and will be spread across not just the 23 plants but the whole company. Most will be achieved through normal losses and voluntary redundancies. Michelin wants to trim $75m in annual costs beyond the already announced $125m, and does not want to wait until the weak North American market begins to improve but rather to develop lean structures and create the ability to react to the market independently, whether the market improves or not.
Bridgestone/Firestone and the Tire Retread Information Bureau (TRIB) are co-sponsoring the distribution of over 100,000 tire inflation brochures at the Commercial Vehicle Safety Alliance (CVSA) “Roadcheck 2001” program to be held throughout north America June 5-7, 2001. The four page brochure titled “What are the high costs of low air pressure” is entirely non-commercial and originally appeared in Bridgestone’s tire topic magazine, Real Answers. The brochures will be distributed by highway patrol officers at weight stations in all fifty states and U.S. territories, and all Canadian provinces and territories, as part of CVSA’s program to heighten truckers’ awareness of the importance of maintaining proper air pressure.
Nokian Tyres has reported its Q2 results, which proved better than analysts expected. While sales were as forecast (up 11.7 per cent to 95 million Euro), operating income was much higher than predicted at 8.5 million Euro, with an operating margin of 8.9 per cent (last year, 3.5 per cent). Results were helped by the 1.9 million Euro operating profit recorded by the Vianor retail chain. Analysts are cautious about the outlook for the second half of the year, with much depending on winter tyre sales.
Increased demand in Latin America has prompted Goodyear to resume production of aircraft tyres at its factory in Sao Paulo, Brazil. Manufacture of these tyres began in 1943 and was stopped in 1992. The biggest customer is Brazilian aeroplane maker Embraer; the fourth largest in the world, and which is currently constructing a new factory in Brazil. 30 per cent of the Sao Paulo aircraft tyres will be for the Brazilian market, with the remaining 70 per cent exported to North America, Europe, Asia, Latin America and Australia. Goodyear claims to be the world leader in aircraft tyre manufacturing.
More and more tyre dealers ask for the tyre pressure control systems with which the newest car models are fitted as original equipment. They are annoyed at getting no satisfactory answer, even from the car dealers selling these cars. One of the problems is that there is no standardised system. Most European car manufacturers are using as a basic a system from supplier Beru, for example with valves from Alligator. But the French car makers went down different development paths with other suppliers, for example Valeo and valve-sub supplier Schrader. The systems are completely different! If it is not possible for the Europeans to find a common level of tyre wheel systems with tyre pressure monitoring sub systems how difficult might it be to find harmony with the car makers from Japan/Korea and North America? The tyre pressure controlling systems situation is constantly changing, but we are painting a picture of the situation today. For example to secure the function of the newest Renault Laguna II the car maker explains that you must use only original parts – for example only Renault wheels. Using different wheels makes it impossible to fix the sensors and the function of the system is interrupted. If this were to become typical the free workshops (car repair stations, fast fitters or tyre dealers) will be unable to take part in the new technologies and the only workshops working with the systems, repairing details and replacing parts, will be the workshops of the car manufacturers.
The Continental Group is reporting a turnover of 2.578 bn Euro, compared with 2.426 bn Euro for the first quarter of 2000, and EBIT figures fell from 135 to 106 million Euro. Despite the fact that the Automotive Systems business unit showed a large increase in turnover from 749 million Euro (Q1 2000) to 879 million Euro, EBIT came down from 29 to 26 million Euro. Only ContiTech – which is up for sale – reported more or less unchanged figures. ContiTech’s turnover makes up 18.5 per cent of the group’s turnover, but 42 per cent of the group’s EBIT comes from ContiTech. The performance of the passenger car tyre division was quite good, with a growth in sales from 588 to 636 million Euro and an EBIT rising from 36 million Euro (Q1 2000) to 46 million Euro. The situation at General Tire North America, now named Continental North America, is dire. For the first quarter of last year, the company achieved an EBIT of 15 million Euro. For the same period this year, it reported a loss of 23 million Euro. At the moment, there are no signs of a turnaround for the tyre division in North America.
Good news for Bridgestone/Firestone Inc. in North America. GM has chosen the tyre manufacturer once again as their tyre supplier of the year and underlined the quality and performance of these tyres.
DaimlerChrysler has announced that it is to cut 26,000 jobs globally over the next three years, which equates to 20 per cent of the group’s workforce. Production will be stopped or curtailed at 13 factories, cutting capacity by 15 per cent. DaimlerChrysler has also told suppliers to reduce prices by 5 per cent.
Goodyear Tire & Rubber has announced worldwide sales in the 3rd quarter of $3.7 bn (Q3 2000 = $3.6 bn). Net income for the same period was $9.3 million, compared to $17 m for Q3 last year. For the first nine months of the year, the company posted a net loss of $29.6 m, compared to net income of $142.3 m for the equivalent period in 2000. Sam Gibara spoke of “a general economic slowdown” and “tough market conditions in many regions.” However, one plus point for the company was a market share gain of 3 per cent in the US replacement tyre market.
The group’s turnover fell from US$ 3.66 bn (1st quarter 2000) to US$ 3.41 bn for Q1 this year. Last year the group achieved earnings before taxes of US$ 80.3 million; this has turned into a loss of US$ 48.2 million. Earnings after tax fell to a loss of US$ 46.7 million. Despite these poor figures, analysts – especially from Deutsche Bank – have confidence in Goodyear, which is based on the hope that the effect of the disastrous Firestone recall will create a big advantage for first brands, and is also based on the assumption that price increases will stick. Last but not least, Goodyear has said that its on-going restructuring programme will lead to further significant cost reductions.
The US National Highway Traffic Safety Administration has announced that it is to open a defect investigation into the General Ameri*550 AS P235/70R16. The tyre is manufactured by Continental Tire North America and has been used as a replacement tyre for Firestone Wilderness ATs on Ford Explorers. The investigation follows initial research results show tread separation claims running at 124 per million. This exceeds the rates for any of the other tyres on the NHTSA list of tyres to be examined. The claims against the General Ameri*550 include seven crashes in which the tyre separation allegedly led to injuries. The NHTSA states that the defect investigation does not mean that it has determined these tyres to be unsafe, or to have a safety related defect. Simply that it warrants further investigation.
In an attempt to reduce vehicle stocks, Ford and General Motors have announced the temporary closure of seven factories in North America. GM is to close five plants (sited in Oklahoma City, Ontario, Michigan and Ohio) for a week, affecting over 14,000 workers. The two plants which Ford is to close temporarily manufacture vans and are situated in Ohio, employing 4,150 hourly workers.
Nokian has released interim financial figures for the first nine months of this year. These show an increase in net sales of 7.4 per cent to 277.7 m Euro and an operating profit of 25.3 m Euro (11.9 m Euro for the same period last year). Net profit reached 9.1 m Euro (2.7 m in 2000). Nokian’s target for the year is to achieve a sales growth of around 10 per cent and improve on last year’s profitability.
At the annual general meeting of Continental AG, held at the Preussag-Arena of the Hanover EXPO Centre, both management board and shareholders were united in not being very happy with the development of the company’s share price. However, they did not agree over the intention to sell ContiTech. Whereas, for the group’s representatives this is another logical step towards becoming a systems supplier for the automobile industry, the question was raised, whether instead it might be more useful to separate from the weak Continental Tire North America (the former General Tire). Another factor is that last year ContiTech achieved quite a profitable result. This kind of argument took the wind out of the sails of both Continental’s managing director, Dr. Stefan Kessel and board member Manfred Wennemer, who is responsible for this business unit within the group. They were united in their desire to follow the path towards “Global Chassis Control”. And in order to emerge from the decline, a cluster of measures has already been introduced. “We expect these measures to bear fruits soon, and that sales increases will be reflected in the results, too. However, 2001 will be a very difficult year for tyres in the USA” – such was the managing director’s outlook. “Therefore, it will be even more important to become a systems supplier. As there are only a few suppliers for the automobile industry, hostile take-overs will be rather unlikely.” Kessel was trying to allay the shareholder’s fears and once more justify Continental’s strategic change. Of course, it would be very helpful to spur on the share price, as explicitly declared by the group’s top management at the AGM – however, it needs more than words.
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