Shares at Goodyear and Cooper are falling. At Goodyear especially, internal factors are not being helped by rising oil prices, which increase costs and affect the spending power of consumers. This has led to weaker-than-expected demand for new cars. Wall Street analysts, such as Deutsche Bank Research, are warning of possible inflationary pressure, but they do not want to sound too pessimistic.
Go Gomma has been involved with repair and tyre dealer products since 1981, benefiting from more than thirty years’ experience gained by its founder, Giuliano Gori. All products and equipment have been chosen for their competitive prices and optimal quality, and also for innovation, safety, ease of use and protection of the environment. This has enabled Go Gomma to become the main supplier of important Italian and foreign distributors, thus confirming the quality and service of its production so that many products sold under other brand names include Go Gomma technology, experience and skill. The company’s current commitments are aimed not only at consolidating its image but also acquiring customers in developing countries by taking part in specialised fairs and sales missions. The experience gained in the traditional repair and tyre dealer sectors has not prevented Go Gomma from shifting its attention towards developing technologies that, even though founded on rubber and polymers in general, have applications in the industrial abrasion, proof coating and surface protection field. Go Gomma is the leading company in this sector with the widest selection of materials and accessories for rebuilders and tyre dealers. A vast choice of top quality products for professionals is the strong point of the company and the foundation for its many years of success.
According to DB analyst R. Lache from NY, quoted in a business newspaper in the US, the problem for Goodyear at the moment is that the manufacturer has cut high discounts for 8 distributors, who are now reluctant to buy tyres from Goodyear, thus putting more pressure on the company. The good news is that Goodyear is sticking to higher prices. Despite the fact that the analyst is sticking to his 36 US$ expectation, he reduced the share from “Strong Buy” to “Buy”.
Leading polyester producer Honeywell Performance Fibers is forming an alliance with Indonesian tyre cord manufacturer GT Petrochem Industries. The aim is to link Honeywell’s polyester fibre product line with GT Petrochem’s conversion facilities to provide a world class tyre cord fabric to the global tyre industry. The two companies have been working closely together since 1996 and the alliance will ensure the supply of quality tyre reinforcement products at competitive prices.
Indonesia and Thailand have threatened to cut rubber production. Indonesia and Thailand are planning an immediate 10 per cent cut in production in a plan to push prices up by as much as 30 per cent. Malaysia is expected to follow suite. If the cuts are effective it could result in 20 per cent price rises in the retail prices of tyres. In order to sustain the cuts, Indonesia and Thailand are proposing to convert rubber plantations into alleged cash crops such as cocoa and coffee. It is expected that the main beneficiary of this move would be Russia, the main producer of synthetic rubber.
Bandag has announced consolidated net earnings of $17.4 million for the quarter ending 31st December 2001, bringing total net consolidated earnings for the year to $43.8 million, or $2.12 per diluted share on sales of $964.9 million. This compares to 200 net earnings of £60.3 million on sales of $996.1 million. Martin Carver, Bandag’s CEO stated that strong results in the last quarter were offset by performance in offshore operations. He noted that offshore operations continued to experience difficult economic conditions and strong competitive pressures.
Superior announced the award of several new and replacement programs under the previously announced long term supply agreement which has now been finalized and signed with General Motors Corporation. The first of these programs will begin production in the Spring of 2002 and include the Saturn vehicle name plate; a first for Superior Industries. “These recent business awards demonstrate the value of this unprecedented year contract to both General Motors and Superior Industries because it was based on long term performance in delivering the highest quality, technology and service at competitive prices,” said Louis L. Borick, President and Chairman of Superior Industries.
Alcoa, the world’s largest aluminium manufacturer and a key player in the aluminium wheel sector, reported lower fourth quarter profits due to weakened prices and lower demand from the aerospace and transport industries. The company also posted its first net quarterly loss in seven years. Fourth quarter earnings, excluding charges, were 11 cents per share, however a 28 cent per share after-tax charge for restructuring resulted in a net loss of 17 cents per share against a net income of 45 cents per share for the same quarter in the previous year. The company is continuing with restructuring activities seeking a target cost saving of $1 billion in 2003.
Michelin has warned its customers and distributors in Europe to beware of truck tyres being offered at extraordinarily low prices. These are believed to be the result of VAT fraud and Michelin is working with customs authorities and police across Europe. Investigations have already identified organised criminal networks and, as a result, a number of VAT frauds have been broken up. Michelin is concerned at potential harm to its truck tyre image and to its distributor network and it asks customers to be aware of complicity should they make illegal purchases from these criminal networks.
Car makers in a lot of markets grieve over significant reductions in new car registrations. One should not forget that, for most suppliers, from whom parts are needed for the production of cars, the consequences are negative also. But not for manufacturers of light alloy wheels: a flood of special car editions and generally growing fitment rates – in comparison with steel wheels – means that the European aluminium wheel manufacturers are selling all that they can produce. New facilities are even having to be built. The aluminium wheel in original equipment changes from a part which raises the value of a car to standard fitment, even for middle class vehicles. In spite of these favourable conditions, the sector is under pressure. The middle-class structured alloy wheel manufacturers cannot resist the downward trend of prices, caused by the car manufacturers. This is especially so because the purchase of this product happens more and more on a global scale. Besides this, the number of possible oe suppliers of cast aluminium wheels is still enormous. A process of consolidation (as in other segments supplying oe) has not happened, until now.
This year’s meeting of the German co-operation of independent tyre dealers under the umbrella of the retail brand “premio” had as its motto “time for take off”. Round about 125 outlets are members, with only a few having more than one service station. The downside of the premio network is that the “brand premio” is not well-known among end users. One reason for this is the fact that the chain is relatively young, about five years old. Of course a brand would be more popular if it were spread all over the country or – as service provider Goodyear would say – if more stations are on the net. But the premio managers are realistic, and it is not possible to grow by leaps and bounds. The competitors among the other groups of tyre dealers have restricted the market. And of course sometimes a member leaves the group after selling his business. Premio is part of the controlled distribution network of Goodyear in Germany which today covers round about 600 outlets. Premio wants one day to be what the group managers call the “lighthouse of the market”. Because the quantity targets have to be limited, Premio wants to be the best in terms of quality. In all criteria of an independent customer satisfaction analysis Premio performed better and even much better than the competitors – in all but two aspects, that is and these two were brand awareness and prices for endusers. It is hard to become the best in the market, but it is also hard to stay the best. How does it work? The best way is to continue to improve and optimise the modules of the system which the Premio Centre in the Goodyear headquarters makes available for the members. They not only try to develop new modules but also have to decide whether some of the older modules are no longer relevant. With more than 50 (!) modules the Premio offer is a leading player; taking just one of the modules available, the new software solution for the tyre trade called “tiresoft II” may well be the most modern in the market.
Cheaper oil prices and the result of the Firestone recall in the US make Michelin shares a “buy”, according to analysts from the Deutsche Bank. Despite weakening demand in the US – the world’s biggest tyre market – Michelin is gaining market share and selling more tyres than ever. Market observers believe that it will be possible to obtain better prices for tyres in the region of 3 to 5 per cent.
The price of rubber, at US$0.54, is the lowest for 30 years. Tyre producers, who buy two-thirds of rubber production, are being very cautious in view of the falling demand for cars in the large industrial countries. Thailand, Indonesia and Malaysia want to keep prices high through a cartel but to date have not been very successful. Competitors Vietnam and Cambodia are increasing production, which has kept prices low. The rubber producers are pinning their hopes on China which – if it joins the World Trade Organisation – will import more rubber.
Nokian Tyres is preparing to launch RoadSnoop, its first generation tyre pressure and temperature monitor. The sensor is battery powered and is mounted in the tyre at tyre changing and operates instantaneously upon turning the key in the ignition. It sends signals to a dashboard mounted monitor. Deliveries are expected at the beginning of March 2002.
According to the monthly investors’ update, the group is still under pressure. In the US the replacement business was quite good, not so in the OE business. In Europe, the group is suffering because of the warm weather, which is having a negative effect on sales of winter tyres, and in Asia, the company has been forced to lower prices due to the fact that cheap imports from China are putting pressure on prices. In a cost cutting move, Goodyear is offering an early retirement package for around 700 white collar workers, half of them working in the Akron HQ.
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