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Fitch Relegates Michelin to BBB-

Fitch Ratings has downgraded Compagnie Generale des Etablissements Michelin Long-term Issuer Default Rating (IDR) and senior unsecured ratings to a BBB- rating from BBB. According to a statement detailing the news, Michelin’s “outlook for the long-term IDR is negative.” The downgrades are said to reflect “the further deterioration of Michelin’s financial profile beyond Fitch’s previous expectation amid the accelerating downturn in the global auto markets…” Noting that the group net leverage has increased 50 per cent (to 2.7x at full-year 2008 from 1.8x at full-year 2007), the agency said it “does not expect a marked improvement in the tyre manufacturer’s financial profile before 2010.”

The analysts put the deterioration down to the slump in tyre demand the market has experienced “particularly in the fourth quarter of 2008.” Fitch expects a further decline of the global tyre markets in the first half of 2009, primarily due to significant production cuts by vehicle manufacturers. “A key issue for management is adjusting its manufacturing capacity to reflect expected volumes in the future,” the agency said in its statement.

20th February 2009/by Tyrepress Editors

Self-Inflation Device Scoops 2009 Tire Technology Awards

The Self Inflating Tire (SIT), developed by Coda Development, has walked away with the Tire Technology of the Year award at the Tire Technology Awards for Innovation and Excellence 2009, presented at Tire Technology Expo in Hamburg, Germany on February 18. Coda Development’s SIT system is primarily designed to aid fuel economy and safety. As well as benefiting drivers through the elimination of pressure checks and the need to manually inflate tyres, it helps to address the serious drawbacks of incorrect tyre pressure.

20th February 2009/by Tyrepress Editors

Continental Sime Tyre Launches New Dunlop 4×4 Ranges

Malaysian Conti subsidiary Continental Sime Tyre (CST) officially launched two new models from its Dunlop 4×4 tyre range at an event held in Malaysia’s Genting Highlands. The two models to be launched are the MaxGrip AT2, an all-terrain tyre, and the Road Trekker 2, a product with a greater on-road focus. Both tyres are available in all CST network dealers.

According to CST chief executive officer Benoit Henry, the continuation of the company’s 4×4 range into the value segment, demonstrates “Continental Sime Tyre’s commitment to our business partners, and with your continued support, commitment and teamwork, this will allow us to face the market challenges together.”

20th February 2009/by Tyrepress Editors

Bridgestone Sustains 52% Operating Income Decrease

Bridgestone has announced its consolidated business and financial results for the fiscal year ended 31 December, 2008. The company commented in its report on the “challenging operating environment,” with its major markets in Asia, the USA and Europe declining over the course of the fourth quarter. This environment is illustrated by the worldwide 5 per cent decrease in tyre segment sales, down from 2,756 billion yen (20.54 billion pounds sterling; 1 GBP: 134 JPY) in 2007, to 2,629 billion yen (£20.05 billion), an effect in part, the company says, of the exchange impact of the stronger Japanese yen and a decline in unit sale. However, bottom line increases also hit hard, as Bridgestone tyre lost 52 per cent of its operating income; down to 92.7 billion yen in 2008 from 195 billion in 2007.

Bridgestone’s statement said that it “worked to maximise its sales momentum by introducing appealing new products worldwide, while at the same time improving and expanding strategic production sites around the world in support of respective product domains, particularly those that have been identified as strategic and important to the company’s future growth.” The fourth quarter’s decline in global automotive production and sluggish demand in the replacement market went some way to affecting the drop in sales in all three major markets.

20th February 2009/by Tyrepress Editors

A focus on changing perceptions

Retreading has long been recognised by commercial fleet operators as a major means of saving on operating costs, yet in some quarters retreads are still seen as offering less than their new tyre equivalents. Putting a stop to these misperceptions through elevating public awareness of retreading’s economic and environmental benefits has been a major focus of the US based Tire Retread & Repair Information Bureau – more commonly known as TRIB – for almost four decades. Recently Tyres & Accessories spoke with TRIB managing director Harvey Brodsky about an industry that commercial vehicle operators simply cannot afford to ignore.

20th February 2009/by Tyrepress Editors

Pirelli Keeping its Options Open Over Continental Tyre Purchase

Pirelli is interested in “analysing” the possibility of a friendly deal with Continental AG for at least part of its tyre business, despite denying this only last week. Pirelli chairman, Marco Tronchetti Provera, made his soft offer of interest in the company in a video interview given to the Financial Times and published online today (20 February). When asked if Pirelli had any interest in Continental/Schaeffer Tronchetti Provera answered: “It’s too early to say. But if the price is right, if we are asked to be part of a transaction, it could be interesting to analyse it – but only if it’s a friendly transaction.”

Re-iterating the early stage of Pirelli’s interest in Continental, the company’s press office issued the following brief statement later that afternoon: “With regard to comments on possible Pirelli transactions on Continental, the company declares that no transaction has been defined even along general outlines. The company also points out that, consistent with the financial rigor foreseen by the guidelines of the recent 2009-2011 industrial plan, any possible future transaction of a strategic nature would not comport any recourse to the market.” However, while the press department’s statement may have played down Tronchetti Provera’s words, earlier in February Il Mondo claimed Pirelli executives had conducted – on separate occasions – meetings with JP Morgan, Deutsche Bank, Mediobanca and a number of advisers.

20th February 2009/by Tyrepress Editors

Goodyear Committed To New Akron Headquarters

More than a year ago, Goodyear reached an agreement with the city of Akron, the state of Ohio and California developer IRG to build its headquarters near the current one, rather than re-locate elsewhere. The plan was on track until the end of 2008, when a credit squeeze halted IRG’s financing. Though the project is still in limbo, Goodyear has said it still plans to move forward.

“All the parties involved are still extremely confident and extremely committed to the program, but because of the credit crisis it has certainly slowed the progress of finalizing the agreement,” Goodyear spokesman Scott Bachman said. The agreement included 30 million dollars in state tax breaks for Goodyear that are contingent upon it maintaining an employment level of at least 2,900 in Akron – just 200 less than the tyre maker currently employs there.

Due to a downturn in demand for tyres, Goodyear recently announced it would cut nearly 7 per cent of its global workforce of about 75,000, but would not name specific facilities that would see job losses. (Tire Review/Akron)

20th February 2009/by Tyrepress Editors

Continental AG Reports 2008 Record Net Loss

Continental AG has reported a record group net loss for 2008, following what executive board chairman Dr Karl-Thomas Neumann called “an unusual year.” The net loss was the result of the company having to write down 1.23 billion euros of “goodwill impairment” due to poor performance in the automotive group’s powertrain division. This was compounded by the effects of high raw material costs and dramatic falls in OE demand during 2008. Consolidated sales came in at 24.239 billion euros, with a group margin of 7.6 per cent – a figure within the company’s “EBIT target corridor.” Nevertheless Continental was able to reduce net indebtedness by roughly 373 million euros, leaving 10.483 billion euros.

Rubber group figures for 2008 faired considerably better with sales of 9.35 billion euros and 10.5 per cent margin. Passenger and Light Truck Tire posted sales of 5.1 billion euros, adjusted pre-tax profits (EBIT) of 644.8 million euros equating to a margin of 13.1 per cent. ContiTech’s numbers totalled 3 billion euros, 327.8 million euros and 11 per cent for sales, adjusted EBIT and margin. Commercial Vehicle Tire (CVT), however, survived on a slim margin of 2.7 per cent (36.3 million euros) despite sales of over a billion. Dr Hans-Joachim Nikolin, executive board member responsible for commercial vehicle tyres, explained that the virtual collapse of OE demand and raw material prices were at the root of the division’s narrow margins. The 290 million euros of increased costs the group had to pay as a result of raw material price increases at the root of CVT’s woes as this division had to face 100 million euros of this figure alone. However, commercial vehicle tyre’s particularly dependence on OE sales is also exposed in the full-year 2008 results.

19th February 2009/by Tyrepress Editors

Cooper’s Melksham Plant Halts Production for a Week

Cooper Tire Europe has suspended production at its Melksham, UK production plant. According to a company spokesman production and closed for a week in order to reduce stocks. However, a BBC news report added that the move would also “help safeguard its future.” There is apparently no threat to jobs at the plant which employs 1100 people. Production is expected to return to normal next week.

19th February 2009/by Tyrepress Editors

Goodyear’s Danville Plant to Lose 400 Staff

Following Goodyear’s announcement in its full-year report for 2008 that the company was to reduce its global workforce by 5,000 over the next year, CEO and chairman Robert J. Keegan stated in a conference call with analysts today (19 February 2009) that a tentative agreement had been reached with local Steelworker leadership at the manufacturer’s Danville, Virginia plant to cut capacity and the work force by 400 people. The agreement will be taken to a union vote today.

19th February 2009/by Tyrepress Editors

Michelin German Plant Starts Short Time Work

Michelin has reportedly reduced working hours at its Homburg, Germany tyre production plant. The move affects 900 of the 1200 workers at the factory that specialises in manufacturing truck tyres. The Saarbruecker Zeitung newspaper quoted a company spokesperson as saying the measure is planned to take effect from 1 March for six months.

19th February 2009/by Tyrepress Editors

Conti Automotive Appoints New Romanian R&D Head

As of February 1, research and development for Continental Automotive in Romania is being headed up by Dr. Christian von Albrichsfeld. The 12-year Conti veteran is coordinating the research and development activities of Continental in Romania at a national level in its Timisoara, Sibiu and Iasi sites. Dr. von Albrichsfeld has taken over this position from Christian Ruediger, who was in charge of the team in Romania for two years and finished his term in the position on January 31.

19th February 2009/by Tyrepress Editors

Bridgestone Announces Temporary Closures at European Facilities

Bridgestone Europe has announced temporary closure of factories in the region following worsening market demand during December, January and February, especially in the OE tyre segment. According to Bridgestone, these temporary shutdowns will affect the bulk of its European facilities, including the company’s plants in Béthune, Bari, Bilbao, Burgos and Poznan. Only the Tatabánya factory in Hungary and the agricultural line at the Puente San Miguel plant in Spain have been exempted from this action, reports Gert Meylemans, senior manager at Bridgestone’s European Communications Office. These temporary closures are already being implemented, Meylemans adds, and employees affected by the closures are being continuously informed as circumstances change.

19th February 2009/by Tyrepress Editors

Rhodia/Dow Corning Silica for NR Undergoing European Road Tests

When Tyres & Accessories met with representatives of Rhodia and Dow Corning at Tire Technology Expo 2008, they revealed that the fruit of their alliance to develop a silica/silane for use with natural rubber has already reached an advanced stage. The details of the project will be reported by T&A at length at a later date, however Rhodia’s global business director Peter Browning confirmed that two customers are already, somewhere in Europe, trialling truck tyres made with the silica/silane in a natural rubber compound.

19th February 2009/by Tyrepress Editors

Hero Forza F278 Inks JMC Light Truck OE Contract

Federal’s second brand Hero has announced that Jiangling Motors has signed a deal to fit the Forza F278 light truck tyre in size 700/R16 10PR as original equipment on its commercial vehicles. The radial is built with a durable steel belt and stronger casing, designed to withstand higher loading capacity.

Initially introducing international advanced technology to the manufacturing of pick-up trucks in the mid-1980s, JMC has become one of the largest commercial vehicle enterprises in China, of which the market share of light truck reaches 28 per cent. Hero’s deal with JMC allows the brand to tap into this market potential, by placing the Forza F278 LTR so prominently.

19th February 2009/by Tyrepress Editors