Across the Atlantic they are called tires, while over here we use a “Y” and say tyres. This tag provides the latest tyre business news emanating from the United States of America (USA), whichever way you spell it.
“Hundreds of thousands” of scrap tyres on a three-acre dump in Pasadena have been burning since late Saturday night, sending flames 300 feet into the air. Between 50 and 60 firefighters are at the scene around the clock. The blaze started when a stolen car was deliberately set alight and the flames spread to the tyre dump.
Hyundai, DaimlerChrysler and Mitsubishi are said to have held talks exploring ways to jointly develop and purchase parts. The procurement talks were held in Hyundai’s Seoul HQ and covered parts purchased in the US, Japan and Europe in addition to South Korea.
The year 2000 tyre recall, with all its consequences and financial difficulties, is more or less over. Sales in North America are strong, plus the performance of the Firestone brand has been stabilised, while the Bridgestone brand managed a growth of 30%, said John Lampe, CEO of Bridgestone/Firestone Americas Holding Inc. yesterday on TV. The fact that Lampe (who has turned out to be a charismatic leader by virtue of his tough battle with his biggest customer Ford, admired by all Bridgestone/Firestone employees in America) appeared on TV this week is another blow for the morale of Goodyear people. Last week they were told by CEO Gibara and his successor from the 1st of January next year, Keegan, that the Corporation has lost market share and has been unable to produce good results on its home market so far. This is forcing the company into the next round of restructuring and cost saving measures. According to Gibara the company is no longer able to pay the health costs at the same high rates as in the past, but has to reduce these costs immediately. This is a consequence, said Gibara, of fierce competition. Employees also fear that the company might lay off thousands more associates in order to reduce costs.
Three companies which supply chemicals for tyre manufacturing are being investigated for possible price fixing. Investigations are on-going in both the USA and Europe into Bayer AG, Flexsys NV and Crompton Corp. Experts estimate that sales of rubber-processing chemicals in the USA are worth around $900 million annually.
The US Supreme Court has refused to hear an appeal from Cooper Tire and Rubber against a $3.3 million jury award in a 1995 rollover case. Cooper appealed the decision, calling the amount “so excessive that it violated the constitutional right to due process”.
1997 marked the US-comeback for BFGoodrich Tires in the agricultural segment, where the brand had a long tradition. Now BFGoodrich Tires – well-known for off road and car tyres – is returning to the European agricultural tyre sector as the second world brand in Michelin’s multi-brand-strategy. Across the world and in the tyre segments where Michelin is well-known for attributes like “premium, innovator, top technology”, BFGoodrich Tires will be positioned in the “value for money” segment, in original equipment and the aftermarket also. Overlapping in some sub segments such as front and implement tyres with the brands Stomil/kormoran and Taurus will, in the long run, be resolved in favour of BFGoodrich.
Now that Goodyear’s stock has fallen to its lowest value in the last 10 years, questions are being asked about the consequences for the management. At the moment Goodyear shares costs less than 10 US-$, and American newspapers report that, since 1996, when Sam Gibara took over, Goodyear’s stock-value has fallen by about 80 percent. Last year the company lost more than 200 million US-$, and this year there is no turnaround in sight. Goodyear is not in a position go on the offensive; on the contrary it has its back to the wall. Bad enough that the bond issues are rated as “junk-bonds” and that obtaining credit will be more expensive, but the scenarios and rumours that are being discussed inside the company would have been unthinkable some time ago. Despite these difficulties, analysts agree that Goodyear can resolve its problems without outside help, assuming it chooses the right measures. On Tuesday this week a routine chairman’s board meeting will take place. It is not known whether there will be any discussions about the management.
In the USA, Robbins LLC has announced a substantial plant expansion and modernisation program, including a new mixing line and a new 1,800 square foot testing and quality control lab. The mixing line will be housed in a new 60,000 square foot plant extension. Robbins, which recently acquired all the assets of Presti Rubber Products Inc., manufactures curing tubes and envelopes for retreading plus custom mixing of rubber compounds.
Indian company Metro Tyres has signed an agreement with Continental to manufacture two-wheeler tyres for the German company. Said Metro Tyres Managing Director Rummy Chhabra: “We will be shortly producing motorcycle, scooter and moped tyres for Continental under the ‘Continental’ brand name. The move will give us access to manufacturers like Yamaha, Honda and Kawasaki among others.”
A Class Action lawsuit against Bridgestone/Firestone filed on the 12th August in California has been transferred to the Eastern District of the US District Court. Thus allowing Federal jurisdiction on the California originated case. The Class Action lawsuit alleges that Bridgestone/Firestone’s Steeltex R4S, R4SII and A/T tyre series contain a lamination defect which can, and has allegedly, caused the entire tread of the tyre to separate leading to the tyre’s destruction. Causes of action in the lawsuit charged the tyre manufacturer with Fraudulent Concealment, Deceptive Practices in Violation of the CLRA, Violations of the Unfair Practices Act, Negligence and Strict Liability. Commenting on the removal of the lawsuit to federal court, Lisoni, acting for the plaintiffs, stated: “This legal action was filed to protect and represent the interests of Americans throughout the country who have purchased one of the more than 27.5 million Steeltex tyres manufactured.” Lisoni emphasised he has received scores of reports from Steeltex tire owners nationwide of tyre defects and damages as well as accidents and injuries resulting from the defects. The purpose of this lawsuit is not about money, Lisoni stressed, adding: “First and foremost, it is to motivate Bridgestone/Firestone to take responsibility for their defective product and do what is best for the safety of its customers-immediately recall the entire Steeltex tyre series.”
Analysts class BMW shares as the best investment among German car companies, with a price rate of 62 Euros. Although the economic forecast for this year was rather negative, BMW reported good sales last month in the USA.
Analysts at Deutsche Bank believe that this year Continental could achieve an EBITA of 600 million Euros. The management had forecast 530 million Euro. Although Temic was acquired, indebtedness has been reduced by 300 million Euros. Business in the USA is still bad, with losses of 100 million Euros (and more) expected. The objective of the chairman of Continental USA, Dr. Ulrich Wellen – to break even – seems not likely to be realised, at least in the near future.
In the USA, Bridgestone/Firestone is voluntarily recalling 754 wrongly-marked Widetrack brand Baja A/T tyres, made over a three week period in 2001. The incorrect markings on the sidewall understated the maximum inflation load of the tyre.
For the fifth consecutive year Michelin has come top of the JD Power survey for satisfaction in passenger vehicle original equipment and top in the light truck OE tyre satisfaction league. The study has been based on reports from 33,700 consumers in their first three years on new vehicle ownership and reports on satisfaction with OE tyres. Michelin had the lowest percentage of owners reporting a tyre problem in the first year of ownership and more than 60 per cent of users said they would buy Michelin tyres as replacements. This is the highest level of repurchasing of any OE tyre brand.
Toyota President Fujio Cho has said that the company will need to build a fifth factory in the US if things go as planned in North America. The company wants to sell two million vehicles annually in the US by 2005 and is aiming at a 15 per cent share of the US market by 2010 – its current share is almost 10 per cent. In addition to the four existing US plants, Toyota has a factory in Canada.
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