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.
The Financial Times has published its list of the world’s 500 largest companies, ranked by market capitalisation. No tyre companies appeared on last year’s list and this year’s includes only one tyre company; Bridgestone. The Japanese manufacturer is listed at number 386, with a market cap of US$ 11.826 billion. It is also ranked the 38th largest company in Japan.
An appeals court in the USA has overturned the decision of a lower court granting class-action status to non-injury lawsuits against Ford and Bridgestone/Firestone over faulty tyres. The court decided that a class action (with all cases decided on the result of a single trial) would be unmanageable because of the large number of claims and the wide geographic spread. Claims affected by the ruling are for financial compensation only and not those alleging personal injury or death. Ford and Bridgestone/Firestone welcomed the decision.
US recycling giant, GreenMan Technologies has reported its sixth profitable quarter in a row. Net Sales for the second quarter ended 31 March 2002 totalled 5.561 million dollars, an increase of 21 per cent compared to the same quarter in 2001. The company processed the equivalent of 5.6 million passenger car tyres in the second quarter of 2002, an increase from 4.8 million in the same quarter of the previous year. Operating profits for the six months to the end of March 2002 have increased by over 100 per cent to 932,000 dollars.
In the US, Firestone has denied reports that it is preparing to settle lawsuits with consumers who claim they were sold faulty tyres. A figure between $200 million and $300 million was mentioned. Firestone says there is no common defect in the tyres and the company is prepared to contest the cases, which are separate from those claiming personal injuries as a result of an accident.
Cooper Tire & Rubber Company has announced, from its headquarters in Findlay, Ohio, a 2002 first quarter net income of $26 million US dollars. Net sales were $813 million US dollars, representing a seven percent increase over the first quarter of 2001.
The Heafner Tire Group is changing its name to American Tire Distributors as from the 4th July 2002. The new name reflects the national nature of the business and focuses on the distribution element of the company. The name change is part of a national branding operation to standardise the company image and operation throughout the USA.
It is not just the big players who face recall problems. Ames True Temper in the USA is recalling 647.000 wheelbarrows due to reported problems with plastic wheels exploding when tyres are inflated. The company is to replace all the affected plastic wheels with new steel wheels.
The tyre fire in Roanoke, Virginia, which has been burning for 25 days, has finally been extinguished. The blaze began when a brush fire ignited an estimated four million tyres, the result of forty years’ collection of casings to supply a recycling/retreading venture that never got started. An official estimated that only 3,500 tyres remain and that the clean-up operation should last only weeks. This compares to the clean-up after Virginia’s worst-ever tyre fire, which is still on-going nearly two decades after the fire.
Daewoo workers in Korea have voted for the merger of the company with General Motors. The union had the final veto over the sale, under which GM will take a 67 per cent stake in Daewoo, with the remainder going to creditors, but almost 70 per cent of the workforce voted in favour. Daewoo ran into trouble nearly 18 months ago when the break up of the large Daewoo organisation left the car maker with debts totalling 10 billion US$.
Speaking at a National Manufacturers Association conference in Nashville, John Lampe, chief executive of Bridgestone/Firestone’s US subsidiary, was extremely upbeat about the company’s future. “I’m convinced we have emerged from the recall stronger than ever before” he said, crediting the company’s “making it right” information programme with the restoration of consumer confidence. Analysts say that planned restructuring and cash reserves should be sufficient to deal with any further problems arising from the recall and lead to profitability of all divisions. Lampe added that the company intends to build market share for both Bridgestone and Firestone brands with new products.
Today sees the ground-breaking ceremony for Hyundai’s first car assembly plant in the USA. It is sited in Montgomery, Alabama and represents an investment of $1 billion. The factory on the 1,600 acre site will employ 2,000 people and produce 300,000 saloons and SUVs a year by 2005. Alabama offered incentives of over $252 million to attract Hyundai and the Korean company joins Honda and Toyota as foreign car companies with plants in the state.
In an interview with Neue Reifenzeitung, Dr. Francesco Gori, who is head of the tyre divisions worldwide, revealed that in 2001, Pirelli achieved almost the same turnover and EBIT figures as it had in 2000. In the future, Pirelli will invest more in passenger car tyres and less in the truck tyre business, but will not sell the Truck Division. Pirelli is successful with truck tyres mainly in southern Europe and Latin America. From July 1st, Pirelli will change the terms of its agreement with its alliance partner Cooper in the USA and will once again resume full responsibility for the Pirelli brand. In Europe, the company is optimising its structure, moving responsibilities increasingly towards its Milan headquarters, to oversee European operations as a single market.
Mass-Merchandiser Kmart, one of the biggest competitors of US-Giant Wal-Mart, filed for chapter 11 some months ago, trying to restructure the group and avoid a total crash. Because of this crisis 563 Penske Auto-Service Centers closed last week. These centers were operated by Penske Auto Centers (PAC) at Kmart locations. PAC is owned 1/3 by Kmart and 2/3 by Penske corporation. Penske Auto Centers used to be the biggest independent tyre dealer in the US and was one of the important key-customers of the Goodyear-group.
This monday Goodyear holds its shareholder meeting in Akron/Ohio. In daily newspapers, as well as in business papers, complacent-sounding analysts are quoted, who point the finger at what Gibara has promised and failed to deliver in recent years. The loss of 203.6 million US-Dollars was not according to plan. The long term debt at 31st December 2001, at 3.1 bn US$, passed another milestone (2000: 2.4 billion US$). And it is known that the first quarter of this year also was disappointing. The analysts agree that there will be no improvements before the second half of the year.
NHTSA (National Highway Traffic Safety Administration) has closed an investigation into Firestone’s truck tyres STEELTEX, saying that there is no design- or manufacturing defect. Good news for a change for troubled Bridgestone/Firestone in the USA.
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