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.
According to reports in the Japanese press, Bridgestone/Firestone has signed a contract with General Motors in the USA to supply tyres as original equipment. The report estimates that the Japanese manufacturer will supply GM with 2.5 million tyres annually for half a million cars and supply could begin this month.
South Pacific Tyres, the jv between Australia’s Pacific Dunlop and Goodyear of the USA, is set to increase production at its plant in Upper Hutt, New Zealand. Production at the plant is due to rise by 65 per cent over the next year, creating 140 new jobs. In unit terms, output will rise by one million tyres, to 2.4 million tyres a year. Production will go from 24 hours a day, five days a week, to 24 hours, seven days. 60 new sizes of tyre will be introduced into the factory, many coming from South Pacific factories in Australia.
Cooper Tire & Rubber and Pirelli have announced the restructuring of their three-year-old alliance in the US market. The object is to improve the competitive strength of both companies and both agree that, while the alliance had proved generally positive, a new approach would be beneficial in pursuing separate brand strategies. From July 1st, Pirelli will resume responsibility for sales and customer servicing of the Pirelli brand in the USA, while Cooper will continue to manufacture certain sizes of Pirelli tyres for sale in the US, as well as providing logistics support. The two companies will investigate the feasibility of Pirelli manufacturing selected UHP Cooper tyres in the future. It is intended that the transition regarding existing Pirelli dealers will be smooth, ensuring that customer service is not adversely affected. The changes in the alliance are mutually acceptable and both companies continue to regard themselves as partners in technical and other related matters. D. Richard Stephens, President of Cooper Tire, and Francesco Gori, General Manager, Pirelli Tyre Worldwide, issued a joint statement, as follows: “Our companies have learned to know and appreciate each other since the beginning and are looking forward to a new and different phase of our alliance which will benefit customers for both brands.” Under the terms of the original alliance, signed in February 1999, Cooper managed the sales and distribution of tyres in the replacement markets of the USA, Canada and Mexico. Pirelli developed products for the US market and strengthened brand awareness via participation in motorsports.
The three-year-old alliance between Cooper and Pirelli is to be restructured to improve competitiveness. Pirelli has said that it will resume responsibility for sales and service of the Pirelli brand in the US. Cooper will continue to manufacture selected Pirelli products in the US. The original agreement in February 1999 was for Cooper to manage the distribution and sales of passenger and light truck tyres in the replacement markets of the US, Canada and Mexico.
The National Highway Traffic Safety Administration (NHTSA) has opened four separate defect investigations into the Ford Focus. Two of the investigations relate to possible airbag malfunctions, and the others concern rear wheel bearings failure and reports that the engine could catch fire. Aimed at motorists under 35, the Focus is the fifth best-selling car in the USA. However, since its introduction in 2000, it has been the subject of eight recalls.
North American Truck sales have plummeted, down by as much as 50 per cent since the 1999 peak. There are signs that the downturn may spread to Europe. European truck manufacturers expect sales to fall by 15-20 per cent in 2002. Volvo has declared US deliveries of trucks down 40 per cent and a 21 per cent decline in Europe. Daf also expect to see the European market fall by 20-25 per cent this year.
Next month, Michelin will close its truck tyre plant at Burnley (UK) and move the production capacity to Romania where the company took over a local producer several months ago. This move was confirmed by CFO Michel Rollier during the Global Automotive Conference held by Morgan Stanley in New York. Rollier added that the truck tyre business should create an average operating profit between 13 and 14 per cent. In the previous year this had been just 8.8 per cent due to the declining market. – a result which was, in any case, much better than the competitors’ results. Rollier added that Michelin wants to intensify its passenger car tyre engagement in the European high performance sector and to improve its position in the winter tyre segment. Both segments meanwhile have become attractive markets. In the USA Michelin has been able to win market share and has exchanged 2.6 million tyres during the Firestone recall.
A Federal Judge has refused an application by Ford and Firestone to dismiss 121 cases brought against the companies where the cases involved accidents in Venezuela and Columbia. Judge Barker ruled that the defendants had not proven that the cases would get a fair hearing in those countries. The decision is not binding on other courts, but may influence similar cases being brought elsewhere in the USA. Firestone was “extremely disappointed” by the ruling, and Ford said it was “unprecedented”. Both defendants are likely to appeal the case.
A fire at a 145 acre tyre dump in Virginia has created a State of Emergency. This allows State resources to be used to contain the fire in a dump estimated to hold over 4 million waste tyres. Authorities expect to let the fire burn out and say it may take months to combust all the waste. The operator was fined for the illegal dump over a decade ago, but nothing could be done to force him to clear the waste heap.
An illegal tyre dump, covering 145 acres and containing an estimated four million tyres, caught fire over the weekend near the city of Roanoke, Virginia. 50 people left their homes, but returned later when the wind changed direction. The cause of the blaze is not known. Governor Mark Warner declared a state of emergency on Sunday, which means that the county can use state resources. Such fires are usually left to burn themselves out, as water run-off could contain toxic chemicals. Officials said the fire “could burn for months”.
The Toyota Motor Corp. presented Goodyear with two awards at its annual suppliers meeting in Nagoya Japan and another award was presented to Goodyear in the USA. First was a Global Contribution Award for Goodyear’s supply performance at Toyota’s 15 plants worldwide. The second award was a “Value Award – Superior” for technical approvals and tyre development on Corolla and Camry cars. The North American award is a Certificate of Achievement for delivery performance through 2001.
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”.
Pirelli’s German MIRS factory is now producing OE tyres for the Mini-Cooper car in size 205/45 17 Eufori@. Production is running with three lines and two others are being built, which will be producing tyres at the end of the year. Ultimately, in late 2004 or early 2005, there will be 13 lines producing 1.5 million high performance tyres a year, mainly for OE. At present, there are 50 people working in the MIRS factory and this will eventually rise to 250, including service staff. Total costs will be more than 100 million Euro and possibly as high as 120 million; Pirelli will not reveal the exact figure. MIRS makes it relatively easy for Pirelli to grow steadily in certain markets over a period of time, and this is the main advantage of the process, as it is not necessarily cheaper than the conventional production of UHP tyres. The first MIRS factory in Milan is a prototype plant, which develops and creates opportunities for new products. As well as Höchst, there is a MIRS factory at Burton-on-Trent, UK, which is not as large, and another MIRS plant at Rome, Georgia, USA is under construction. The plan to build a MIRS factory in Latin America has been abandoned, but Pirelli could build a plant in Japan, although no specific plans for a production base in Japan for OE business have been revealed.
Firestone tyres recalled in the USA are being put to good use, with rubber crumb used as artificial turf. A Montreal-based company called FieldTurf is producing the artificial turf for the Lions’ new stadium at Ford Field, Dearborn. A spokesperson for FieldTurf said that it had been specified that the rubber crumb came exclusively from Firestone tyres, in line with Bill Ford’s stance on corporate environmental responsibility.
A Memorandum of Understanding was signed this week regarding the purchase of 80 per cent of the tyre manufacturing business of Kumho. The buying consortium is headed by JP Morgan Chase and includes US equity fund Carlyle Group. At an estimated $1.5 billion, the sale – which still has to be finalised – would be South Korea’s largest-ever asset sale to foreign interests.
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