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.
Continental has not been able to sign – as planned – a contract with Moscow tyre plant. Weeks ago the company said it would invest 43 million US-$ over the next 3 years into Moscow tyre plant, making Continental the majority shareholder. The company now says that as yet there are some legal questions unanswered and it is sure to sign the contract within the next few weeks.
As reported in the German newspaper Die Welt, car producer Ford is to pay 26 million US-Dollars to a woman, seriously injured in an accident caused by an allegedly defective Firestone tyre. Since the accident the woman is paralysed and can only breathe with artificial aid. Because of this agreement, the legal process due to begin shortly, has been dropped. In the USA there are about 200 actions outstanding claiming damages against Ford and Firestone and the sum of money involved could amount to billions of Dollars. It is claimed that defective Firestone tyres have been responsible for the deaths of 148 people in the United States.
Bridgestone has said that it will hold a press conference today to give a revised earnings forecast and details of revised output plans for its US subsidiary. Last year’s results were hit by the Firestone recall, with group net profit falling 80 per cent. President Shigeo Watanabe is scheduled to attend the news conference.
Automotive supplier TRW has received orders worth 900 million US-Dollars from Renault (for the Megane) and Fiat (for the Stilo), concerning the production of Electrically Assisted Steering systems (EAS) for this year and beyond. These new contracts bring TRW’s volume for EAS-systems in 2001 up to 500 million US-Dollars. The steering-systems for Fiat will be developed in Birmingham and produced in Livorno (Italy). The steering system for Renault will be developed and manufactured in Pamplona (Spain).
The management of Bridgestone/Firestone USA has made it very clear that it will do everything in its power to revitalise the Firestone brand and losses in market share will not be accepted without a fight. It is expected that the company will embark on one of the biggest advertising and marketing campaigns in the group’s history.
Autopolis, the Bear-ish auto industry strategist is likely to downgrade forecasts for the US and North American automotive markets. Despite high sales, production is down by 20% and stocks 40% above normal. This follows an earlier warning of a forecast 11% drop in world-wide (in Western Europe and Asia too) demand, and alerts issued by Autopolis regarding over capacity, and the need to cut costs and improve marketing.
In the US, a federal judge turned down lawyers’ requests to order a recall of Ford Explorers and Firestone tyres. The judge ruled that only the National Highway Traffic Safety Administration has the authority to order such a recall. Bridgestone/Firestone has already indicated that it would fight any such order from the NHTSA in the courts. In a rare moment of unanimity, both Ford and BF Inc. welcomed the judge’s decision.
From 2002, cars in the Championship Auto Racing Teams (CART) competition will be racing on Bridgestone Potenza radials instead of Firestone tyres. The company says that the Bridgestone brand has had limited exposure to racing fans in the US up till now but, with CART evolving into an international program, it is appropriate to capitalise on Bridgestone’s reputation as an international race brand.
Back in October, Tenneco Automotive announced that 285 jobs were to be cut in the USA, as part of a plan to reduce salaried staff by 700 by the end of this year. The company has announced another 405 salaried job losses worldwide, blamed on the state of the global automotive aftermarket and reduced vehicle production in the USA.
Toyo Tyre and Rubber Co has announced the establishment of a wholly owned US subsidiary. The $20million plant will begin manufacturing vibration resistant rubber auto parts by July 2002. The company’s main outlets will be Japanese motor manufacturers operating in North America.
Firestone has settled a court case pending in Texas, paying the person injured due to an Explorer Rollover 7.5 million US-Dollars. Earlier last month Ford and a Ford Dealer already agreed to pay 6.5 million US-$ according to articles in major US newspapers.
Goodyear has announced that its tyres will be the sole make in use in a form of motor sport new to the UK: ASCAR, or Anglo-American Stock Car Racing. This is based on the US-style stadium stock car racing, NASCAR, and will consist of a nine-race series, beginning later this year on a specially-built banked oval track in Northamptonshire, at Rockingham.
Continental and Japanese tyre manufacturer Yokohama, who already operate a plant together in the USA, producing truck tyres, want to intensify this cooperation. They want to create a 50-50 joint venture in Japan by the end of the year, merging their Japanese activities and focussing on their Japanese OE customers. Yokohama will also help Continental increase its replacement market business. In addition, the two companies want to work more closely together in production in the NAFTA area and are looking at potential synergies, in areas such as purchasing.
Goodyear has revised its earnings outlook for the third quarter of 2001, downwards, Net income per share is be similar to the second quarter’s 5 cents per diluted share. This compares to 11 cents per share for the third quarter 2000. Goodyear says that an already slowing demand had weakened further in the aftermath of the terrorist attacks on the USA.
Bridgestone/Firestone has issued the results of its four month investigation into the accidents in the USA involving certain Firestone tyres. A number of causes were identified, including unspecified manufacturing problems at Decatur, tyre design in the shoulder area, driver abuse (travelling too fast and at the wrong pressure) and the weight of the Ford Explorer vehicle, particularly an alleged uneven weight distribution on the back axle. Ford denies that the margin for error between the load capacity of the tyres and the weight of a fully-laden Explorer is too slim.
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