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.
In a management reshuffle at Ford in the USA, Henry Wallace, Chief Financial Officer and Wayne Booker, Vice Chairman, are to retire. There is speculation that Martin Inglis, Head of Operations for Ford North America, is to succeed Wallace and that Nick Scheele, Chairman of Ford Europe, is to return to the States as a replacement for Inglis. Ford stressed that these latest moves have no connection with the current Firestone recall situation.
Nokian Tyres is preparing to launch RoadSnoop, its first generation tyre pressure and temperature monitor. The sensor is battery powered and is mounted in the tyre at tyre changing and operates instantaneously upon turning the key in the ignition. It sends signals to a dashboard mounted monitor. Deliveries are expected at the beginning of March 2002.
The prospects for manufacturers of heavy trucks in the USA are rather gloomy for this year, as experts are expecting a decline of up to 30 per cent. Despite this, analysts are not pessimistic about the prospects for Michelin, as the turnover from OE sales of truck tyres is only about 3 per cent of total group turnover. Better results than for 1999 are expected too for Goodyear, due to the downward trend in raw material prices and, last but not least, the recently-announced tyre price increases look like they will stick.
Lear Corporation (Southfield, Michigan/USA) and Beru (Ludwigsburg/Germany) have signed a Memorandum of Understanding to jointly design and develop Tyre Pressure Monitoring systems for the global automotive market. Under this strategic partnership, the two companies will develop Tyre Pressure Monitoring Systems that will relay information to drivers through the electronic architecture used for the Remote Keyless Entry System. The joint venture will combine Lear’s capabilities as the North American leader in Remote Keyless Entry Systems with that of Beru, the market leader in Tyre Pressure Monitoring Systems in Europe.
First came the second tyre recall with costs up to 3 bn $-US, secondly the “extended guarantee” due to problems with ignition systems, and thirdly many quality-related recalls of new car models, all of which have cost Ford a lot of its expected profit. Therefore the management has announced early retirement for up to 5000 white collar workers in the US. This is seen as the first step in a major restructuring in North America, where Ford has announced about 13 p.c. fewer new registrations compared with the same time last year, whereas the market in general shows only about 5p.c. fewer registrations of new cars. Analysts from Wall Street have already greeted Ford’s latest decision positively.
As widely expected, the Bridgestone Corporation has reported a massive fall in net profits of 80 per cent for the year 2000. Net profit was 17.7 billion Yen (US$ 155 million), which was better than the company’s prediction late last year of 13 Billion Yen. Turnover was down too, by 3.8 per cent to 2,006.9 billion Yen, and pre tax profits were down nearly 38 per cent, from 200.8 billion Yen last year to 124.8 billion Yen. This is largely attributable to the effects of the Firestone recall. This is the company’s worst result in ten years. Since the announcement of the tyre recall, Bridgestone shares have fallen in value by 50%.
On the eve of the Paris Air Show, Goodyear announced that it was to triple production of radial aircraft tyres at its plant in Danville, USA, where the company has recently invested $10 million. The production increase is in response to growing demand due to increasing radialisation in the aircraft tyre sector, although bias-ply tyres still make up the majority of this market. The radials will fit military and private planes, as well as commercial aircraft such as the Boeing 737 and Airbus A320.
Goodyear announced that it will contribute in excess of 1M US Dollars (1,081,775 Euro) to be divided between the New York Times 9/11 Neediest Fund providing aid to rescue workers, civilians and their families and the American Red Cross. The fund will probably exceed this figure as contributions are added by Goodyear employees. The company has also dedicated personnel to ensure the constant supply of tyres to sites in Washington and New York, and has dispatched tyre engineers to assist New York City’s tyre maintenance staff to avoid equipment downtime.
Hayes Lemmerz International, the world’s largest wheel manufacturer, plans to invest 23 million US dollars with the objective of quadrupling the annual capacity of the Mexican aluminium wheel factory in Chihuahua to 1.2 million units by the year 2001.
As a matter of practice, US unions choose one tyre maker as the basis for labour negotiations, targeting standard contracts for the coming year to apply to the other tyre companies also. This year they have decided to negotiate with Bridgestone/Firestone.
Bridgestone/Firestone has announced that it is to recall 62,000 tyres sold in the Venezuelan market at an estimated cost of US$ 6.4 m. The tyres have been linked with 60 deaths in the country. The consumer protection agency is recommending investigation into charges of possible criminal negligence against Ford and Bridgestone/Firestone, plus a number of civil law suits are planned.
The Wall Street Journal questioned whether Goodyear acted too slowly, or put cost before safety regarding the tyre problems in the USA. Samir Gibara, for Goodyear stated, “Our engineers determined that the tyres were not defective, so there was no recall”. The outcome of the case could have a serious effect on the way in which manufacturers introduce quality improvements to their ranges in future.
Pirelli has sold a first stake of its Cisco-shares for US$1.55 bn to institutional investors. When it sold its “Pirelli Optical Systems” for US$2.15 bn the company received Cisco-shares in lieu of payment.
The slogan was “Service Makes The Difference”. Consultants MMS GmbH, together with the German dealer association BRV (which claims to be the “centre of competence”), organised this interesting seminar. Regrettably, representatives from only about 30 independent tyre dealers attended, with the majority of the 150 delegates coming from the tyre industry and their equities. Hubert Hannezo, Michelin’s Worldwide Marketing Manager for passenger car and light truck tyres, made a very informative speech and explained to the audience what is going on, for example, in the USA and what might become popular here very soon, and why. A totally new form of service is developing through the internet, and specialists from Continental enlarged on this in detail. Larry C. Morgan, a big tyre dealer from the USA, explained his growth philosophy. He is confident that his group will sell around ten million tyres a year from 2005 on. One of his statements was “Bigger is better, only if big is better” and “If it is to be, it is up to me”. Finally, keynote speaker Sir Tom Farmer used the opportunity to explain again what Kwik-Fit is, how it has grown, and for what it stands. One criticism of the seminar might be that there was no opportunity to ask questions, nor to initiate any discussion.
Bridgestone/Firestone USA has announced John Lampe as successor to outgoing Masatoshi Ono. John Lampe steps up from the number two position to lead the largest subsidiary of the Bridgestone Group. The announcement was made official at a company press conference in Nashville on 10th October.
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