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.
Superior Industries (Van Nuys/California), North America’s Leading oe supplier of aluminium wheels, announced record revenues of more than 331 m US-$ (+13.5%) and record net income to more than 40 m US-$ (+16.3%) after tax.
Goodyear has won new and extended contracts for off-the-road tyres from the US Army, valued at $16 m. One is an $11.5 m deal to supply AT-2A traction tyres (size 14.00R20) for five-ton cargo trucks. The extended contract is for $4.5 m to supply the same tyres in size 16.00R20.
The BMW factory at Spartanburg (South Carolina), in which in addition to the Roadster ever more X5 off-road vehicles are produced, will soon face production capacity problems. A higher vehicle output could also benefit American wheel suppliers such as Superior Industries or Alcoa/Reynolds.
The sale of Land Rover to Ford by BMW – a deal which was in doubt recently – has been finalised. BMW agreed to Ford’s stipulation that one third of the asking price of 3 bn Euros will not be paid until the year 2005.
The current Firestone recall has led to many in the USA calling for tougher standards in tyre testing. It has been revealed that, following the Firestone recall in 1978, new regulations were drawn up, incorporating more stringent safety criteria. However, the suggested changes were scrapped when Ronald Reagan became President as it was considered that their implementation would adversely affect the car manufacturing industry.
Bridgestone/Firestone’s chief executive in the USA, John Lampe, has said that the company has not found a defect in its recalled tyres, but he did say that there was “a safety issue with a small percentage.” Lampe’s definition of a defect is “something you can point to and say ‘there is the cause’ and we haven’t been able to find a cause or combination of causes.” He added that he believes the tyres only pose a safety problem when fitted to Ford Explorers.
With the acquisition of the energy cable activities from BICC General for US$216 million Pirelli is strengthening its world-wide leadership in this particular business which will bring it up to US$ 3.4 billion in turnover. Their nearest competitors are Alcatel (sales – US$2 bn) and Sumitomo (sales – US$1.5 bn).
Michelin has won a five-year contract to supply trailer tyres to Transamerica Trailer Leasing (TTL) across Europe. TTL is Europe’s second-largest trailer leasing company, operating more than 21,000 trailers. The company is based in Barking, in the UK and has offices across Europe. It is owned by a Dutch bank. Michelin tyres will be specified as exclusive OE fitment on new trailers, while Michelin new and Remix tyres are being fitted to the fleet. No details of the value of the contract have been revealed, but TTL currently spends more than US$5 million on tyres annually.
Production has started at a new Goodyear Chemical polymer plant in Beaumont, Texas. The plant cost US$ 144 million and has an annual capacity of 240 million pounds of synthetic rubber and speciality polymers. It is Goodyear Chemical’s fourth facility in Texas.
At a press conference, Bridgestone president Yoichiro Kaizaki dismissed rumours that claims for damages in the USA could force Bridgestone/Firestone Inc. into bankruptcy. The company has set aside $450 million to cover claims and any extra needed could come from the US company’s reserves, estimated at $2.3 billion. Despite the reassurance, Bridgestone shares fell by over 13 per cent in Tokyo.
There are rumours in the market that the industry will raise tyre prices – maybe even this week – to cover increases in raw materials (rubber, oil, carbon black). As production capacities have been expanded during the last 24 months, it is doubted whether any increase will stick due to market pressure.
Bill Sharp (59) has retired suddenly on July 14th after 36 years of Service for the tyre maker. His successor, John C. Polhemus (56) used to be President of Goodyear’s Latin America region. Marco Molinari, currently Vice President Marketing and Sales North America, becomes Vice President Global Marketing Projects. Jim Vogel, currently Director Corporate Accounts North American Tire, becomes Vice President Marketing and Corporate Accounts for North America.
In a survey in the US, it seems that OE pull-through is an important factor and that the tyre recall has – according to Goodyear – stimulated interest in tyres. Before the recall, 36.7 per cent of respondents said they would choose Goodyear tyres and 21.4 per cent Firestones. During the recall, these figures changed to 55.2 per cent and 4.1 per cent respectively.
In the USA, Goodyear is defending a product liability lawsuit brought against the company by former customer Heatway Systems. Heatway alleges that Goodyear supplied it with millions of dollars worth of defective hoses, used in heating systems for buildings, which caused up to $2 bn of damage. Heatway has already paid $6.5 m to settle 119 claims.
Goodyear’s Chief Engineer of Product Design has warned of the economic cost of tyre under-inflation as gasoline prices reach a new high in the USA. Petrol consumption and tread life are adversely affected. A Goodyear survey showed up to 28p.c. of vehicles had “seriously under-inflated” tyres.
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