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.
Goodyear, together with Michelin, has benefited from the Firestone crisis, increasing turnover but not able to improve profits. Last year the company paid a dividend per share of US$ 1.41; in 1998 the figure was $4.43 per share. It is expected that this year’s dividend will be similar to last year’s. Perhaps the turnaround might happen next year.
Sales of tyre and wheel manufacturer Titan (Quincy/Illinois, USA) have dropped last year to US$ 588 million (1998: US$ 660,8 million). Striking and a bad condition of the American agriculture are assumed to be responsible for the figures showing an EBIT of US$ -11.4 million compared to US$ 8.4 million in 1998.
More and more nowadays, we hear that the tyre industry is becoming increasingly global and ever-more companies describe themselves as “a global player”. But what exactly makes a company a true global player? An in-depth article in TYRES & ACCESSORIES 6/2000 looks at the criteria by which a so-called ‘global player’ should be judged and concludes that the only three companies that merit this term are Bridgestone, Goodyear and Michelin. The article examines in detail each company’s performance in the world’s most important markets, their market shares and turnover figures, their strengths and weaknesses and their prospects for the future. The article goes on to examine the home markets of the global players (USA, Europe and Asia) and discusses the performances of the lesser players and what is likely to happen to them. Today’s global tyre market is one of acquisitions and alliances, mergers and new technological advances. Competition is intense and, in terms of market share, none of the big three seems able to leave its rivals standing, neither is the gap between the big three and the second three growing. Having said that, none of the second three stands a realistic chance of becoming a true global player in the future. The article gives a detailed, objective assessment of today’s tyre industry, together with some speculation concerning what might happen in the future.
During a highly emotional press conference in Tokyo, Bridgestone’s boss Kaizaki again asked Ford to shoulder more of the blame. Kaizaki again pointed out that the recall in the USA is precautionary and, to date, no technical failure has been found. In Saudi Arabia, for example, the tyres have not caused – according to a joint investigation by Firestone and Ford – the problems. Firestone has never tried to cover up the facts, said Kaizaki (67). He refused to resign and said that he would take the responsibility for re-establishing the Firestone brand. A management shake up in Nashville seems likely, as soon as the recall is over. John Lampe, Executive Vice President for Bridgestone/Firestone USA, said during the hearing of the Senate Commerce Committee that Ford should share the blame. Official data on 16,000 Explorer rollovers, related to 600 deaths, show that in only a very few cases were there problems related to tyres. Bridgestone management is annoyed that, during Nasser’s call to Sam Gibara at the end of August, the Goodyear chief said that he had no knowledge of Goodyear problems in connection with the Explorer. Goodyear supplied two million tyres for the Explorer and there have been numerous proofs and photographs showing that Explorer accidents and rollovers had occurred with Goodyear tyres.
Ford Motor Company has suffered a reduced profit of 888 million US-$ in the third quarter, compared to the same period for 1999 (959 m). Ford Chairman Jacques Nasser attributes the results to the Firestone recall. To provide good tyres to Ford customers is more important than realising short term profits.
Titan Tire (Iowa/USA) has been found responsible and fined for safety violations connected with an explosion at the Titan plant, in which a trucker was killed on Nov. 24,1999.
Delphi Automotive has exclusively ordered membranes from ContiTech Elastomerbeschichtungen GmbH. They are to be used in pressure sensors for fuel injection systems. This year ContiTech will produce 40,000 of these membranes for the US-based automotive supplier, in 2001 the number will be doubled.
Automotive components group ArvinMeritor is to cut its US workforce by 30%, or 800 staff. The reason is a fall in orders from the truck industry in the USA. There are no plans for cutbacks at the company’s European facilities.
US-tyre manufacturer Cooper increased turnover during the first nine month by 17 % compared with the same period in 1999 to 1.3 bn $. This figure includes 123 million $ coming from Oliver, the retreading company which was purchased some months ago. It is said that Oliver has lost its biggest customer, forcing the company to search aggressively for new opportunities. Surprisingly or not: Cooper again managed an Operating Profit in the Tire Division of 10.4 % (last year 11.5 %) but there is the need for some restructuring in the non-tyre field.
The American tyre manufacturer plans to close one of its oldest factories, Pneumaticos Goodyear SA, which is located near Buenos Aires. Goodyear has operated a sales office in Argentina since 1915, making it one of the company’s oldest subsidiaries outside the USA.
Bridgestone is to join Goodyear, Continental, Michelin, Cooper, Pirelli, Yokohama and others in raising tyre prices in the USA to compensate for raw material price increases. Effective June 1st, Bridgestone tyre prices will rise 4%. Historically, Bridgestone has taken advantage of other manufacturers’ price increases in order to gain market share, so this latest announcement seems to indicate that this time the price rises will stick.
In his statement to senators in the USA, Bridgestone/Firestone chairman and chief executive Mr. Masatoshi Ono apologised to the families “who have lost loved ones in these terrible rollover accidents”. This was interpreted by some as an attempt to put some responsibility on to the vehicle, rather than the tyres alone. Ford’s chief executive, Jacques Nasser, is reported to have said later that the issue is to do with tyres and not vehicles.
The German automotive association (VDA), organiser of the 58th International Commercial Vehicles Exhibition, which took place in Frankfurt this year due to EXPO utilising facilities at Hanover, has announced record results for the event. 1,318 exhibitors from 42 countries filled the exhibition, including some 725 automotive parts suppliers, more than ever before. In all, 240,000 people attended the show, 85 % of them trade visitors. Bernd Gottschalk, president of the German automotive association stated, “The IAA grows in importance as a sales exhibition”. He believes that the whole climate at the exhibition was one of optimism and faith in the future of the business. This may be true, but it is only one side of the coin. Despite the pre-event high hopes there remained an apprehension that the recent economic boom might soon come to a sudden end. There are many indicators that the boom may be slowing down: Dramatic decline in sales in the USA, and an accelerating rationalisation amongst manufacturers making trade more intensive for both suppliers and the fleet business. This and high fuel prices and, last but by no means least, the distortion of competition as a result of differing transport regulations within the European Union. In the final analysis, the commercial vehicle business remains as full of contradictions today, as it ever has. Find out more in the November issue of NEUE REIFENZEITUNG.
US tyre manufacturer Goodyear has announced its confidence in the Latin American market during the year 2000. The company believes it will be able to increase its Ebit-margin significantly.
With three new tyres, named “4x4Contact”, “4x4SportContact” and “4x4WinterContact”, the German tyre manufacturer wants to establish its leading brand in the segment of sports utility vehicles (SUV). And this segment seems to be quite interesting: According to a Continental market analysis the number of 4×4 vehicles in Europe is expected to double by the year 2005 compared to 1995 and leading to a growing market for 4×4 tyres. Some reasons are that new fashionable/stylish compact SUVs which are faster, fuel efficient and easier to drive or larger SUVs offering a high load carrying space and/or seating capacity are stimulating the demand. As a result SUVs are increasingly becoming an alternative to standard cars. Therefore the focus of the three 4×4 tyres is for on-road use, but for the future Continental plans to launch all-terrain and off road tyres, too. Meanwhile the “4x4Contact” is the tyre for compact and medium range SUV, whereas the “4x4SportContact” has a more sporty image. Fast and high powered cars are the target for this tyre. The “4x4WinterContact” – as the name suggests – is the specialist for the colder time of the year. European production of the tyres was launched recently and later this year they will also be manufactured in USA.
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