AKRON-General Tire will relocate its headquarters from Akron to Charlotte, N.C., by the end of next year, signaling the final exodus from the ``Rubber City'' of a foreign-owned tire manufacturer. It also signals a fresh start for a company that has struggled to regain profitability after several years of red ink, cutbacks and changes in programs and top executives.
Citing a need to bring the company closer to its Charlotte passenger tire plant, Alan L. Ockene, General Tire's president and CEO since 1991, said the move would improve effectiveness, reduce long-term costs and generate ``a new corporate culture consistent with our size and strategy.''
General's roots in Akron stretch back to its founding in 1915 by William F. O'Neil.
The company's Nov. 8 announcement had been long anticipated, and probably surprised few.
Last June, employees received letters notifying them that a move to Charlotte was under consideration. Recently, Mr. Ockene told trade journalists a decision was expected soon, and ultimately would be in the hands of the board of directors of General's German parent, Continental A.G., the world's fourth-largest tire manufacturer.
The relocation, scheduled for late 1995, will involve General's Passenger/Light Truck Division and its corporate staff, which includes certain sections of the finance, legal and human resources departments. Some administrative functions and part of the firm's research and development operations will remain in Akron, at least for now.
The tire maker's Commercial Division and its 48 employees will head to Charlotte at a later date.
The company said it is evaluating sites in both North and South Carolina for the construction of a new headquarters building. That complex, Mr. Ockene told TIRE BUSINESS, would include a new passenger and light truck tire technology center-a project General axed last year in an effort to save money and rechannel funds into other operations.
The scrapped plans had called for a $12 million tech center near the Charlotte plant. However, Mr. Ockene said the company has yet to determine final cost figures for the new headquarters.
The number of employees General will ask to move to Charlotte has not yet been finalized, although the company said it is expected to be between 300 to 350-about half of the personnel it currently has in Akron. A decision will be announced Nov. 18.
At one time Akron was home to four major tire manufacturers: Goodyear, Firestone (later Bridgestone/Firestone Inc.), B.F. Good-rich (later Uniroyal Goodrich Tire Co.) and General.
BFS moved to Nashville, Tenn., in 1992, and Michelin Americas Small Tires will relocate to Greenville, S.C., from the former U.G. Tire headquarters by mid-1995.
According to a General spokesman, employees choosing not to relocate will get standard severance packages, with no special buyouts or early retirements.
Any actual savings from the move, ``in the long run, is not something that can be put on paper and quantified,'' Mr. Ockene said. ``Our first initiative was to get our technology-our R & D-together with our factories to allow them to work together with the people who build our tires.''
The relocation notwithstanding, General's dealer strategy will not change, Mr. Ockene said, nor will dealers who handle General products be affected by yet another restructuring by the tire maker.
He admitted General has suffered from an image as a company that sometimes seems to implement change just for the sake of change, as well as from well known problems in the areas of product quality and availability. He contends those difficulties are now behind the company.
And it's no industry secret General has had financial problems. In 1991-when Mr. Ockene assumed the helm-the company lost more than $200 million. Now it is in the black, he said, and will at least break even this year.
``After this move...if we can build on our dealer business and continue to realize savings in our plants, we'll be in good shape for the future,'' he said.
As for 63-year-old Mr. Ockene, he said he will help with the transition, but has no plans at this time to move his family to Charlotte. His contract expires in April 1996-when the relocation should be completed.
Of all the reasons given for the relocation, longtime industry analyst Harry Millis, with Cleveland-based Fundamental Research, believes the real one is Continental's need for a ``cultural change'' at General Tire.
``It's always a problem when a company wants to change directions, or you have an owner who is not satisfied to keep the company going in the same direction it has historically been going,'' he said.
``One way is to make a clean break and move its headquarters.''
Mr. Millis said the real question is: ``Does (General) have the right program? If they do, it will probably be easier to implement it in a different cultural environment....But we won't know that answer for three to five years.''
Analyst Donald DeScenza said other factors could have played a part in the decision to move to Charlotte, as well.
``They're sort of moving their headquarters to where the center of activity is,'' he said, noting the location of General's own tire plant and plans by BMW A.G. and Mercedes Benz A.G. to build car factories in the region.
Continental, which has close relationships with both firms in Europe, may hope the closer proximity will net it important original equipment business in the future, according to Mr. DeScenza.
What has troubled Mr. Millis is that General has ``zigged and zagged in their desires, marketing structure and the face they've presented to their customers.
``And the last thing you want to do is confuse your customers.''
He also doubted the wisdom of what he called General's ``dual track'' approach-wanting to be a major private brand player while at the same time trying to maintain an original equipment presence and be ``a premium replacement tire, major label player.''
He believes the company ``does not have the size or discipline'' to focus on all those areas and adequately serve its customers.