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February 06, 1995 01:00 AM

'A NEW ERA OF COOPERATION': GOODYEAR RENEWS COMMITMENT TO DEALERS

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    SAN DIEGO-Goodyear Chairman Stanley Gault and Executive Vice President Sam Gibara roared into the company's annual dealer meeting in championship race cars Jan. 23 touting a new era of partnership between the company and its independent dealers. Calling them ``valued customers,'' Mr. Gibara outlined for the record 1,700 dealers gathered in San Diego a slew of new programs and incentives to help them become more competitive and profitable in the marketplace.

    Among those programs were plans to provide Goodyear dealers with tire lines that won't be available at mass merchandisers like Sears, Roebuck and Co. and WalMart Stores Inc., or through tire discounter Discount Tire Co. of Arizona.

    Two such tires-the second generation Aquatred II passenger and the Wrangler Aquatred light truck lines-will be offered exclusively through independents.

    Such exclusive tire lines are part of Goodyear's strategy to address dealer concerns over previous changes in the firm's distribution policies that put them in direct competition with these alternative channels of distribution.

    Anger resulting from those distribution changes has since prompted two separate lawsuits against the tire maker.

    Offering no excuses nor apologies for expanding Goodyear's distribution beyond the dealer network, Mr. Gault nonetheless admitted to dealers, ``We probably could have done a better job of communication.''

    But, he said, the financial results speak for themselves.

    ``I expected some criticism for bending some old traditions,'' he said, ``and I got it, thank you very much. But I have to tell you that those decisions to expand were based on factual information that not many others had or would acknowledge at the time.''

    Mr. Gault said that while Goodyear's financial situation was bleak when he took over the company's reins in 1991, it has recovered. But had it not regained its financial health, he told dealers, the tire maker could not have continued ``to supply you with the products necessary to sustain and grow your business.''

    The Goodyear chairman reaffirmed his personal commitment that ``our independent dealers are now, and will solidly remain, Goodyear's primary and preferred channel of distribution.''

    And he spoke of the company's obligation to enhance dealer competitiveness.

    ``We rely heavily on your role as a partner,'' he said, ``to help us succeed in the marketplace, to grab and run with the tools we will provide so that you can do your part to increase sales, market share and profitability for both of us.''

    Mr. Gibara said Goodyear's mission is to widen its lead over Michelin and Bridgestone/Firestone Inc. in North America.

    ``One's position in one's home market provides a definite competitive advantage,'' he said, noting Michelin in Europe and Bridgestone in Japan enjoy margins wider than Goodyear's in North America.

    ``Both use their considerable home market strength to finance their strategies in other parts of the world,'' he said.

    To ensure its global success, Goodyear must grow its North American sales at twice the industry rate (i.e. 4.5 to 5 percent annually), Mr. Gibara said. ``This is the centerpiece of our worldwide strategy and also where a strong and successful partnership with our dealers becomes so essential.''

    With Goodyear's financial house in order, ``the time to strike is now,'' he said, noting both Bridgestone Corp. and Groupe Michelin are struggling with manufacturing investments and the pay-down of $6 billion in debt burdens each. Goodyear's debt is slightly over $1 billion, Mr. Gibara said.

    Goodyear in 1993, and again in 1994, made more money than its nine direct competitors combined, he noted. ``If there ever was a time to refocus on our primary distribution channel-our network of dealers-this is it.''

    He outlined other strategies, as well:

    Ongoing product introductions (exclusive to dealers), supported by aggressive national brand advertising. ``Other channels will get their own products,'' Mr. Gibara said. ``This dealer-exclusive policy will be pursued in the future as we replace existing product lines with new ones'';

    Simplified and flexible marketing programs, including an incentive plan for the sale of Goodyear products that, for the first time, rewards growth expressed in dollars. Dealers also will see a new incentive program to increase profitability on premium tires;

    Decentralization of retail advertising that gives dealers more fexibility in how advertising money is spent, helping them compete more effectively in their local markets. Co-op rules, systems and administration also have been simplified;

    A new expansion support program to help qualifying dealers add new locations and convert competitive outlets in areas where Goodyear is under-represented; and

    The rollout in June of a new Customer Sales and Service Center (see story above).

    Goodyear said it also has modified freight and physical supply policies that will improve product availability and fill rates.

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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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