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October 02, 1995 02:00 AM

MORE ALLIANCES, CO-OP VENTURES IN GOODYEAR'S FUTURE-GIBARA

Bruce Davis
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    FRANKFURT, Germany-Strategic alliances, joint ventures and other types of cooperative ventures will play an increasingly important role in Goodyear's future-especially in emerging marketplaces, according to Sam Gibara, the Akron-based tire maker's president and vice chairman. Goodyear's joint ventures in China and India are prime examples of this thinking, Mr. Gibara pointed out, but the strategy could be extended to cover non-tire automotive components in Europe, for example, where Goodyear does not have a manufacturing presence currently.

    Research and development alliances with suppliers and/or customers are also of strategic importance in accelerating the development curve, said Mr. Gibara, whose visit to Frankfurt coincided with the biennial International Automobile Exhibition, IAA.

    ``The time has come for tire makers to develop alliances,'' he said. ``The major mergers are mostly behind us now; we can look at alliances upstream, downstream, or with customers or suppliers, or among tire makers themselves.

    ``Look at the automotive industry, and the number of alliances they've developed in the past 10 years,'' the 31-year Goodyear veteran continued. ``The question becomes, however, `How far can the tire industry go?' By definition, we're limited,*.*.*.*we have nowhere near the number of opportunities the carmakers have, based on the number of components.''

    Goodyear's entry into China nearly came as a result of another partnership, South Pacific Tyres in Australia, which had approached Goodyear four years ago about the possibility of cooperating on a venture in China. In the end, though, Goodyear's own efforts yielded the joint venture in Dalian, China.

    Nonetheless, Mr. Gibara has a strong opinion about the types of alliances available. ``I believe a lateral alliance is not necessarily a sign of strength; upstream, or downstream, that's a sign of strength.''

    As for components other than tires, Goodyear is looking at a number of options in terms of manufacturing in Europe, especially in light of the trend in such products toward so-called lifetime contracts, where suppliers can obtain guarantees of delivering a component or system for the life of a particular model run.

    ``Goodyear is a U.S.-based company in terms of non-tire products,'' Mr. Gibara acknowledged. ``But we're not unique in that aspect, . . . there are no true global players in this area.

    ``We're certainly sensitive to the fact that our customers are more global, and that we need to keep pace.

    ``Therefore, we're looking at all options in this respect. It does not need to be an acquisition or a merger-it could be an alliance. We don't have a specific date in mind as to when, but it'll be sooner than later.''

    As for the firm's tire presence in Europe, Goodyear management welcomes recent changes there allowing tire companies to extend their production schedules to include Saturday and Sunday shifts.

    Goodyear currently works Sunday shifts in Europe only at its United Kingdom plant, in Wolverhampton, and in Turkey. But management anticipates moving to 21 shifts at Fulda, Germany, by year's end, and negotiations are under way at the Philippsburg, Germany, and Colmar Berg, Luxembourg, plants to allow the change as well.

    ``We need it,'' Mr. Gibara said. ``Europe is a high-cost base, . . . it's the last area geographically to go this way, but manufacturers need it to secure a manufacturing base here.''

    Goodyear is known for its marketing savvy, but the firm has been noticeably quiet in the debate on rolling resistance and the so-called ``green tire.'' Is Goodyear missing out on this development?

    ``Let me dispel any misunderstanding,'' Mr. Gibara stressed. ``Goodyear has a silica tire, as do most of our major competitors. But it's not a question of silica vs. not having silica. It's more a question of value added, of price-cost relationship, and benefit to the customer.

    ``The emphasis is on value,'' the native of Egypt continued, ``and consumer benefits; . . . what's best for a particular customer or particular application.

    ``We're all looking at alternatives to silica to improve the value-added aspect. Goodyear probably doesn't advertise as much as we used to do, but that doesn't mean we're not active (on this front).''

    Goodyear also stresses service in its relationships with original equipment customers, he said.

    ``A good product nowadays is almost a given, therefore the service component of an OEM relationship is becoming more important in the overall scheme.''

    He noted activities like just-in-time delivery, assembled tires and wheels, on-line communication, or even servicing a carmaker's sales network, among those services an OE supplier must be able to offer.

    Whether providing more services will lead to better OE prices is questionable, he said. ``There is no good answer to this question (about OE prices). The tire industry has not done a good job. It's really a question of leverage.''

    Among other topics of interest Mr. Gibara addressed were:

    Poland-Goodyear continues to negotiate with the Polish government about acquiring TC Debica and/or Stomil Olsztyn S.A., but is forced to respond to the privatization agency's timetable there. A manufacturing or other type of alliance there is an option, but not Goodyear's first choice.

    Tire shortages-Manufacturers in general did a poor job of forecasting for 1995; demand growth, however, was quite different than any previous experience. There still are shortages in truck and other commercial vehicle products, in part because of long lead times in getting molds.

    Asia-Will be a growing part of Goodyear's global business. A commercial vehicle tire venture in China is being negotiated. Talks have been held with Vietnamese officials, but this market must be considered along with the entire Southeast Asia trading zone, which Vietnam will be part of by the turn of the century.

    Latin America-Goodyear anticipates building on its already strong presence there as vehicle makers are gearing up to invest $12 billion or more in new car and truck making capacity.

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