FRANKFURT, Germany-What a difference a year makes. Mid-1995 was a frenzy of activity as Europe's major tire makers scrambled to add weekend shifts, move to seven-day work weeks, and otherwise squeeze extra production out of existing capacities.
Mid-1996 is bringing plant furloughs, plant closings, capacity cutbacks and other measures designed to bring output in line with ``tepid'' demand and allow a thinning of overstocked warehouses.
The delicate balance between demand and capacity in Europe also is a key factor in the competitive strategies of the main competitors.
Market leader Group Michelin reported increased overall sales for 1995, although it experienced shortages of heavy truck tires and certain passenger tire lines.
It took action throughout the year to keep up with demand, implementing seven-day work weeks at several plants, taking control of low-cost production in Poland, revealing three new plant projects, for France and Sweden, and pursuing a low-cost production joint venture with Continental.
Goodyear, No. 3 in Europe with about 13 percent of the estimated $21.5 billion market, has ambitious plans for the region, marked by its recent closing of a high-cost plant in Greece, its purchase of majority control of Poland's TC Debica, and streamlining measures at other European plants.
``In Europe, our objective is to become a clear No. 2 and close the price gap that separates the European leader from the followers,'' said Samir Gibara, chairman of Goodyear, taking direct aim at Continental A.G.
``To do this, we will continue to utilize the same basic marketing strategies that have gained us market share, including more new products and additional distribution.''
In distribution, Goodyear is attacking on several fronts, buying up an equity chain in Sweden, strengthening its franchise and dealer incentive programs in Germany, Italy and elsewhere, and securing a supply agreement with Kwik-Fit Holdings, Europe's largest independent dealer.
Pirelli Tyre consolidated its position in Europe last year, benefiting from high demand for truck tires and enhanced original equipment business.
It refocused attention on the higher margin high-performance tire market, where Pirelli derives 40 percent of its car tire revenues; this contrasts with the overall market, where 21 percent of sales are in this category.
Bridgestone/Firestone (BS/FS) Europe reported 24-percent growth in sales last year, to $1.8 billion, and claims replacement market shares of 11 percent for car tires and 15 percent for truck tires, according to T. Amase, managing director. That puts it in a position to challenge Pirelli, fourth on the European pecking order.
A noticeable share of the firm's growth last year came from increased OE car tire sales, said Gene Meade, director OE sales. BS/FS gained market share in this area by importing tires from Japan to take advantage of spot shortages throughout the year, caused by higher than expected car production and capacity restrictions at most European tire makers, Mr. Meade said.
From a manufacturing standpoint, Bridgestone/Firestone has opted to match its competitors in Europe and move to expanded production schedules at plants in Spain and Italy, although the extra shifts have now been scaled back again because of excess stocks, especially in truck tires.
Sumitomo Rubber Europe also experienced double-digit growth last year, in part due to the full-year consolidation of Pneumant Reifen in Germany and the purchase of the retail network Pneus Holding in France.
Earnings improved in Germany-including Pneumant-and the U.K., but Dunlop France suffered a slight setback due to the raw material costs, Sumitomo said.
Its ambitious investment plans at Pneumant in eastern Germany detoured from its original course, which will result in the Furstenwalde plant being converted to acar tire only factory; truck tire capacity at SP Reifen's plant in Wittlich is being expanded.
Tire makers benefited last year from healthy winter tire sales, which grew 14 percent over 1994 to 21 million units Europe-wide, accounting for more than 16 percent of European replacement market sales, according to Pirelli data.
Winter tire sales are forecast to hit the 21 million mark this year, with a drop in Germany offset by growth in Scandinavia. Demand for higher speed rated winter tires is growing, Pirelli said. T- and H-rated snow tires are expected to comprise 60 percent of the German market, which represents nearly half of all winter tire sales.
Some makers are complaining about sluggish original equipment business this year, but official data show new car sales across Europe up 4.8 percent through six months, to 6.87 million units.
June sales did decline 8.8 percent from 1995, mainly due to drops in France and Spain; 1996 is still expected to exceed 1995 by 4 to 5 percent, vehicle industry associations say. But suppliers to Renault and Volvo-with sales down 3.9 and 19.5 percent, respectively-experienced some malaise.