AKRON—Most major events in the tire industry do not come in the form of ``bolt-from-the-blue'' revelations. Rather, they are the outgrowth of a series of preceding events—and such was clearly the case with most of the industry's top headlines in 1996. In fact, several of last year's top stories—the sale of Big O Tires Inc.; the future of the National Tire Dealers & Retreaders Association's convention and trade show; and relations between Bridgestone/Firestone Inc. and organized labor—also were among the top ink-grabbers of 1995.
Others, such as the advent of ``lifetime'' tires and the emergence of Titan Wheel International Inc. as a player in the market for farm and off-road tires and wheels, have been building over time.
Few announcements, however, take the industry entirely by surprise—as did Group Michelin's on July 30 that Carlos Ghosn, chairman, president and CEO of Michelin North America, would leave the company in two months to (it was later revealed) accept a top post with France's Renault Group.
Just six months earlier, a corporate reorganization within Group Michelin had resulted in Mr. Ghosn's being named head of the company's worldwide passenger and light truck tire strategic business unit—its largest operation—and one of nine members of Michelin's Group Executive Council.
And scarcely two months before that, Mr. Ghosn had spearheaded Michelin's plans to invest $500 million to $900 million to boost capacity at its three tire plants in South Carolina and to build an off-the-road tire plant there.
Suddenly, however, he was gone—his place at Michelin North America filled by James M. Micali.
As 1995 closed, it appeared that a group of Big O dealers and management, led by President Steven P. Cloward, had made a successful bid to acquire the publicly held dealership franchiser for $16.50 per share, or about $56 million.
Such a deal would have left the company—and many of its dealers—highly leveraged, so when word got out early this year that private brand tire distributor TBC Corp. was considering a similar offer, it seemed to many to be a good alternative to the leveraged buyout (LBO) proposal.
Even Mr. Cloward, speaking for the LBO group, admitted: ``TBC has some obvious resources that we'd be hard-pressed to duplicate.''
In March, TBC signed a letter of intent to acquire Big O, the Big O board and the LBO group terminated their earlier agreement, and TBC proceeded to purchase the franchiser July 10 for a final price of $16.47 per share.
To reflect what it called its ``broader focus on the total tire and rubber industries in addition to tire service, retreading, repairing and recycling,'' the American Retreaders Association rechristened itself the International Tire and Rubber Association, effective April 8, officially dropping ``retreaders'' from the group's name.
The association also moved to develop programs geared toward commercial tire dealers, whether or not they are involved in retreading. It hired a full-time commercial tire dealer services director, Kevin Rohlwing, who launched a new publication, the ITRA Commercial Tire Service Update, and is preparing a commercial tire service manual, which also will form the basis for a certification program for commercial tire service personnel.
The ITRA also continued discussions with the National Tire Deal-ers & Retreaders Association, be-gun in 1995, regarding the possibility of creating a single tire industry trade show.
But for a variety of reasons, the NTDRA ended up taking a different tack.
Faced with declining attendance at its own annual convention and trade show and increased competition—especially for exhibitors—from the Automotive Aftermarket Industry Week (AAIW) shows, held each fall in Las Vegas, the NTDRA decided to redouble its efforts to improve the quality of and attendance at its 1996 convention in Atlanta, Sept. 5-7.
While most rated the various educational seminars and workshops second to none, the number of trade show exhibitors fell by 30 percent, as did the number of dealers attending.
Faced with the prospect of mounting its 1997 convention and trade show in Las Vegas within three weeks of the AAIW shows, the NTDRA board voted to combine its 1997 show with the AAIW and instructed incoming Executive Vice President David Poisson to pursue that possibility.
Despite procedural and logistical obstacles, Mr. Poisson was able to announce Nov. 4, on the eve of the 1996 AAIW, that the NTDRA would indeed be merging its show into that event—more particularly with the Specialty Market Equipment Association/Auto International Association (SEMA/AI) show—for 1997, and beyond.
``We're approaching this as a permanent (liaison),'' he said.
What began July 12, 1994, when 4,000 union workers went on strike against Bridgestone/Firestone Inc., came full circle 29 months later, when, on Dec. 12, 1996, members of the United Steelworkers of America ratified a new contract with the tire maker.
Though the union had called off the strike—which had become the longest in the history of the rubber industry—in May 1995, it continued to pursue various complaints against BFS filed with the National Labor Relations Board and attempted to keep pressure on the company through various negative public relations efforts.
The settlement, which was reached Nov. 4, is a traditional give-and-take deal, according to several analysts, with compromises on both sides.
The union workers, analysts said, won their jobs back and recorded gains in wages and benefits, thwarting several major give-backs the Japanese-owned tire company had proposed.
For its part, Bridgestone/Firestone saved itself as much as $45 million in back pay owed to the replaced workers and won some significant concessions, including a move to 12-hour shifts and the tying of 30 percent of future cost-of-living allowances to productivity.
1996 may also have seen the final step in the gradual ratcheting upward of tire manufacturers' treadwear warranties for passenger tires, which already had reached as high as 85,000 miles.
At its February dealer meeting in Las Vegas, Goodyear unveiled its Infinitred all-season radial, warranted to the original purchaser for as long as he owns his car.
Upon closer inspection, the warranty provided for a free replacement if the tire wore down to the treadwear indicators within the first three years. Thereafter, regardless of time or mileage, a worn-out tire would be replaced at a 50-percent discount, providing certain maintenance practices had been followed.
The competition soon followed suit, as Bridgestone/Firestone put a ``lifetime'' warranty on its redesigned Bridgestone Turanza T, while Michelin debuted the X One, with an ``unlimited mileage warranty'' and an industry-leading UTQG treadwear grade of 620.
Following a failed bid to win the Republican Party's presidential nomination, Maurice Taylor Jr., chairman and CEO of Titan Wheel International Inc., returned his attention to making his company a significant player in the market for agricultural and off-road wheels and tires.
The company's Titan Tire Corp. unit—consisting of the former Pirelli Armstrong Tire Corp. farm tire plant in Des Moines, Iowa, purchased in 1994, and Dico Tire Inc. in Clinton, Tenn., purchased in 1993—broke ground Nov. 14 in Brownsville, Texas, for a $100 million farm and off-road tire plant, which is scheduled to have a capacity of 13,000 units per day.
``Titan reached our goal to become the world leader in off-highway wheels,'' Mr. Taylor said, ``and I'm comfortable. . . that we will again meet that challenge in the tire market.''
Meanwhile, a private New York-based investment company acquired two small North American tire makers amid talk of growing larger still.
In April, Pensler Capital acquired control of Toronto-based United Tire & Rubber Co. Ltd., primarily a maker of off-the-road tires, and in September purchased Denman Tire Corp. in Ohio, a maker of light truck, specialty and off-road tires. The two companies combined have annual sales of about $100 million.
President Sanford Pensler said his company is ``committed to expanding, and look(s) forward to continuing to build our presence in this industry to over $200 million by the end of 1997. . . .''
It recently was disclosed that Pensler has expressed some interest in buying Pirelli Armstrong Tire Corp.'s Nashville, Tenn., tire plant, closed since November.
As is often the case, news on the scrap tire front in 1996 was a decidedly mixed bag.
While the industry continued to champion the use of tire-derived fuel, a more mysterious sort of combustion called into question one promising alternative use of shredded scrap tires: as a substitute for crushed stone in certain civil engineering applications.
The apparent spontaneous combustion of tire chips used as fill material under two roadbeds in different, rural sections of Washington state early in the year resulted in a drastic decline in the use of tire chips in similar public works projects.
Projects under way at year-end, however, held greater promise of helping develop markets for scrap tire rubber. The Chicago Board of Trade planned to establish a recyclables exchange on the Internet, where participants could post listings to buy or sell recycled rubber, among other materials.
Also the American Scientific Testing Materials Committee on Rubber was reviewing proposed revisions to its standards for recycled crumb rubber that would both tighten and strengthen the specifications for a variety of crumb rubber materials, establishing com-mon definitions and protocols.