Skip to main content
EVENT TRACKER
Keep track of rescheduled, canceled industry events with our COVID-affected event tracker - Powered by Snap Finance
Close
Sister Publication Links
  • Rubber & Plastics News
  • European Rubber Journal
tb-logo
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • OPINION
    • CORONAVIRUS
    • AUTO INDUSTRY
    • BUSINESS/FINANCIAL
    • COMMERCIAL TIRE
    • FACTORY FIXES
    • GOVERNMENT & LAW
    • INTERNATIONAL
    • MOTOR SPORTS
    • NEW PRODUCTS
    • RETAIL TIRES
    • SERVICE ZONE
    • SEMA/AAPEX
    • SMALL BUSINESS
    • TIRE MAKERS
    • SPONSORED CONTENT
    • COVID takes dealers for roller-coaster ride
      A year later, pandemic's full tire industry impact unclear
      Tire Cologne canceled; rescheduled until 2022
      New round of Paycheck Protection Program funding opens
    • DTM switches horses mid-stream; awards race tire contract to Michelin
      Icahn Auto trims fiscal 2020 operating loss despite 14% lower sales
      Oshkosh unit gets contract for new USPS local delivery vehicle
      Sumitomo adds treadwear-detection to 'Sensor Core' toolkit
    • Titan eyes solid recovery in 2021 as ag sector rebounds
      4 Wheel Parts celebrates 60th anniversary with deals, promotions
      CarAdvise partnering with RepairSmith mobile repair services
      Goodyear to raise prices by up to 8% on all passenger tires on April 1
    • Goodyear joins connected mobility pilot program in Ohio
      Michelin launches high-scrub, weight-sensitive X One Multi T trailer tire
      TRAC Intermodal redirects retread biz 100% in-house
      Giti rolling out range of GT Radial-brand urban/regional truck tires
    • USTMA joins coalition supporting passage of Equality Act
      McMahon's Best-One increases its minimum wage to $15
      Oshkosh unit gets contract for new USPS local delivery vehicle
      Conti recalling 94,000 Conti-, General-, Barum-brand LT/SUV tires
    • Maxam adding multipurpose radial, solid OTR tires
      Goodyear names Patterson to lead Cooper integration efforts
      DTM switches horses mid-stream; awards race tire contract to Michelin
      Sentury's 10-year global expansion strategy will include plants in North America, Europe
    • DTM switches horses mid-stream; awards race tire contract to Michelin
      Bridgestone World Solar Challenge canceled due to pandemic restrictions
      Pirelli, Goodyear ink sedan racing series contracts in Canada, Europe
      Goodyear extends partnership with Nürburgring race circuit
    • Snap-on debuts Triton-D10 diagnostic tool with scan, lab scope capabilities
      Maxam adding multipurpose radial, solid OTR tires
      Michelin launches high-scrub, weight-sensitive X One Multi T trailer tire
      Giti rolling out range of GT Radial-brand urban/regional truck tires
    • COVID takes dealers for roller-coaster ride
      Investment groups to acquire Mavis Tire network
      Vogue Tyre offers $75 rebate on set of 4 tires during March
      4 Wheel Parts celebrates 60th anniversary with deals, promotions
    • Snap-on debuts Triton-D10 diagnostic tool with scan, lab scope capabilities
      Pennzoil offering carbon-neutral lubricants for passenger cars
      Washington dealership uses new-school solution for recruiting auto techs
      Marinucci: Customers may ignore dangerous conditions
    • TIA seeking nominations for Tire Industry Hall of Fame
      SEMA survey shows resilient auto aftermarket in 2020
      SEMA scholarships and loan forgiveness now available
      WTC hosting webinar Jan. 20 on load-capacity standards
    • SEMA survey shows resilient auto aftermarket in 2020
      Trade groups oppose minimum wage increase proposal
      New stimulus package fixes PPP loan confusion
      Vaccine may usher sense of normalcy
    • Goodyear joins connected mobility pilot program in Ohio
      Titan eyes solid recovery in 2021 as ag sector rebounds
      Michelin launches high-scrub, weight-sensitive X One Multi T trailer tire
      Goodyear names Patterson to lead Cooper integration efforts
    • Sponsored By Yokohama Tire Company
      7 questions to ask consumers when they need tires for a crossover SUV
      Sponsored By Yokohama Tire Company
      Stocking Tires for Crossover SUVs
      Sponsored By AppointmentPlus
      Three Important Lessons Learned for the Tire Business During a Pandemic
      Sponsored By Yokohama Tire Company
      7 questions to ask consumers when they need tires for a crossover SUV
  • SHOP FLOOR
    • BALANCING
    • DEMOUNTING
    • SAFETY
    • TIRE REPAIR
    • TPMS
    • TRAINING
    • VEHICLE LIFTING
    • WHEEL TORQUE
    • Video: Balancing Tire
      Safety tips for wheel balancing
      An introduction to wheel balancing
      Wheel weights: Balancing form with function
    • Video: Demounting
      Making rims ready for a tight seal
      Tire changer types, tips and trends
      How to clear rim rust and corrosion
    • Video: Safety
      Ergonomics on the shop floor
      Customers
      Considerations for shop safety policies
    • Video: Tire Repair
      Staying safe when repairing a tire
      Essential tools, materials and equipment for tire repair
      An introduction to tire repair
    • Video: TMPS Service
      Replacement TPMS sensor overview
      The life-saving work of TPMS
      An introduction to TPMS service
    • Video: Training
      Options and resources for CE tech training
      Internship ideas to attract tech talent
      Choosing the right auto service tech school
    • Video:Vehicle Lifting
      Tips and recommendations for lifting safety
      The gravity of proper lift points
      Safety essentials when using jack stands
    • Video: Wheel Torque
      The danger of too much, too little torque
      The importance of torque specifications
      Introduction to proper wheel installation
  • Multimedia
    • VIDEOS
    • PHOTOS
    • PODCASTS
  • Events
    • ASK THE EXPERT
    • LIVESTREAMS
    • WEBINARS
    • SEMA LIVESTREAMS
  • Data
    • DATA STORE
  • Resources
    • DIRECTORY
    • CLASSIFIEDS
  • ADVERTISE
  • DIGITAL EDITION
  • Awards
    • Tire Dealer Humanitarian Award
MENU
Breadcrumb
  1. Home
February 15, 1999 01:00 AM

GOODYEAR, SUMITOMO LINK UP

Bruce Davis
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    AKRON—Goodyear and Dunlop, two names etched side by side in the annals of tire industry history, will now go arm and arm in the marketplace. Effective in September, Goodyear will take over control of Dunlop tire operations in North America and Europe from Japan's Sumitomo Rubber Industries Ltd., according to terms of an alliance the two companies set up Feb. 3.

    As a result, Goodyear will use the Dunlop brand in North America as the ``better'' brand in a ``good-better-best'' brand strategy, giving Goodyear dealers a much needed—and asked-for—complementary brand and providing an immediate boost to Dunlop's market share in North America, Goodyear Chairman and CEO Samir Gibara said.

    The deal, still subject to due diligence and approval by each firm's board of directors, would increase Goodyear's consolidated annual tire sales by $2.5 billion, or 20 percent, making the company the world's largest tire maker again.

    ``Becoming No. 1 was a consequence of this deal, not the aim,'' Mr. Gibara said. ``Our primary goal is to make both companies more efficient, more effective. Being the biggest is not enough, however: We also have to be the best.''

    For Sumitomo—which will continue to control the Dunlop brand in Japan and most of Asia—the deal provides a needed capital boost and will lead to a larger market presence for the Dunlop brand worldwide, said Sumitomo Rubber President Naoto Saito.

    Coinciding with the Sumitomo deal, Goodyear announced a series of restructuring moves in the Americas and Asia—starting with the phase-out of tire production at its Gadsden, Ala., plant—that the company expects will yield $100 million to $150 million in annual cost savings.

    Under the alliance agreement, Goodyear and Sumitomo, which owns the Dunlop brand in most major world markets, will form four joint-venture operating companies—one in North America, one in Europe and two in Japan—and two support ventures, based in the U.S., for global purchasing and for sharing tire technology.

    Goodyear will own 75 percent of the joint operating ventures in North America and Europe and Sumitomo 25 percent. In Japan, Sumitomo will own 75 percent of the two joint ventures and Goodyear the remaining 25 percent.

    Goodyear also will have controlling interests in the two support ventures. Combining the global purchasing power of Goodyear and Sumitomo Rubber should result in $100 million to $120 million in savings annually, the companies said.

    What appears on the surface to be a complex deal is actually simple, Mr. Gibara said.

    ``In essence, we are buying a controlling position in the former Dunlop Tyre, as it existed before Sumitomo Rubber bought them in the early 1980s,'' Mr. Gibara said. At the same time, Goodyear is not getting involved directly in Japan with Sumitomo Rubber, except for the original-equipment business with Japanese car companies and in the Japanese replacement market, ``both of which are better handled from a cultural standpoint by Japanese,'' Mr. Gibara said.

    The North American joint venture will cover Dunlop Tire Corp.'s U.S., Canadian and Mexican operations with annual sales of $800 million, but will exclude Sumitomo Tire (U.S.), the San Francisco-based distributor of the Sumitomo tire brand.

    Goodyear's North American tire group, including Kelly-Springfield and Goodyear's Canadian and Mexican operations, will operate outside the joint venture, but will play a key role in making the venture successful through Goodyear's distribution channels, Goodyear said.

    To settle the difference between the value of the respective businesses being consolidated and the agreed-upon shareholding ratios, Goodyear will pay Sumitomo a cash settlement of $936 million the date the two ventures go into effect, Goodyear said.

    In addition, Goodyear plans to acquire a 10-percent interest in Sumitomo—valued at about $100 million—and Sumitomo will acquire an equivalent dollar value of Goodyear shares, equal to about 1.2 percent. Goodyear will become Sumitomo's second-largest shareholder, and its ownership position will afford it a seat on the Sumitomo Rubber board of directors.

    Definitive joint-venture agreements are expected to be signed in May, with the ventures becoming operational by Sept. 1.

    ``This new alliance returns Goodyear to its leadership position in the tire industry, strengthens Goodyear's leadership in North America, makes it a clear No. 2 in Europe, and provides it with a needed foothold in the important Japanese automotive market,'' Mr. Gibara said.

    Although becoming No. 1 was not the overriding goal, size does matter, Mr. Gibara said.

    ``Economies of scale do matter. This is a capital-intensive industry, requiring high levels of technology. Even trailing the competition by only a point or two, it was tough to really have the resources in capital and technology to compete. Our competitors had more firepower.

    ``It also creates excitement within the company. You can ask people to do more because they are more motivated.''

    Sumitomo Rubber, which employs 28,000 worldwide, had corporate sales of $5 billion in 1997. The firm's consolidated sales will fall by nearly 50 percent once the alliance takes effect, but will provide the tire maker with ``a stable, increased profit,'' Sumitomo said in a news release.

    Sumitomo has been carrying more than $3 billion in debt for several years, with a debt/equity ratio of 325 percent last year, according to Morgan Stanley Dean Witter.

    The deal will mesh Sumitomo's strength in Japan and presence in Europe with Goodyear's reputation in North America and Europe to lead the companies toward accelerated growth, Sumitomo said.

    Sumitomo Tire is the operating name of Treadways Corp., which is not owned by Sumitomo Rubber. Treadways also controls and distributes the Eldorado, Jetzon, Laramie and Telstar brands.

    Brad Dawson, Crain News Serviceer, contributed to this report.

    Letter
    to the
    Editor

    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].

    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Newsletter Center

    Staying current is easy with Tire Business delivered straight to your inbox.

    SUBSCRIBE TODAY

    Subscribe to Tire Business

    SUBSCRIBE
    Connect with Us
    • Facebook
    • LinkedIn
    • Twitter
    • RSS

    Our Mission

    Tire Business is an award-winning publication dedicated to providing the latest news, data and insights into the tire and automotive service industries.

    tb-logo
    Reader Services
    • Contact Us
    • About Us
    • Site Map
    • Industry Sites
    • Order Reprints
    • Customer Service: 877-320-1716
    Partner Sites
    • Rubber & Plastics News
    • European Rubber Journal
    • Automotive News
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    RESOURCES
    • Advertise
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Media Guide
    • Editorial Calendar
    • Classified Rates
    • Digital Edition
    • Careers
    • Ad Choices Ad Choices
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • OPINION
      • CORONAVIRUS
      • AUTO INDUSTRY
      • BUSINESS/FINANCIAL
      • COMMERCIAL TIRE
      • FACTORY FIXES
      • GOVERNMENT & LAW
      • INTERNATIONAL
      • MOTOR SPORTS
      • NEW PRODUCTS
      • RETAIL TIRES
      • SERVICE ZONE
      • SEMA/AAPEX
      • SMALL BUSINESS
      • TIRE MAKERS
      • SPONSORED CONTENT
    • SHOP FLOOR
      • BALANCING
      • DEMOUNTING
      • SAFETY
      • TIRE REPAIR
      • TPMS
      • TRAINING
      • VEHICLE LIFTING
      • WHEEL TORQUE
    • Multimedia
      • VIDEOS
      • PHOTOS
      • PODCASTS
    • Events
      • ASK THE EXPERT
      • LIVESTREAMS
      • WEBINARS
      • SEMA LIVESTREAMS
    • Data
      • DATA STORE
    • Resources
      • DIRECTORY
      • CLASSIFIEDS
    • ADVERTISE
    • DIGITAL EDITION
    • Awards
      • Tire Dealer Humanitarian Award