Current Issue
Published on November 8, 1999

GOODYEAR SHOULD FOCUS ON SUPPLY

Goodyear, while still a great company, needs to re-examine its priorities and get back to the basics: providing dealers and customers with the products they want, when they need them. All of the company's recently announced initiatives and alliances, while exciting, mean nothing if it can't fully supply its customers with tires.

That's the position in which Goodyear finds itself of late, as it watches profits decline, customers complain and its stock price fall.

It's true, Chairman and CEO Samir Gibara has accomplished his goal of returning Goodyear to its former glory as the ``world's largest'' tire company.

The recent alliance with Sumitomo Rubber Industries Ltd. of Japan gives Goodyear a controlling interest in Sumitomo's tire making facilities in North America and Europe.

It also provides Goodyear with marketing rights to Sumitomo's Dunlop, Remington and Centennial brands in these markets.

The alliance also promises to provide Goodyear an entry into the Japanese tire market, which has eluded it for so long.

These are remarkable accomplishments. But in contrast is the harsh reality that in its home market of North America, Goodyear is having a difficult time.

The company admitted as much in its third-quarter financial report, noting that its North American tire unit has ``underperformed.'' It cited the cost of combining the Goodyear and Dunlop operations, a change in product mix to lower-margin tires and an inability to increase production to meet stronger-than-anticipated demand as contributing to the poor results.

Goodyear, it seems, has spread itself too thin, taking on too many projects simultaneously.

In the past year, the company has closed its Kelly-Springfield division's office in Cumberland, Md., merging these operations into its Akron headquarters. It also has attempted to lead the industry in using run-flat tires to eliminate the need for the spare, spent nearly $1 billion on its alliance with Sumitomo, begun a campaign to more than double the size of North America's winter tire market, unveiled a new automotive service format called Gemini and decided to exit the open-wheel/Indycar racing circuits.

At the same time, the company decided and then reversed the decision to end tire production at its oldest U.S. tire plant, in Gadsden, Ala., after underestimating product demand.

And now it's embarking on a new multibrand marketing strategy to integrate all of its brands.

That's a lot of activity to undertake, even for a $15 billion company.

Goodyear should clear its plate of all non-essential activities until it gets its supply problems under control.

Focusing on this issue will help the world's largest tire maker get back on track.

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