AKRON—Cooper Tire & Rubber Co., Michelin North America Inc. and other tire companies dominated the news with major deals in 1999, but the "mother" of all tire company deals was Goodyear's alliance with Summitomo Rubber Industries Ltd. The Akron-based company gained control of Sumitomo's Dunlop tire operations in North America and Europe while Sumitomo took control of Goodyear's sales in Japan. The deal increased Goodyear's annual sales by about 20 percent ($2.5 billion) making it the world's largest tire maker.
While that alliance was seen as good news, the last week in October proved to be less kind to Goodyear. It was then that Goodyear announced a sharp decline in quarterly earnings, dropped out of Indy-car racing and was dumped from the New York Stock Exchange's prestigious Dow Jones Industrial Average after almost 70 years on the index.
If that wasn't enough, The Spirit of Akron—one of Goodyear's seven blimps—crashed in a grove of trees near Akron. Neither the pilot nor a video technician on board were seriously injured.
Goodyear also unveiled plans to drop nearly a quarter of its SKUs, stop making three private brands and, in light of an ongoing need for more capacity, reversed its decision to shut down tire manufacturing at its Gadsden, Ala., plant. The tire maker also said it will import four million tires from subsidiaries in Poland and South America to raise fill rates for its North American dealers.
After studying its 15-year-old Certified Auto Service operation, the tire maker decided it had outlived its usefulness, so the company scrapped it and unveiled the new Gemini Automotive Care concept.
Meanwhile, Michelin hardly stood still, as it bought the Akron-based dealership Tire Centers Inc. with its 163 locations and close to $500 million in annual sales.
The Greenville, S.C.-based tire manufacturer also announced a $400-million program over the next five years to expand seven North American plants and build a new rubber compounding facility.
"Bib," the company's mascot, bared his teeth by halting direct shipments to Morgan Tire and Auto Inc. after the Clearwater, Fla.-based retailer purchased the 22 locations of Philadelphia-based Avellino's Tire & Auto Inc. and Wheel Works, a 24-store chain in California.
Both dealerships were members of Michelin's Alliance dealer program. But Morgan Tire wouldn't commit to purchasing at least 51 percent of its tires from Michelin.
Fed up with price erosion, Michelin created a Maximum Value Pricing policy for its BFGoodrich brand that set minimum retail prices for its popular All-Terrain T/A and All-Terrain T/AKO light truck tires. The company then said it would cut off shipments to dealers who sold those lines below prescribed prices.
BFG also introduced the Scorcher line of performance tires featuring yellow, red or blue stripes on the sidewall and on the tread.
The eye-catching design caught dealers' attention but also raised the ire of San Francisco's Board of Supervisors, which sought to outlaw the tires claiming they might encourage unsafe driving and incite gang activity.
Michelin and its Michelin Retreading Technologies Inc. (MRTI) unit was sued by, then counter sued Bandag Inc. in an Iowa federal court. The retread equipment supplier charged Michelin was trying to damage its dealer network and "eliminate Bandag as a competitor."
Michelin's counter suit called Bandag a "monopolist" that has illegally dominated the retread market for more than 20 years.
Last January, Bandag settled a three-year-old lawsuit with Treadco Inc. and paid $5.4 million to the Fort Smith, Ark., firm. Treadco had charged Bandag with not renewing its franchise agreements because Treadco had opened a Hercules/Cedco precure retread plant and was preparing to open a Bridgestone/Firestone retread operation.
In February, Bandag's two-month-old Tire Management Solutions Inc. subsidiary signed a fleet management pact with Roadway Express Inc. Bandag also announced in July it would eliminate about 100 positions in the process of changing from a product-driven to a service company.
Bandag's franchise base saw some erosion as two dealerships among the nation's top 20 truck tire retreaders switched to other systems. In March, Ray Carr Tire Inc. of Harrisonburg, Va., dropped Bandag and signed with Marangoni Tread North America and Associated Rubber Co. A couple of months later, Bauer Built Inc. of Durand, Wis., said it would convert to MRTI.
Cooper Tire & Rubber Co. spent about $1 billion last year on two major acquisitions: Standard Products Co., parent of retread equipment and materials supplier Oliver Rubber Co., and Siebe Automotive. With the buyouts, Cooper's product mix shifted from primarily tires to more of a multi-product supplier of rubber components to original equipment auto makers. Tires will account for only about 42 percent of sales once the Siebe deal is approved in early 2000.
Italian tiremaker Pirelli S.p.A. signed a pact turning over responsibility for its North American sales to Cooper. Pirelli will distribute and market Cooper tires in South America and the two companies will cooperate on raw materials purchasing.
Pirelli also forged an agreement with Group Michelin to cooperate on the development of the French company's PAX integrated run-flat tire-wheel system.
Continental General Tire Inc. settled a year-long strike at its Charlotte, N.C., plant in September and said it plans to return to the farm tire market after a three-year hiatus.
Brigestone/Firestone Inc. formed a new unit to enhance truck tire sales and opened a new passenger and light truck tire plant in Aiken County, S.C.—the first factory in the world to incorporate Bridgestone Corp.'s new automated production system.
On the retailing front, independent tire dealers got just what they didn't need: another national competitor. Ford Motor Co. kicked off a major advertising campaign in August that christened Ford dealerships "America's newest tire store."
The car maker said by 2002 it plans to sell about six million tires per year through its dealers. It also began heavily advertising brakes, shocks, batteries and wheel alignments as part of an initiative to increase aftermarket sales to its customers.
In April, Ford acquired Kwik-Fit Holdings Plc., Europe's largest independent tire dealership, but said it had no plans to expand the chain to North America.
Itochu International Inc., the U.S. arm of a Japanese trading company, purchased the 98-store Tire Pros dealership in California with plans to expand the chain nationwide.
Penske Auto Centers Inc. closed 113 stores in February, giving the 650-store Troy, Mich.-based chain about 200 fewer locations than when it purchased the tires and auto service operation in 1995 from Kmart Corp.
Sears, Roebuck and Co. trimmed the number of its National Tire and Battery locations by about 10 percent, shuttering 33 stores.
Charlotte, N.C.-based J.H. Heafner Co. Inc. sold the majority of its equity interests to Charlesbank Capital Partners LLC, a private equity firm, and continued to grow by purchasing California Tire Co. in January. It also added 17 stores to its Winston Tire chain in California.
In late summer the company changed its name to Heafner Tire Group Inc. to better reflect its status as a national distributor.
The International Tire and Rubber Association moved its World Expo to Nashville, Tenn., after 41 years in Louisville, Ky. While attendance at the '99 show dropped about 16 percent, ITRA said it was committed to the new location and scheduled the 2000 event for May 1-3 there.
The Tire Association of North America's annual International Tire Exposition in Las Vegas continued to grow with a 40-percent increase in exhibit space in 1999. TANA said the show attracted more than 5,000 tire buyers—a 9 percent increase over 1998.
TANA also agreed to partner with Smithers Scientific Services Inc., an Akron-based rubber and plastics industries research and consulting firm, to develop training courses for tire dealers, employees and tire manufacturers.