LAS VEGAS (January 28, 2000) — William J. Sharp, Goodyear´s top North American Tire executive, surveyed the expanse of dealers gathered for the company´s annual dealer meeting and then said something unusual for a Goodyear executive.
Speaking from a stage as long as a football field, Mr. Sharp admitted the company had made mistakes and let down many of its dealers during the past year, specifically in the area of product supply. Then he apologized.
"It would be the biggest understatement of the entire conference not to admit that 1999 was more than a disappointment to a lot of you in the audience, and to us as your supplier, for a lot of reasons," the North American Tire president said Jan. 19. He was speaking to the record 4,600 dealers crowded into the huge ballroom at The Venetian hotel in Las Vegas.
"If I tried to start this conference with an inspirational speech about how great we have been in the past as a team and how wonderful the future is going to be if we work together to meet the challenges, I would be doing you all a great disservice."
Mr. Sharp´s comments before the first combined gathering of Goodyear, Kelly and Dunlop dealers marked the beginning of a new era for the tire maker.
For the first time ever, the company will go to market offering a multi-brand program, dubbed G3, featuring the Goodyear, Dunlop and Kelly brands.
But Mr. Sharp said Goodyear also will focus on "making our customers feel like customers."
Calling 2000 "The Year of the Customer," he pledged to rebuild the relationships that differentiated Goodyear from others in the past.
The tire maker, he said, must "abandon the institutional way of doing things in favor of committed, business-driven decision-making."
To help achieve this, the company will move more people from its Akron headquarters and into the field, while empowering them to make more decisions on their own, Mr. Sharp said.
Goodyear also will devote every Tuesday to customer concerns: "a day when every moment is focused on the customer," Mr. Sharp said.
Since assuming his current position in July 1999, Mr. Sharp said he and Goodyear´s management team have spent a lot of time examining the supply problems and implementing solutions.
Last year, Goodyear´s fill rates sometimes fell below 50 percent as a result of underestimating replacement market demand, increasing business with auto makers and attempting to close its tire plant in Gadsden, Ala.
In all, the company fell about 9 million tires short of what it needed to cover last year´s demand and meet the anticipated supply and fill-rate needs for 2000, Mr. Sharp said.
The shortage caused havoc for many tire dealers who couldn´t get the tires they needed.
"It was bad," said John Turk, president of Conrad´s Tire Service Inc. in Cleveland. "It was difficult because it was broad and, in some cases, it was deep."
Goodyear´s inability to fully supply tires "put a bad taste in everyone´s mouth because they couldn´t get product," said David Epperly, owner of the seven-store Tire Pro chain in Columbus, Ga.
Mr. Sharp said Goodyear already has implemented changes that are improving its ability to supply dealers more fully.
Fill rates in many cases have increased to 70 percent, Mr. Sharp said, and he expects further improvement into the 80- to 95-percent range by the end of the first quarter, depending on the customer.
Goodyear is taking a variety of routes to improve its supply ability. They include:
* Ramping up production at the Gadsden plant, whose closure has been indefinitely postponed. Output at the plant soon will reach 18,000 units daily (6 million tires annually);
* Obtaining an additional 1.75 million tires from Europe and another 1 million from Brazil;
Streamlining production by reducing the number of product codes (tire sizes and types) by 28 percent;
Capping tire sales to auto makers at the 1999 level;
Scrapping OE downstream tires that don´t have an immediate market to free up warehouse space;
Rationalizing warehouses to improve distribution; and
Modernizing plants that produce OE tires to improve efficiency by 20 to 25 percent.
In addition, the company is installing 45-inch curing presses in its Topeka, Kan., plant for making all-steel medium truck radials, which Mr. Sharp said should improve fill-rates by 20 percent over traditional levels.
The company also is adding tire-building equipment to boost production of low-profile medium truck tires by the end of the first quarter.
"Now I´m not going to stand here and say everything is perfect," Mr. Sharp said. "But I will say that we have all the pieces in place to play this game, and there is no excuse for not winning. None."
Mr. Sharp´s words seem to play well with most dealers.
"I liked what I heard, and I like his approach," said Terry Westhafer, president of Central Tire Corp. in Verona, Va., adding he didn´t think Mr. Sharp needed to apologize for last year´s poor showing.
"Goodyear´s track record speaks for itself," he said. "There´s no point in dwelling on the past. I think the important thing is where we go today, and tomorrow and the future."
But to Mr. Epperly, the apology was appropriate.
"He had to do that," he said. "It was a nice thing to sort of set the tone that Goodyear really had fallen behind and that they had to fix the problem."
Still, some dealers, including Irwin Rabinowitz, president of Blake Phillip´s Car Care in Rosenberg, Texas, remain unconvinced. "What it means we´ll see in the next few months," he said.
For many others, though, Mr. Sharp´s comments seemed to have the right effect.
"I think Bill Sharp came across as an extremely credible guy," said Randall Clark, chairman of Dunn Tire Corp. in Buffalo, N.Y. "He was the bright spot of the whole conference—a real breath of fresh air."
As for Mr. Sharp, he´s been impressed with the dealers´ support and understanding during the past year.
"I personally think they´ve been incredibly patient," he said.