AKRON—In an effort to cut costs and become more efficient, six of the world's eight largest tire makers have joined to launch a global e-commerce purchasing and procurement joint venture by the end of 2000. Goodyear, Group Michelin, Cooper Tire & Rubber Co., Pirelli S.p.A., Continental A.G. and Sumitomo Rubber Industries Ltd. are the founding members of the independent company, which is expected to be called RubberNetwork.com.
Japan's Bridgestone Corp., the world's largest tire and rubber product maker, and Yokohama Rubber Co. Ltd., the No. 7 tire maker, are not part of the alliance. Neither company offered comment on the venture.
While the Internet initiative is aimed at streamlining and achieving substantial savings in purchasing and procurement, "it's more than just that," a Goodyear spokesman said. "It will also involve buying and selling. It covers all ends of the spectrum."
The partners, in a joint statement, said total purchases for the tire and rubber product industry account for more than $50 billion a year in raw materials, equipment, machinery, goods and services. Goodyear alone spends about $5 billion annually, the spokesman said.
The formation of the joint venture follows a trend in which several competitors in an industry form an alliance to create online marketplaces in hopes of cutting costs and increasing profit.
The e-commerce venture will be open to all companies that do business in the rubber industry, he said, and can work in conjunction with other exchanges, such as the one established recently by leading auto makers. A steering committee, made up of representatives from member companies, will begin meeting shortly and reviewing ways other companies can become part of the exchange.
"We expect many more—manufacturers, retailers and suppliers—will make use of our global marketplace," the spokesman said. "This is not just for the large companies like ourselves—smaller companies can take advantage of it. We're the founding members of the joint venture, but any other company, and especially those associated with the auto industry, can take advantage of the collective marketplace to buy and sell electronically."
He said it was too early to tell whether or how independent tire dealers might be able to participate in the venture.
The steering committee expects to have a definitive agreement and a business plan for the e-commerce company by midsummer, a Michelin spokesman said. "We are not putting limits on the possibilities," he said.
While the venture is still in the planning stages, the partners said they've established that each transaction will be protected to ensure the confidentiality of each firm's individual business activities. The joint venture partners were in discussions for a while on the joint e-commerce plan, a Cooper spokesman said.
"We need to get a better handle on all kinds of pricing pressures," he said. "We need to do everything we can do to be as competitive as possible."