CGT's earnings fall though sales rise HANNOVER, Germany—Higher raw material costs sent Continental General Tire Inc.'s first-quarter operating earnings plunging 31.8 percent, compared with the first three months of 1999, despite a 7-percent increase in sales, according to a report from parent company Continental A.G.
For the period, CGT posted operating earnings of $14.8 million on sales of $402 million.
Overall, the parent firm's net earnings jumped 17 percent to $55.3 million on the strength of a 14-percent jump in sales, to $2.39 billion. The company reported that all its business units reported improvements over the 1999 quarter.
Pirelli's tire sales rise in quarter
MILAN, Italy—Based in part on the first-time consolidation of results from Pirelli Tires Alexandria in Egypt, Pirelli S.p.A.'s tire sector reported a 22.1-percent increase in first-quarter sales, to $700 million.
The company reported healthy increases in sales in all sectors, including 31-percent growth in light truck tires and 19 percent in medium truck tires.
Pirelli bought majority control of truck tire maker Alexandria Tire last fall, and has budgeted nearly $140 million through 2003 to expand and modernize its single factory. Annual capacity will rise to 550,000 tires initially, and then jump another 50 percent to 825,000 tires by the end of the program, Pirelli said.
Overall, Pirelli S.p.A.'s operating earnings climbed 20.1 percent to $189 million, as sales rose 17.8 percent to $1.74 billion.
Gadsden project awaits incentives
GADSDEN, Ala.—Goodyear is waiting for state and local officials to decide on how best to provide for $8.3 million in incentives to help lead to a possible $100 million expansion at the company's passenger and light truck tire plant in Gadsden.
The state of Alabama has proposed a 15-year bond issue to provide the money, which likely would cover the demolition of a 71-year-old portion of the plant.
Last month, Alabama Gov. Don Siegelman proposed that the state pay for $5.3 million of the incentive package and that local entities—including the city of Gadsden and surrounding Etowah County—fund the remaining $3 million.
Once the funding plan is settled, the state will contact Goodyear for further discussions that likely will address employment or operation guarantees, as well as funding issues, a local union official said.
Just 15 months ago, Goodyear announced it would stop tire production at the plant, but severe fill-rate problems prompted the company to reconsider.
RMA opposes Korean regulations
WASHINGTON—South Korea's new Automobile Tire Safety Inspection Standard is a trade barrier and should be fought as such, according to the Rubber Manufacturers Association.
In a May 4 letter to U.S. Trade Representative Christine Barshefsky, RMA President Donald Shea said the standard—which took effect April 1—"contains several barriers to free trade."
Among other things, the standard requires all tire importers to undergo "redundant, costly, time-consuming" safety and performance testing according to Korean rules, which are nearly identical with those in the U.S., the European Union and Japan, Mr. Shea said.
"The (South Korean) government has delegated this inspection/ performance testing responsibility to domestic Korean tire manufacturers," he said. "We know of no place in the world where there exists such a flagrant conflict of interest in product testing and certification."
The standard also levies a 0.4-percent fee on each lot of tires approved to enter South Korea, a fee which is "clearly a tariff," Mr. Shea said.
According to U.S. government figures, South Korea exported more than 9.7 million tires to the U.S. in 1999, while the U.S. exported only 206,000 to Korea, Mr. Shea said. "The new action by Korea will only serve to exacerbate the existing trade imbalance for tires," he added.
Mr. Shea urged Ms. Barshefsky to encourage the South Korean government to drop the 0.4-percent fee and the testing requirements. The RMA did not report a reply from the USTR as of May 10.