AKRON—"Historic" and "unprecedented" were just two of many descriptions bandied about on June 23, when Goodyear and its arch-rival, Group Michelin, shook hands on a joint-venture deal to create one industry standard for run-flat tires.
It was, indeed, a unique event to witness—a little like seeing the heads of Macy's and Gimbel's opting to go into business together. The top executives of both tire companies appeared side-by-side at a New York press conference to say, in essence, they'd buried the hatchet.|.|.|in the sidewall of Good- year's "EMT" run-flat and instead adopted Michelin's PAX system.
The momentous event, beamed by satellite to journalists in a video studio in Brecksville, Ohio, and to a gathering in Paris, brought together Michelin Chairman Edouard Michelin and Sam Gibara, Goodyear chairman, president and CEO.
After several years and millions of dollars spent pursuing somewhat parallel technologies in the hope of convincing auto manufacturers—and motorists—that spare tires aren't necessary, the two tire companies have yet to see run-flats gain widespread acceptance in the marketplace.
Goodyear has a few original-equipment contracts for its EMT (Extended Mobility Tire) and Michelin has yet to gain any for PAX, though the French tire maker said several car makers are interested.
The tire companies said after analyzing all available tire-wheel run-flat combinations, it was decided—following year-long discussions—that Michelin's is the best platform.
"When we invented the PAX system, we knew we had a winner. We knew it had great potential to become the standard of tires for the 21st century," Mr. Michelin said following Mr. Gibara's announcement of the alliance between the two "fierce competitors."
In signing licensing agreements, the companies vowed to divvy up expenses in a research-and-development project to devise advanced run-flat technologies.
The 50-50 joint venture—which will operate under the designation "Global Run-flat Systems Research, Development & Technology"—will be based in the Netherlands, though no R|&|D staffs will be committed to that headquarters. Instead, tire designers and engineers from both companies will regularly collaborate to share their progress.
Explaining the reasoning behind the endeavor, Mr. Gibara admitted that "in our zeal to bring each of our radically new technologies and run-flat systems to the marketplace," Goodyear and Michelin "were complicating, confusing and discouraging adoption of these systems on a mass scale because of the lack of an evolved global standard."
According to the new agreement, Goodyear will license its EMT technologies to Michelin, including pressure-monitoring system patents, and is in discussions with Pirelli S.p.A. about licensing the EMT. Michelin will license Goodyear its PAX tire-wheel system; earlier Michelin signed a similar licensing agreement to provide Pirelli with PAX.
Goodyear and Michelin also said their run-flat technology will be made available to all tire makers.
By contributing resources toward development of one standard, the tire makers said they are hoping to "dramatically accelerate the availability of advanced run-flat systems" for auto makers and consumers.
But Mr. Gibara pointed out just how "rare" this meeting of competing tire executives was, joking: "I don't think we want to make it a weekly occasion."
"Right now, outside this room, across the globe," he continued, "Goodyear's and Michelin's sales and marketing organizations are beating each other's brains out for new business—as they should."
However, "on rare occasions it makes more sense for two very competitive companies to collaborate, when it will serve the best interests of consumers, customers, the industry, and when it ultimately leads to a new element of competitiveness."
Just don't expect more of the same, Mr. Gibara cautioned in answer to a question about whether this is the first of other cooperative projects between the two firms.
He reiterated several times that this was only a technical agreement, and revenues from sales of the run-flat system will accrue separately.
One goal of the new venture is "to share a vision of the market," Mr. Michelin said, adding that "today's technological advancement can't come fast enough without the cooperation of global players."
Goodyear, the world's largest tire maker, first announced in 1992 the development of its EMT technology for a self-supporting tire that fits on conventional wheels. Two years later it was offered as an option on the 1994 Chevrolet Corvette—the first OE fitment of a run-flat. It has since made its way to the aftermarket.
Despite Goodyear's prediction that by 2003 it would move the majority of its capacity toward runflats and incorporate the technology into 70 percent of its tire lines, the company has sold only 500,000 EMTs in the past three years—less than 1 percent of Goodyear's overall tire sales, a spokesman said.
PAX was launched in 1996. Unlike the EMT, it features an integrated tire-wheel assembly. The tire mechanically locks onto a special wheel and includes a run-flat insert that allows the vehicle to continue operating if air pressure is lost. PAX also uses a low-pressure warning system.
A couple of years ago, Michelin also introduced its ZP (zero pressure) tire for conventional wheels, a run-flat similar to the EMT. But a spokesman acknowledged that ZP sales volumes in the replacement market have been small and the tire has not been very successful. Consequently, Michelin is evaluating the ZP's future, though he said the tire—OE on some Lincolns—will continue to exist "in the short term."
Because the "run-flat abilities" of Goodyear's and Michelin's systems are so different, a Goodyear spokesman said the companies are studying how they might be integrated, adding that Goodyear will continue to market its EMT for "as long as there are customers who want a run-flat with a conventional wheel."
As with many new technologies, a jointly designed run-flat likely will begin showing up as original equipment on luxury cars before eventually making its way to more mainstream vehicles. But its widespread acceptance—and global sales—will hinge, in part, on the willingness of OE manufacturers to change to the new standard, according to Michelin and Goodyear.
One drawback for both tire makers has been the fact many consumers aren't willing to spend the estimated 20 percent more for a run-flat vs. the cost of standard radial tires.
Mr. Michelin predicted a PAX-based system could be available OE as soon as 2001.
To ensure "vigorous competition," the companies said they "will continue to compete in the sale of run-flat systems and the provision of aftermarket services."