AKRON (July 27, 2000) — Surprised by the sudden and unexpected departure of two of Goodyear´s top North American Tire executives, tire dealers say they´re pondering whether the moves portend changes in direction for the company.
Securities analysts who follow the company are wondering much the same thing, after watching the recent decline of Goodyear stock, which has been selling at close to its lowest price-level in nearly a decade.
Goodyear announced a series of management changes July 14, in the wake of what it called the "retirement" of 58-year-old William J. Sharp, president of North American Tire, and the simultaneous reassignment of that unit´s vice president of sales and marketing, Marco V. Molinari.
Mr. Sharp, who previously gave no indication he was planning to leave, was succeeded by John C. Polhemus, who had been president of Goodyear´s Latin American region.
Mr. Polhemus, 56, has been with Goodyear 31 years and held posts in Europe, Asia and the Philippines. He had headed the company´s Latin American operations since July 1999.
Succeeding Mr. Polhemus as head of the company´s Latin American region was Chris W. Clark, 48, formerly managing director of Goodyear Brazil.
Eduardo Fortunato, previously director of sales and marketing for Latin America, is filling Mr. Clark´s vacated post in Brazil.
Mr. Molinari, meanwhile, has been named vice president, global marketing projects — a new position. Jim M. Vogel, formerly director of corporate accounts, becomes vice president of marketing and corporate accounts.
Tire Business contacted a number of dealers soon after the announcement, and most said they were surprised by the departure and replacement of Messrs. Sharp and Molinari, both of whom dealers said were well regarded.
More than one dealer told of having spoken recently with Mr. Sharp during a Goodyear-sponsored Mediterranean cruise, where he gave no hint of leaving and talked of the company´s progress in solving its previous tire back-order problem and its plans for the future.
One of those who accompanied Mr. Sharp on the Goodyear incentive cruise was Pam Fitzgerald, president of Gatto´s Tire & Auto Service, Melbourne, Fla., and a past president of the Tire Association of North America.
"If he knew anything (at that time) I´d be surprised," Ms. Fitzgerald said. "We chatted about the changes they´d made in manufacturing and how well they had been received. He said there was more to come. ... I don´t know (the reason for Mr. Sharp´s leaving) — it´s a mystery to me."
Mark Teuscher, vice president of Viall Tire & Auto Service in Akron, said Goodyear´s back-order situation had greatly improved under Mr. Sharp´s leadership.
"That´s the reason I was surprised to see some of the changes," Mr. Teuscher said. "It seemed like maybe they were on the right path as far as filling the pipeline and some of the other things they´ve been doing."
Mr. Teuscher said he and other Goodyear dealers received a faxed letter July 14 from Mr. Polhemus, who introduced himself and essentially reassured them, saying, in effect: "Don´t worry. This management change isn´t going to affect you."
"I wasn´t worried," Mr. Teuscher said.
John Turk, president and CEO of Conrad´s Total Car Care and Tire Centers in Cleveland, said the company-sponsored cruise was his first meeting with Mr. Sharp, who had told him and other dealers on board "he wanted to get to know us better so he could be of greater service."
Mr. Turk, whose dealership has 26 stores, said that while he didn´t know Mr. Polhemus, "I am very excited he´s coming in." The company´s direction could stand improvement from the dealer´s point of view, he said.
For her part, Ms. Fitzgerald said there are at least three topics she´d like to discuss with Mr. Polhemus, after he gets settled in his new job: the G3 integration of the Goodyear, Kelly and Dunlop brands; the positioning of the company´s product lines; and the Gemini automotive service program.
"It will be interesting to see if things are going to change," she said.
Veteran dealer Roland Lesieur of Maynard & Lesieur Inc. in Nashua, N.H., said changes are needed in some areas of the company´s operations. He said Goodyear´s attempt to organize its three flag brands into a multi-brand portfolio known as G3 has progressed too slowly.
A longtime Kelly and Monarch dealer, Mr. Lesieur said he´s been wanting to add Goodyear and Dunlop tire lines to his company´s wholesale and retail offerings. But he´s been frustrated by the lack of action on the part of Goodyear, which has been implementing the program market by market.
"We wanted (to be able to purchase) Dunlop direct from them, and that didn´t happen. We also wanted some Goodyear merchandise, and that didn´t happen. They have done absolutely nothing about merging the brands together. If they´re going to do it, they better start moving a lot faster than they are."
Nick Mitsos, president of 35-outlet Mountain View Tire Group, based in Rancho Cucamonga, Calif., and a member of Goodyear´s dealer advisory council, said he has "no idea" what precipitated the reshuffling of Goodyear´s North American Tire management.
Mr. Mitsos said he believes Mr. Sharp and Mr. Molinari "laid a good foundation" in the case of Goodyear´s still-evolving G3 and Gemini programs.
The fact that Mr. Polhemus´ background includes retail experience — something that´s been missing in Goodyear´s top North American Tire post for several years — should be a positive factor for tire dealers, Mr. Mitsos said.
"I hope, with this new appointment, there will be stability (in the company´s management), because that´s what we need," he said.
Randall L. Clark, chairman of Dunn Tire Corp. in Buffalo, N.Y., and former chairman and CEO of Dunlop Tire Corp., said he, too, was surprised by the management changes at Goodyear but had been reassured via phone by Mr. Polhemus that Goodyear´s programs and policies would continue as before.
"Yes, we would like to see them bring the brands into closer coordination," Mr. Clark said. "But (they´re) dealing with the integration of what up to a couple of years ago were separate companies. Even Kelly was run as a separate corporation."
Michelin North America had similar growing pains in integrating its Michelin, Goodrich, Uniroyal and associate brands into such a portfolio, Mr. Clark said.
Securities analysts told Tire Business they doubted the management shakeup would have much effect on the depressed price of Goodyear´s stock.
Rod Lache, an analyst for Deutsche Banc Alex. Brown in New York, said the stock´s price reflects a lack of investor confidence in Goodyear caused by the company´s missing market expectations.
On more than one occasion, he said, Goodyear management led investors to expect financial improvement — only to disappoint them in the end.
While tire fill rates have improved in recent months, the company´s problems go deeper, Mr. Lache said.
A year ago, Goodyear was operating with too much inventory only to wind up the year without enough. Meanwhile, he said, "they´re coming in with earnings that are all over the map."
There obviously are control issues, "issues that go deeper and higher (on the management totem pole) than Bill Sharp," Mr. Lache said.
Mr. Lache´s current recommendation on Goodyear shares is "market perform," meaning "hold."
Analyst Efraim Levy of S&P Equity Group in New York likewise doesn´t expect much improvement in Goodyear´s share price resulting from the management changes.
"I don´t think it´s going to make a big difference," Mr. Levy said. There are larger issues that Goodyear needs to deal with, such as its failure to execute its announced plans and inability to make recently enacted price increases stick in the heat of market competition.
Mr. Levy, who in June changed his recommendation on Goodyear stock from "hold" to "avoid," due to the rising cost of oil-derived raw materials, believes tire-market competition is largely to blame for the stock´s depressed price.
It would help if Goodyear´s competitors enacted similar price increases, but the market environment now is "pretty competitive," he said.
Mr. Levy said Goodyear Chairman and CEO Sam Gibara is on the hot seat as a result. "He´s got his grand plan that he announced a couple of years ago (which included increasing sales from its current $14 billion level to $20 billion by 2003), and he has to show how he´s going to get there. And right now, it´s not looking so good."