Despite all its widely publicized problems in North America last year, Bridgestone Corp. held on to the title of world's largest tire maker, based on fiscal 2000 sales revenue.
However, Bridgestone's claim to the No. 1 ranking is precarious and should probably carry an asterisk-``No. 1 by default.'' Bridgestone's spot at the top this time is purely by virtue of the vagaries of global currency traders: Bridgestone's tire sales as reported in yen actually declined, but the swing in the yen-dollar exchange rate throughout 2000 resulted in the Japanese company's sales being higher.
As a result, both Group Michelin and Goodyear have legitimate claims on the No. 1 ranking as well.
After finishing in a virtual tie with Bridgestone for the 1999 crown, Michelin increased sales last year-as reported in euros-by nearly 13 percent, but found its tire sales in dollars lower than in 1999 as the euro-dollar exchange rate shifted by 15.5 percent.
Goodyear lays claim to the top spot based on production. The company said it sold 223.3 million units in fiscal 2000, or 23 percent of the estimated world market of 892 million units. This is more than either Bridgestone or Michelin, by Goodyear's own calculations.
Neither competitor publishes annual production statistics, although Michelin claims 844,000 units of daily capacity and said its production volume increased by nearly 4.5 percent over 1999.
For 2001, the picture does not get any clearer. Bridgestone's six-month sales are 3.7 percent ahead of 2000-again aided by a weakening yen-dollar exchange rate-while Michelin's sales rose 4.5 percent and Goodyear's slipped 3.8 percent.
The yen-dollar and euro-dollar exchange rates skewed nearly 9 and 11 percent, respectively, in the first six months of 2001. In deriving its annual rankings, Tire Business uses annual averaged exchange rates.
Michelin has made two strategic moves that could add up to $100 million in new revenues to 2001 sales: the creation of Michelin Shanghai Warrior Tire Co. Ltd. in China and the purchase of two tire plants and retreading and retail assets in Romania from Tofan Grup.
Overall, the top dozen tire makers on TB's global ranking remained the same as the year before.
The most obvious change is the disappearance of Japan's Ohtsu Tire & Rubber Co. Ltd., whose results are now combined with those of Sumitomo Rubber Industries Ltd. after Sumitomo increased its ownership of Ohtsu to a majority stake. This change-which adds more than $750 million to Sumitomo's total-allowed the firm to hang on to the No. 5 spot.
Pirelli S.p.A., the perennial No. 6 producer, has dealt a wild card into the rankings game for 2001 and beyond: It intends to sell its truck tire business, worth nearly $750 million in global sales, in the coming 18 months.
Analysts covering the industry point to any of the top four tire makers-Bridgestone, Michelin, Goodyear or Continental-as the most likely candidates to purchase these assets, although each has question marks about its ability or need to make such an acquisition. The Pirelli truck tire business is based almost entirely in Europe and South America.
>From a profitability standpoint, Cooper Tire & Rubber Co.'s tire division led the pack, with a 10.2 percent operating profits/sales ratio. Bridgestone's tire operations, despite suffering a 38.8-percent drop in operating earnings, reported a 7.9-percent earnings ratio, slightly better than Sumitomo's tire operations' 7.7 percent and Michelin's 7.4 percent.
For perspective, the major tire makers' operating ratios last year were lower than their averages for the previous three years.
On a net profit basis, only Michelin and Toyo Tire & Rubber Co. Ltd. reported earnings improvements last year over 1999. All the rest were either down by double-digits or in the red.
Capital expenditures dropped at four of the 12 largest tire makers in 2000, with spending among these firms averaging 6.1 percent in a range from 3.5 percent at Goodyear's tire division to 16.9 percent at Hankook.
Investment in research and development grew at eight of the 12 companies profiled. The average spending on R&D among the major tire makers was 3.3 percent, with Kumho at 1.3 percent and Michelin and Conti at 4.1 percent.
The global tire market grew less than 1 percent in 2000 over 1999, to $69.6 billion. The ``Big 3'' tire makers account for 57 percent of the global market, up slightly from 55.5 percent a year earlier. The 10 largest tire makers represent 81.7 percent, up from 80.8 percent in 1999.
Of the total, about 60 percent is estimated to come from passenger and light truck tires, with medium/heavy truck tires accounting for slightly more than one-quarter, according to data from the Global Market for Tyres: Forecasts to 2005, a study published earlier this year by Just-Auto.Com.
Considered geographically, North America accounts for slightly more than a third and Europe slightly less than a third of the global market, according to the study. Asia represents about a fourth, with Japan accounting for nearly half of Asia.
The 75 companies in this year's ranking hail from 30 countries. China is the base of operations for 16 firms, followed by eight from India, seven from the U.S., and five each from Japan and Taiwan, four from Russia and three from South Korea.
New to the rankings this year are: China's Hangzhou Zhongce Rubber Co. Ltd. at No. 26 and Double Happiness Tyre Industries Corp. Ltd. at No. 68; Egypt's Transport & Engineering Co. at No. 66; and Iran's Iran Tire Mfg. Co. at No. 73. Hangzhou Zhongce and Double Happiness are part of China Enterprises Ltd.-formerly China Tire Holdings Ltd.-but are listed separately this year to reflect their autonomy within the holding structure.
Returning to the rankings are: Dneproshina at No. 45 and Rosava at No. 55 of Ukraine; and Moscow Tyre Works of Russia at No. 73.
Gone from last year's rankings are: China Tire Holdings Ltd., Dong Feng Lion Tyre, Xiamen Rubber Factory and Weida (Wuxi) Rubber Group Co. Ltd., all of China; Malaysia's Silverstone Tyre & Rubber Co. Sdn. Bhd. Ltd.; and General Tire & Rubber Co. of Morocco. The Chinese companies and Silverstone were dropped for lack of updated sales data, while General Tire Morocco's 2000 sales of $35.7 million fell below the Top 75 threshold.