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January 22, 2002 01:00 AM

Run-flat rivals welcome the competition

Miles Moore
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    TOKYO (Jan. 22, 2002)—Rivals in run-flat tire technology are outwardly calm about the plans of Bridgestone Corp. and Continental A.G. to develop global standards together for run-flat tire systems.

    “We are delighted to see that others in the industry are following our leads and working together to move tire technology forward as quickly as possible,” said Tom Chubb, vice president of new business development for Michelin Americas Automotive Division. Michelin introduced its PAV run-flat system—now called the PAX system—in 1996, and has long-standing cooperative agreements with Goodyear and Pirelli S.p.A. to develop and globalize the PAX technology.

    At least one analyst, however, thinks Bridgestone and Conti's entry into the run-flat race could hamper development of universal run-flat standards.

    Conti and Bridgestone announced the deal at a Jan. 22 press conference in Tokyo, the day after the pact was signed. “The two companies…will join forces to provide vehicle manufacturers and consumers with advanced run-flat tire systems for passenger cars and light trucks,” according to a press release issued by Bridgestone's U.S. subsidiary, Bridgestone/Firestone.

    Under the agreement, the Japanese and German tire makers will continue to develop and market run-flat systems independently, but exchange information about each other's technologies. Bridgestone's technology is called the Self-Supporting Run-flat Tire, or SSR, while Conti's is the Conti Safety Ring (CSR) run-flat systems.

    The two companies will release more details of their agreement and exhibit their run-flat products at the Geneva Auto Show in early March.

    At the news conference, Bridgestone said it made 100,000 run-flat tires at its plant at Saga Prefecture on the island of Kyushu, but planned to increase that number to 1.5 million by 2005.

    “Bridgestone and Continental are industry leaders in run-flat technology,” said John T. Lampe, BFS president, chairman and CEO, in the BFS press release. “By combining each company's strengths, the availability of these systems will increase and, with it, customer choice. This will be a significant benefit to drivers around the globe.”

    Conti and Bridgestone's announcement came nearly three years after Pirelli signed on in 1999 to team with Michelin on the PAX project. Goodyear and Michelin came to an agreement the following year to create a Global Run-flat Systems Research, Development & Technology joint venture.

    Under the agreement, Michelin licensed PAX technology to Goodyear while Goodyear licensed Michelin its Extended Mobility Tire or EMT technology and tire pressure monitoring patents.

    Michelin's Mr. Chubb said he did not expect Bridgestone and Conti's run-flat joint venture to affect his company's project at all. “We believe the PAX system is the future of the tire industry,” he said. “Zero-pressure mobility is just one aspect of the PAX system. We would welcome all the world's tire makers to join those of us who are already realizing its benefits.”

    A Goodyear spokesman noted his company was the first to receive an original equipment fitment with a run-flat tire, on the Chevrolet Corvette. The Goodyear run-flat became an option on the Corvette in 1994 and standard equipment in 1997.

    “Since they're competitors, I can't honestly say we wish them well,” the spokesman said about the Bridgestone-Conti deal. “It appears to be something they worked out between themselves, and without knowing what they have, it's difficult to comment.”

    At the Frankfurt Auto Show last September, Goodyear Chairman and CEO Sam Gibara announced that Goodyear had become the world leader in run-flat tires, with nearly 50 original equipment fitments among eight major auto makers.

    Efraim Levy, an analyst with Standard & Poor's Corp. who follows Goodyear, called the Bridgestone-Conti agreement “a setback” in terms of creating industry standards for run-flat tires.

    “Goodyear and Michelin agreed to a standard, and now it looks like there will be a rival standard,” Mr. Levy said. “Either there will be some wasted effort, or else one of the standards won't be picked. The auto makers don't want to choose between the standards; they want a universal standard.”

    Besides Goodyear and Pirelli, Michelin has included some non-tire manufacturers in the PAX project. Among these is Dow Chemical Corp., which signed an agreement in March to provide Michelin with a polyurethane-based inner support wheel for the PAX integrated tire/wheel system.

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