In many ways, 2002 was a year of continuation for the tire industry as many of the news events that began a year or two earlier-tire recalls, 9-11 and a faltering economy-remained to impact dealers and manufacturers alike.
It was a momentous year in which the Tire Association of North America and the International Tire & Rubber Association completed their historic merger into the Tire Industry Association, after years of informal and formal talks aimed at combining the groups.
But it also was a year where the weak economy ate into companies' profits and caused some to close or file for Chapter 11 bankruptcy protection.
The blockbuster event undoubtedly came in April when Penske Auto Centers Inc. shut down all 562 of its nationwide outlets after initially shuttering 63 locations in March.
The closing came in response to news that Kmart Corp. had filed for Chapter 11 bankruptcy protection, although the economic fallout from the Sept. 11 attacks as well as Penske Auto Centers' failure to turn a profit in seven years also played a role in the dealership's departure.
As a result, Scottsdale, Ariz.-based Discount Tire Co. became North America's largest independent tire dealership with 500 company-owned outlets.
Performance Management Inc.'s attempts to turn around Winston Tire Co., California's largest tire retailer, led to a Chapter 11 filing in January 2002 and Goodyear's taking over the retail chain's assets in October.
The struggling chain's 97 stores-once owned by the former Heafner Tire Group (now called American Tire Distributors)-either will be converted into Just Tires stores, closed or sold to third parties.
Winston Tire President Ron Vines said he hopes to keep the Winston name alive on a handful of stores.
Economic troubles even cropped up in paradise, as Honolulu-based Lex Brodie's Tire Co. was forced into foreclosure and later purchased by Finova Mezzanine Capital, a subsidiary of Scottsdale, Ariz.-based Finova Group Inc.
Then-owner John Mayo had tried to expand the 41-year-old dealership by buying 25 gas stations but, when the deal failed, found himself financially overextended. Finova, one of his dealership's creditors, then foreclosed to protect its interests.
In November, Ray Carr Tires Inc., a commercial tire dealer and retreader in Harrisonburg, Va., closed some of its locations and was negotiating the sale of some of its assets.
The company said it plans to continue strictly as a wholesaler.
This year also saw struggles for some tire manufacturers.
Continental Tire North America Inc. sustained losses through the first nine months of the year and was hit with costs of $19.6 million related to a recall of 596,610 tires.
Goodyear posted a net loss of $600,000 for the first nine months of 2002 as worldwide sales fell 3.3 percent. The Akron tire maker's stock plunged below the $10 mark in September, its worst performance in more than a decade.
Goodyear's financial health and loss of North American market share prompted some changes in leadership and policy. Chairman Samir Gibara announced he was stepping down as chief executive officer in favor of President Robert Keegan, with the change to take effect Jan. 1, 2003.
Changes also abounded at its North American Tire unit, where President John Polhemus assumed full responsibility for the consumer tire business, then announced he would retire Dec. 1.
Jonathan D. Rich, president of Goodyear Chemical, succeeded Mr. Polhemus.
To correct some of its supply and market share problems, Goodyear launched G3 Xpress, a program that offers smaller dealerships more competitive pricing on passenger and light truck tires and faster delivery through the use of independent wholesalers.
In contrast, Bridgestone/Firestone bounced back from recall mayhem, posting first-half operating earnings of $54 million and a 12-percent jump in sales.
Much of BFS's turnaround is attributed to its independent dealers who rallied around the tire maker, as well as to the leadership of Chairman John Lampe and John Gamauf, vice president of consumer tire sales.
BFS closed its Decatur, Ill., tire plant to bring supply in line with demand and cut costs. It also invested in new products and backed those with promotions and advertising.
Mr. Gamauf, in turn, toured the country with Mario Andretti, speaking to more than 4,000 dealers and reinforcing their support for the Firestone brand. Their efforts helped BFS gain more dealers and revise its 2002 earnings outlook upward.
Meanwhile, Purcell Tire & Rubber Co.'s Bob and Juanita Purcell, recognizing that their employees have worked hard to build Purcell Tire, sold the Potosi, Mo.-based company to them through an Employee Stock Ownership Plan (ESOP). Mr. Purcell continues as president and Mrs. Purcell executive vice president of the retail/commercial dealership, which has 67 outlets in 38 states.
In September Hoosier Racing Tire Corp. announced it was discontinuing its Hoosier brand passenger and light truck tire line due to dwindling margins and a general contraction of tire lines within the industry.
Litigation also continued to rattle many tire companies as both Cooper Tire & Rubber Co. and Bridgestone/Firestone were hit with class-action lawsuits.
Michelin North America Inc. and Bandag Inc. settled their mutual lawsuits against each other concerning unfair competitive practices in the retread market.
Michelin also dropped a suit alleging Bridgestone/Firestone conspired with Bandag to hinder Michelin's growth in the market.
Neither Bandag nor Michelin released many details, but both companies agreed to drop non-compete obligations on their franchisees. They also agreed to allow franchisees more flexibility in handling the competitors' retread products.
Joey Roland, owner of Discount Tire and Parts Inc. in Jasper, Ga., filed suit against Cheng Shin Rubber USA Inc. for alleged price discrimination, breach of contract and fraud.
No depositions have been held yet in that case.