HILTON HEAD, S.C. (Feb. 28, 2003) — A professor from the University of Akron is the latest tire industry observer to project that Goodyear will be unable to escape its current financial problems without seeking Chapter 11 bankruptcy protection, though he gave no timetable in which that might occur.
“I see very little reason for optimism; I think they will go belly-up,” said Dennis Byrne, a UA professor emeritus of economics, speaking Feb. 26 at the Clemson University Tire Industry Conference in Hilton Head. “I don't think they will disappear. It will
be some type of reorganization. They're in for a tough time.”
Mr. Byrne said Goodyear faces a number of problems that all came together at one time to force the situation the tire and rubber company now finds itself in. Those negatives, he said, include: product mix and prices; advertising and product awareness; rising levels of debt and interest costs; imprecise forecasts; poor employee morale; dealer problems; and cost structure.
Saying the company ticked off “everybody at once,” he added: “Everybody is upset at them, including their employees.”
In addition, the firm, while gaining original equipment market share in the U.S., continued to see a decline in its aftermarket passenger and light truck market share. “The company is dominant in OE where there is no profit,” Mr. Byrne said.
Goodyear's cost structure, he added, is high because of such things as legacy costs—especially high pension liabilities—and rising raw material costs. “Ultimately, what will get them as much as anything is the unfunded pension liability,” he predicted.