A lively tire industry
Things in the tire industry also were quite interesting and lively this year, with several tire companies making notable news.
Goodyear had a most challenging year. In efforts to turn around its monumental losses and falling stock prices, Sam Gibara, Goodyear's board chairman, retired and was replaced by CEO Robert Keegan. Amid whispers of the possibility of bankruptcy for the monolith of the U.S. tire industry, the company began reorganizing itself, cutting costs and improving product mix and margins.
Its turnaround effort is aimed at saving $1 billion to $1.5 billion by 2005. A major hurdle the company overcame was signing a contract with the United Steelworkers of America (USWA)-a pact the company expects will yield more than $1 billion in cost savings and additional returns from productivity gains for Goodyear's beleaguered North American Tire unit over the contract's three-year life.
Despite the fact that by the end of 2003 Goodyear will have 6,000 fewer employees worldwide than at the end of 2002, two fewer plants and an 8-percent increase in global revenue per tire, increases in raw material prices-which have grown about 8 percent-have made the road to a financial turnaround bumpy and difficult as losses continue to mount.
Goodyear posted a net loss of $332.4 million for the first nine months of 2003. The company also is restating its last five years of financial results after discovering errors in its inter-company billing and its computerized accounting system. That decreased net income over the period by $84.7 million.
Bridgestone/Firestone's North American unit is strong and getting stronger as it continued to recover from the impacts of the Firestone tire recalls. It had a very eventful year. The company moved into a new headquarters building in Nashville, Tenn., opened new distribution centers outside of Dallas and in Tennessee, and restructured its management team in this year.
Bridgestone Corp. suffered a significant loss due to a fire at its Tochigi, Japan, plant, which could cost the firm as much as $357 million. This year, even with rising raw materials costs, Bridgestone Americas Holding Inc. CEO John Lampe forecasts a net profit of $60 million and operating income of $130 million.
One concern, however, is that contract talks with the USWA have broken down and no further negotiations are planned this year.
Bandag Inc. continued to divest portions of its Tire Distribution Systems (TDS) commercial dealership subsidiary. In 2003 the Muscatine, Iowa-based company sold 25 of its commercial tire outlets and 12 retread plants in Arkansas, Louisiana, Mississippi and Tennessee-which accounted for 25 percent of TDS' annual sales.
The buyers were Southern Tire Mart of Columbia, Miss., Trans American Holdings, Ft. Smith, Ark., and Best One Tire/Zurcher Tire Group in Monroe, Ind.
Marangoni Tread North America signed two more franchisees in 2003, bringing its total to 12. The new dealers are Schrader's Tire & Oil in Toledo, Ohio, and Blevins Tire & Recapping of Bristol, Va.
And Michelin North America Inc. opened its 14th retread plant, in Nashville, Tenn.
Due to rising raw material prices which have affected all tire manufacturers, Bridgestone/Firestone, Continental Tire North America Inc., Goodyear, Hankook Tire America Corp., Kumho Tire USA Inc., Michelin North America Inc., and Yokohama Tire Corp. all announced they will be raising medium truck tire prices 2-6 percent by early 2004.
It's interesting to note that according to the U.S. Department of Labor's Bureau of Labor Statistics, the Producer Price Index for truck and bus tires increased 2.8 percent between January and October of this year.
The Tire Industry Association (TIA) made headlines in its first full year as an association. TIA began the year with the selection of a new executive vice president, Roy Littlefield, after Ross Kogel resigned to return to his family's tire business in Michigan. The association moved its office to Bowie, Md., from Reston, Va., and personnel were hired to help increase membership.
This past summer the new Today's Tire Industry magazine consolidated four old ITRA and TANA publications into one. The result is a sleek, informative bi-monthly magazine that provides the tire industry with information about tire retailing, commercial truck tire, retreading and tire recycling all in one place.
TIA then introduced to the retail industry its Basic Automotive Tire Service (ATS) Program, designed to provide new hires and experienced technicians with some form of documented training. So far, ATS has received rave reviews from every dealer who has seen it. That includes American Car Care Centers Inc., which is paying for each of its 1,100 member stores to belong to TIA so they can gain access to this program.
The most talked about development, however, has been what many refer to as the industry checkoff program. That would generate funds for programs that support the collective tire industry. Actually, TIA refers to this as the National Tire Safety, Research and Education Alliance Act. (See related story above.)
This program has to be approved by Congress in order for the industry to work together without violating antirust regulations. It would allow a new organization, the Tire Industry Alliance, to be created to collect a fee on every new replacement tire sold in the U.S. The money would be used to enhance consumer education, employee safety and training and further industry research and development.
In the government area, the National Highway Traffic Safety Administration (NHTSA) concluded its first round of testing several hundred commercial truck tires and retreads. There will be a second round of testing as the Bush administration prepares to develop new test procedures to replace FMVSS119, which specifies requirements for commercial tires.
NHTSA's ruling on tire pressure warning systems for passenger and light truck tires was overturned in court in August. This sets back creation of a ruling on commercial truck tire pressure monitoring systems until the rules for lighter vehicles are in place.
Whew! I'd say we packed quite a bit into 2003! No wonder my head is spinning and I'm wondering where the year went. I guess it's also because, like Father Time, I'm getting older, too.
Yeah, when I look in the mirror I see it's true. Time may be a great healer, but it's a lousy beautician.