ORLANDO, Fla. (Feb. 26, 2004) — Goodyear officials clearly sought to deliver assurance to dealers in more ways than one at this month's dealer meeting in Orlando.
Besides launching the Assurance tire line, executives for the Akron-based tire maker outlined steps taken last year in its turnaround effort to make a case for dealer confidence in the company.
Most importantly, Goodyear executives sought to impress upon dealers that they are fulfilling promises made during a much more tense dealer conference last year.
“I thought it was refreshing,” Dale Pinkerton, owner of Dale Pinkerton Inc. in Butler, Pa., said of the conference. “It was the first time in many, many years that I feel as though a dealer means something to Goodyear.”
Many tire dealers interviewed by Tire Business during the conference expressed similar sentiment, saying they are behind the struggling tire maker and confident of its eventual success.
“In all honesty, I feel from the bottom of my heart that we're back on the right track,” said Mr. Pinkerton, who will celebrate 25 years with Goodyear in August. “I'm again proud to be a Goodyear dealer.”
But while dealers and Goodyear executives alike expressed renewed excitement—partly from the new tire launch and partly from improvements in other areas such as fill rates—virtually no one said the work is done.
“I feel the effort overall was good in 2003, but this will be the third time I'll say this: Do not misinterpret my enthusiasm,” Jack Winterton, vice president of replacement tire sales for North American Tire, told dealers. “Do not think for a second that we don't feel we have issues, do not think…we're getting cocky. We are still very, very humble because we know, and you constantly remind us, that we have so much more to do. I am excited, not satisfied. There's a big difference.”
In fact, Jon Rich, president of Goodyear's North American Tire unit, braced dealers for more financial bad news.
The company has yet to report its fourth quarter, year-end 2003 or revised 2002 results. As of Feb. 5, Wall Street expects a loss of $1.33 per share in 2003.
“At the end of the day, the year 2003 will go down as one of the most difficult financially in the history of North American Tire,” he said. “But at the same time, I'm very confident in the steps that we took last year.”
He said the first half of the year brought a 4-percent decline in shipments for all tire makers while the second half was up 5 percent, leaving a net increase of 1 percent. In 2004, shipments are expected to increase 3 percent in the industry, though Mr. Rich thinks it may be higher. Still, headwinds such as rapidly rising raw materials costs also loom on the horizon.
In their speeches, both Mr. Rich and Bob Keegan, chairman and CEO, highlighted several efforts taken on during the year.
Most critically, both executives said, the assembled leadership team shares a singular direction and strategy.
“That has not always been a reality in North American Tire,” Mr. Keegan told dealers. “This is our new reality in North American Tire.”
In 2004, Mr. Keegan said the tire maker will continue efforts among the same seven strategies highlighted last year—promote leadership, “cash is king,” lower the cost structure, leverage distribution, build brand strength, establish product leadership and create an advantaged supply chain.
He noted that the company is not in a narrow cost-cutting frame of mind. “In areas that are important to us, we're investing,” he said.
Mr. Keegan also reiterated Goodyear's renewed emphasis on independent tire dealers.
“Through our period of difficulty in 2003, you continued to believe in us, you continued to be, I would say, our No. 1 asset, so I thank you for that,” he said to applause.
In an analyst's report issued Feb. 10, Saul Ludwig with McDonald Investments Inc. in Cleveland estimated that Goodyear independent dealers sold about 25 million Goodyear, Dunlop and Kelly tires of the estimated 65 million total consumer replacement units the company sold last year in North America.
If the newly found support takes hold, they could spur a 10-percent increase in volume, or 2.5 million tires this year for Goodyear.
“That would indeed be a major positive accomplishment and is an important step towards restoring the division to profitability,” he wrote.
Shawn Long, vice president and COO for Long Tire & Auto Service Centers in Valrico, Fla., a Goodyear Gemini dealership, said this year's meeting was starkly different from last year's, when Mr. Keegan acknowledged several “missteps” by Goodyear in recent years.
“Most people came last year looking for a fight,” he told Tire Business. “This year I think we feel motivated to go back to our businesses and make them happy.”
He added he feels more confident after hearing what Goodyear officials had been up to for the past year, since dealers in the field don't often get such progress reports.
Many dealers remarked to Tire Business that the current leadership team—which includes longtime dealer favorites such as Mr. Winterton—inspires their confidence.
“I really think they're changing the entire trend of the Goodyear company because you have more people in there now in the top management who are orientated to the dealers, and that's what we need,” said Dennis Stowers, president of S&H Tire Sales in Canton, Ga.
Still other dealers said their confidence comes from surviving the good and bad times with Goodyear.
“We have all our eggs in one basket with them,” said Kelly Monthei, general manager of 26-outlet Graham Tire in Worthington, Minn. “We're confident, and we're doing everything we can to get them there.”
As a testament to his confidence in Goodyear, Rick Zimmerman, general manager of Big 4 Tire Distributors Inc. in Pearl River, La., said he added Kelly to his Bridgestone/Firestone lineup three months ago.
“I think they have a good attitude,” he said of Goodyear executives. “I think they have the resources behind them to do it. We wouldn't have taken on the Kelly line if we didn't have confidence they could turn this thing around. We see it as a good opportunity.”