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February 14, 2005 01:00 AM

On track to see black again

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    Goodyear's North American Tire (NAT) operation is on track to finish 2004 in the black-the first time since 2001 that it will cap a year on the profit side of the ledger, the unit's top executive said.

    While he was unable to comment on year-end results until they are officially released, Jon Rich, NAT president, told more than 1,600 dealers attending Goodyear's 2005 Dealer Conference in Grapevine that operating earnings in North America had more than doubled through the first nine months of 2004.

    The company's stock price also performed well during the year, gaining 87 percent, he said.

    For the year, Goodyear gained market share in North America, with the Goodyear brand growing three times the industry average for passenger and light truck tires, Mr. Rich said. That was led by the success of the Assurance lines the Akron-based company launched last year.

    And despite industry speculation regarding the company's private brand business and a 15-percent increase in the importation of Asian tires, Goodyear gained share in private and associate brands during the year, he claimed.

    Still, he described 2004 as a difficult year in terms of rising raw materials prices and costs of things like healthcare premiums and transportation.

    Although Goodyear raised prices, ``at the end of the day, we did not recover all of the cost of raw materials with price,'' Mr. Rich said.

    So how did the company improve its earnings? A lot came through productivity measures, such as closing the tire maker's Huntsville, Ala., plant, reducing the labor force, as well as implementing other costs productivity initiatives like Six Sigma, Mr. Rich said.

    Citing several of Chairman and CEO Robert Keegan's ``Seven Reasons to Believe'' in Goodyear, Mr. Rich said the company will continue to introduce new products and rebuild the brand.

    ``New products are going to be the lifeblood of the new Goodyear,'' he said, adding that the company will introduce more tires at the meeting in Grapevine than Goodyear has ever done at a dealer conference.

    Goodyear also continued to invest heavily in 2004 to insure that ``every tire we produce meets the highest standards of quality,'' Mr. Rich said.

    Since embarking on a quality improvement initiative in 2003, Goodyear has seen its vibration adjustments decline by 30 percent, said Joe Gingo, chief technology officer and executive vice president, quality systems.

    While this quality improvement effort remains a work in progress, the tire maker now is performing force variation screening on 100 percent of its tires and is screening 60 percent of its tires for dynamic balance and about 65 percent for radial run out.

    By year-end 2006, all Goodyear tires will undergo such testing, Mr. Gingo said, adding that the company's newest products, including the Assurance lines, already are screened to these parameters.

    Calling independent tire dealers the company's most important customer, Mr. Rich said Goodyear is taking steps to control unauthorized wholesaling and distribution of tires. Going forward, he said Goodyear will look for ways to encourage dealers to sell out to customers, rather than having its programs focused mainly on dealers buying large volumes from the company.

    ``Our goal is to give you the best tires in the industry, with a value proposition that keeps the playing field level and helps you beat our competitors,'' he said.

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