AKRON (March 14, 2005) — Give Morry Taylor credit. Like the mythical Phoenix rising from the ashes, the flamboyant president of Titan International Inc. has resurrected the company's financial fortunes and positioned it for long-term growth with the planned acquisition of Goodyear's farm tire operations.
What a difference a couple of years make.
After losing money the past three years, Quincy, Ill.-based Titan, parent of Titan Tire Corp., returned to the black in fiscal 2004, earning $11.1 million as sales grew 3.8 percent to $510.6 million. This follows a loss of $36.7 million the year before.
Then, a few days after reporting its year-end results, Mr. Taylor confirmed rumors that Titan was buying Goodyear's North American farm tire unit.
That $100 million deal, which will add roughly $225 million to Titan's annual revenues, includes Goodyear's farm tire plant in Freeport, Ill., as well as the rights to make and sell Goodyear-brand farm tires for the North American market. Goodyear will continue to make and sell farm tires overseas.
The agreement appears to be a good one for both firms.
For Goodyear, it allows the company to shed a non-strategic, unprofitable operation, while earning royalties from Titan via a licensing agreement. Goodyear also gets much needed cash to reduce debt and is no longer burdened with having to support a money-losing operation.
In addition, the transaction effectively removes at least 725 jobs from its payroll, although Goodyear has agreed to cover some pension and retiree costs.
For Titan, the acquisition will strengthen its position in North America and double its estimated farm tire sales. It also will give the company a second brand to sell and will increase the number of sizes and tire types it offers.
Just as importantly, it gives Titan a boost in prestige as the company will be able to offer one of the best known and most respected brand names in the North American agricultural marketplace.
Still, for all the positives this purchase brings, Mr. Taylor will have his work cut out for him to make it work.
First, he must come to terms with the United Steelworkers of America Local 745 at the Freeport plant. After Titan's unsteady relationship with the union in past dealings—which include the longest labor strike in tire industry history—that is no sure thing.
Mr. Taylor also must find a way to turn around a business that has been losing money and to integrate the Goodyear farm tire brand into his company's own sales structure. That means making sure it has a distribution system sufficient in size.
Still, we wouldn't bet against Mr. Taylor overcoming all of these obstacles. After all, he's proved time and again that he can prevail over adversity.