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Published on February 13, 2006

No time yet to rest for Goodyear

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Opinion

AKRON (Feb. 13, 2006) — At Goodyear's recent dealer meeting in Nashville, Tenn., Chairman and CEO Robert Keegan said he and his management team plan to sit back and relish the accomplishments they've made over the past three years in turning around the company's North American Tire (NAT) business.


“We want to do that for about a day, maybe a day and a half,” he joked. Then it's on to the next phase of the company's turnaround plan.


Mr. Keegan and his team have many reasons to feel good about their accomplishments of the past three years. The company has been in the black since mid-2004, and—judging from comments during the meeting—dealer confidence in the tire maker is soaring.


Since 2003, Goodyear has gone from fighting rumors of its impending bankruptcy and hearing vocal dealer criticisms to enjoying widespread confidence shown best in the roaring standing ovation Mr. Keegan received from dealers.


But as Mr. Keegan and NAT President Jon Rich rightly pointed out, there is little time to rest.


The company still needs to expand profitability in North America. Merely staying in the black is no longer good enough. It must find ways to cut costs, improve operations and generate exciting new products to keep the numbers steadily going up.


Challenges—especially raw material prices—won't let up. And the demands of investors won't either, as evidenced by the nearly 17-percent drop in Goodyear's stock price after its recent warning that higher-than-expected raw material increases in 2005's fourth quarter will hold NAT segment operating income roughly flat compared to the prior period.


Debt of more than $5 billion and unfunded pension liabilities still must be addressed.


Also, Goodyear executives must stay proactive about keeping dealers satisfied. This goes beyond a promising and upbeat dealer conference. It's an everyday effort involving all of the company's interactions with dealers.


John De Leonibus, a dealer in Hyattsville, Md., told Tire Business he finds it hard to get information about marketing and support programs. The new products convinced the longtime Kelly dealer to add Goodyear tires, but it hasn't been a totally smooth road.


“I believe in it, I want to sell it,” he said. “But to promote it in the marketplace, they're making it a little difficult for me.”


It's understandable that no business will ever be without its share of hiccups and communication miscues. But with darker days in the very recent past, Goodyear can't let seemingly little issues fester.


Still, the tire maker has come a long way in three short years. If executives keep building on the changes and innovations that got them this far, perhaps they can enjoy an entire two days' rest in another three years.

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