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Published on August 28, 2006

A stronger Cooper must prevail

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Opinion

AKRON (Aug. 28, 2006) — For years, many in the tire industry questioned whether Cooper Tire & Rubber Co. could survive long term with its focus on North America and the broadline tire business.


Cooper ignored its critics and quietly and steadily recorded solid profits, growing sales and legions of happy, profitable dealers as it became the ninth-largest tire maker in the world.


Now that the Findlay, Ohio-based manufacturer has hit a rough patch financially, it still should continue to ignore its critics and follow through on its current business plan. In the long run it will make it a stronger, more global player.


As it does this, however, management must not be swayed from doing things the Cooper way—a business philosophy that has served the firm well over the years, albeit adapting it to the new tire industry environment.


The fact is, the industry is changing dramatically and Cooper needed to do something dramatic to stay competitive.


Long known as a value tire producer, Cooper in recent years has watched the broadline market erode with the influx of low-cost imports and slipping demand.


With CEO Tom Dattilo's departure earlier this month and Cooper's continuing losses, some question whether the company's strategies—to add to broadline with higher-margin products, to take the Cooper brand to a premium level and to establish a low-cost manufacturing presence in China—were correct or still needed time to blossom.


Dealers contacted by Tire Business seemed torn. They understand the company's need to offset high manufacturing costs yet were disappointed to see it move away from its roots. Some thought the high performance and premium brand push took Cooper's focus off the mark, while others believe the broadline market is vanishing fast and to rely primarily on it could be a huge mistake.


Though it may be an uncomfortable change for dealers used to the “old” Cooper, the company simply can't remain just a broadline supplier—not when the market is moving to larger and higher performance sizes.


With low-cost imports infiltrating the performance segment, that market will become more difficult, too.


To succeed, Cooper needs to continue to spend the marketing dollars to make its flag brand and performance tires more recognizable in the minds of consumers.


At the same time, it must not neglect what it knows best: building quality tires that offer value and profit potential.


The company also should continue efforts to grow in the still huge broadline segment, especially as some other major tire makers exit that business.


Cooper has competed successfully over the years by producing quality products cost effectively with an emphasis on taking care of its tire dealer customers.


It should not lose focus of this as it navigates the future.

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