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Cooper launches new tire, CEO discusses strategy

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PEARSALL, Texas (April 12, 2007) — Following a few years of investment in the high- and ultra-high-performance tire segments, Cooper Tire & Rubber Co. is bringing more attention to its broadline roots to regain a proper balance between the two, the tire maker's new CEO said recently.


Roy Armes, who joined Cooper in January as CEO and president following a 31-year career at Whirlpool Corp., said Cooper spent a lot of time and money trying to catch up in the high-performance segment, but it lost some focus on maintaining competitiveness.


“We're kind of bringing a little bit more attention back to the broadline because it is still a very high volume in the industry and in our business, and we're going to continue to support that,” Mr. Armes said at a March product launch at Cooper's test track in Pearsall. “And at the same time we're going to be supporting any new changes or new market segments that are being developed out there. So we've got to have the right balance.”


The statement is a welcome one to Ray Conkle, Bob Sumerel Tire Co.'s retail operations manager, who also attended the product launch. “That strategy to me is as simple as 'business 101,'” Mr. Conkle told Tire Business in April. “…It's obviously very good he's going to focus on that.”


The new product—the CS4 Touring—was touted as a premium broadline tire aimed at sedans, minivans and crossover vehicles. Mr. Armes said the higher end tire may push the traditional definition of broadline tires.


“For us, we're not going to spend a whole lot of time defining categories,” he said. “We're trying to define what are the market needs out there.”


To get a sense of those needs and Cooper's place in the market, Mr. Armes developed a “90-day plan” to reach out to stakeholders as soon as he started the job.


His plan first involved talking to customers—eventually reaching about 200 dealers through visits and keynote addresses at conferences. “I need to get out,” he said. “I need to understand customers, what's important to them, what's not important to them.”


Mr. Conkle said he had a very favorable impression of the CEO after the product launch. He and other dealers asked Mr. Armes some tough questions and were pleased by his responses, Mr. Conkle added. Cooper products account for about 55 percent of Bob Sumerel's retail tire business. Bob Sumerel Tire's headquarters is in Erlanger, Ky., though Mr. Conkle is based in Columbus, Ohio.


“I can tell you he's as down to earth as anybody I've talked to,” he said. “…He's concerned about relationships with people, which is refreshing.”


Mr. Armes then turned to Cooper employees, reassuring them about the company's direction and evaluating their talent. “I spent a lot of time trying to bring some calm to the organization,” he said.


He also visited with analysts, bankers and rating agencies as well as community leaders from Cooper's hometown of Findlay, Ohio.


He even went to China and visited Cooper's operations there in addition to visits to its North American facilities.


The last detail—finding a new house and moving—also somehow got completed.


“That was kind of my 90-day plan that was complete in 70 days, 60 days almost,” Mr. Armes said, laughing. “But it's helped me to get up to speed very quickly.”


Though he's new to the tire industry, Mr. Armes said he's learned that many of the issues facing tire makers are, at their heart, similar to those facing many other industries, including appliances.


“I would still say today that the appliance industry prepared me well for the tire industry,” he said. “Even though they're different products, the type of things we need in Cooper are you've got to grow profit, you've got to continually improve your quality, you've got to be cost-competitive, you've got to innovate your product and you've got to have people to support all of that…. I think those are pretty similar in a lot of industries today.”


In his tenure at Whirlpool, Mr. Armes served in a wide variety of positions, including engineering, procurement, operations, sales and marketing. That broad base of experience will serve him well at the tire maker, he added.


That's not to discount some surprises the tire industry had up its sleeve. Mr. Armes hadn't expected the support and loyalty among tire dealers.


“It's an important element, one that I did not sense was there before,” he said.


He also got a crash course in the manufacture of a tire, demonstrating a level of complexity that he didn't know about before. The competitiveness of the industry also led him to reconsider his feelings from his appliance days.


“I certainly wouldn't have expected any industry to be so competitive as appliances,” he said, “but tires are.”


He quickly pointed out, however, that he's confident Cooper can do well in the environment.


He's pleased with the firm's Chinese operations—both the acquired Chengshan plants and the joint venture plant with Kenda Rubber Industrial Co. Ltd.—but he'd like to see the strategy accelerated.


His plan involves getting the Kenda joint venture plant running faster than originally planned as well as establishing a distribution network in China for the Cooper brand in the domestic market.


“So far we're well on track with that, but we're looking for ways we can accelerate that,” Mr. Armes said.


Analysts in the past had speculated that Cooper may need to close a North American plant, but Mr. Armes said no decisions have been made—the firm did cut employment and output at its Texarkana, Texas, plant as part of a realignment of manufacturing resources—and he doesn't expect to make any moves in the short or even perhaps medium term.


“We're going to continue to look at that and how we can leverage our footprint globally to maximize and optimize the product that we can get out of those operations,” he told Tire Business. “…Every operation has to continue to be competitive for us to continue to source product there.”


Asked about the possibility of more joint venture plants in China, Mr. Armes said he's leaving his options open there as well.


“Right now what we'll try to do is focus on the core things that we do best and get that back in line before really pursuing other strategic options at this point,” he said. “But we're leaving our options open at this stage.”


Cooper will still be committed to the private label business, Mr. Armes added, though the firm's long-term position will depend on what its private brand customers do.


“As long as our customers are requiring those products, we're going to try to continue to fulfill those needs,” he said.

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