KISSIMMEE, Fla.—Given the economic tailspin of the past 18 months, you'd think the atmosphere at Goodyear's annual dealer conference would have been like that of a slow-leaking tire—not quite flat but not that great either.
Instead of spending a lot of time talking about how tough business has been, the tire maker's executives focused on the positive, noting that Goodyear and its dealers not only survived the past year but are well positioned to grow and prosper in the future.
“I believe we took advantage of the crisis and are better for it,” said Rich Kramer, Goodyear's chief operating officer, in his kickoff address to more than 1,000 dealership personnel gathered at the Gaylord Palms Resort & Convention Center Jan. 24-27 in Kissimmee.
After meeting the challenges of last year, “is there anything you can't face?” he asked. “Is there anything you can't handle? Probably not.”
Mr. Kramer suggested that the changes dealers made in their dealerships during the past year likely will benefit them in the long run. The recession, he said, drove them to focus on controlling costs, streamline inventory, create new ways of communicating with customers and allow employees the opportunity to grow and gain responsibilities.
Goodyear, at the same time, was doing much the same, he said.
During 2009, the company launched 20 products across all brands and segments, including the Assurance Fuel Max passenger tire, which he called an award-winning product and a consumer favorite. “Our timing couldn't have been better,” he said.
Goodyear also invested in people—“continuing to build our team,” as he put it—simplified its product and brand portfolio, managed its inventory and supply chain to generate cash to reinvest in the business and made difficult decisions around cost.
“All of these things weren't just the right things to do in extreme circumstances last year,” he said.
“They were the right things to do for the future of our North American business.”
Goodyear Chairman and CEO Robert Keegan repeated this theme in his address on the conference's second day.
“I think first you showed courage, flexibility, and you adapted to the changing conditions, which by the way in many cases were changing weekly mostly,” he said.
These, he said, helped dealers overcome the challenges of the recession.
Secondly, Mr. Keegan said, “as we enter 2010, we're all a bit bloodied.” At the same time, though, “what we saw was that we learned an incredible amount during 2009.”
Looking ahead, Mr. Kramer said Goodyear sees four key drivers in the global tire business, all of which have relevance in North America.
The first is growth. “We've all heard about the rapid growth in the emerging markets,” he said, “but keep in mind North America is a growth market, as well. People may believe what they want to believe about emerging markets, but North America is still the proving ground.” This is one of the reasons companies in all industries are trying to get a foothold in the U.S., he said.
Another factor driving business is technology. Its role in all aspects of the tire industry continues to increase—not only in how tires are made and tested, but in how they are sold, marketed, advertised and researched, Mr. Kramer said.
The third driver is the development and growth of environmentally-friendly innovation or “green” innovation.
“In our industry the main environmental concern is low rolling resistance leading to ever-improving fuel economy,” Mr. Kramer said. This is relevant to consumers and is a key priority for auto makers, as well, he added.
The introduction of the Assurance Fuel Max is an example of Goodyear's commitment to green innovation, Mr. Keegan said. He called it the “right product, right time, right performance features, mid-tier pricing, great positioning.”
Goodyear, he noted, launched the Fuel Max during a time when companies in the tire and other industries were cutting back on new product launches, pulling back on marketing and not taking risks. The Fuel Max, he said, is the fastest Goodyear tire ever to reach 1 million units in sales, following its launch in April 2009. The tire already is approaching 2 million units in sales.
Today Goodyear has the leading technology in fuel efficiency, Mr. Keegan claimed, “and we plan on keeping it. But I can tell you we will be investing over the next…years significant sums of money in the development and manufacturing and marketing of fuel-efficient tires.”
Mr. Keegan pointed out an SUV displayed at the meeting that was fitted with developmental Fortera Fuel Max as an example of what's to come. Goodyear plans to introduce this tire, an extension to the Fuel Max line, for SUVs and crossover vehicles in the third quarter in 23 sizes.
The trend toward more fuel efficiency in tires “is a big, big deal and I think one…that you are likely to underestimate,” he told dealers. And fuel-efficient tires are likely to be a huge generator of sales and profit margins for Goodyear going forward.
“Don't underestimate how big this is going to become,” Mr. Keegan advised. “Do not underestimate it, because I think we have had a tendency to do that in our own company the past couple of years.”
The final key driver Goodyear sees is smarter consumers.
“Our consumers are more knowledgeable and more informed about tires than they have ever been,” Mr. Kramer said.
Through the Internet they know more about pricing and product characteristics. Also, there are potential regulations such as tire labeling that will make more information available to consumers that will simplify the purchase decision.
“For us, this means producing tires whose features and benefits are readily apparent,” Mr. Kramer said. “For you, it means expecting shoppers who know more about what you're selling than ever before.”
Looking ahead to 2010 and beyond, Mr. Keegan said he is proud of how far Goodyear has come over the past few years, particularly because these accomplishments have occurred during a period of “unbelievable economic challenges.”
As an example, he cited Goodyear's achieving in 2008 the No. 1 status (and No. 2 in 2009) in the motor parts category of Fortune magazine's most admired companies list.
“We're hugely proud of that and hopefully for 2010 we're back on top,” he said. “But I must tell you how far have we come? When we started thinking about it, we never made the list. We never made any list that was put together for Fortune's most admired.”
Mr. Keegan said he's also proud that “what we've put together is enduring. It's sustaining.”
This sets the company up for 2010 and beyond, he said.
Looking at 2010, Mr. Keegan said he thinks business will be better, but the improvement will be modest. “There's too much uncertainty in the overall economy in the U.S. and Canada and around the world to have a very robust economy other than in places where the government is really having an impact with stimulation,” he said.
But Goodyear and its dealers are ready, he said. “More than at any time that I've been in this business, your teams are better than they were,” he said. “Your overall capability is better than it was, and we've just come out of a 2009 where the tire industry in the U.S. did very well given the prevailing market conditions.
“So let's seize the moment and take advantage of what the markets are giving,” he said.