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September 28, 2015 02:00 AM

Tire makers' success parameters changing

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    There definitely are different ways of measuring success these days in the global tire industry.

    Years ago, it was a big deal to be crowned as the No. 1 tire manufacturer in the world based on sales totals.

    You had the “Big 3” of Bridgestone Corp., Group Michelin and Goodyear battling it out for the top spot, and there really was drama from year to year on which tire maker would come out on top. Whether they said so publicly or not, it mattered to them which company won.

    But being the biggest doesn't seem to be, well, that big of a deal anymore.

    For the record, according to the annual Global Tire Report compiled by Tire Business, Bridgestone remained No. 1 for the seventh consecutive year, at just more than $26 billion in tire sales, with Michelin in its now familiar No. 2 slot at $24.7 billion.

    Goodyear once again came in third, with sales of $16.4 billion. As its tire revenue eroded more than $4 billion from 2011 to 2014, the Akron-based tire maker now is closer to No. 4 Continental A.G., with $11.9 billion, than it is to No. 2 competitor Michelin.

    Clearly, though, Goodyear Chair-man Richard Kramer has a different measurement for success than the top line.

    Despite sales that dropped in terms of dollar amounts for the first half—with a significant amount of the decline coming from foreign currency translation—the Goodyear leader pointed at robust operating margins of 13.4 percent in North America, 16 percent in Asia-Pacific and 12.4 percent in Latin America. Only its Europe, Middle East and Africa segment, at a 7-percent margin, fell short of Goodyear's targets.

    Continental itself has shown surprising strength in its tire and rubber business. Among the top 10 tire makers, only four posted higher revenue in 2014 than in 2011, and Conti was by far the biggest gainer, with sales increasing $1.2 billion in the period.

    After changing its focus years ago to become a diversified automotive supplier giant, it was thought Continental's tire and rubber units would suffer. While now making up just 26 percent of overall Conti sales, the firm's Rubber Group—including the ContiTech industrial rubber unit—is projected to report a 2015 operating earnings ratio of 16 percent.

    Definitely a success, by any measure.

    This editorial recently appeared in Rubber & Plastics News, an Akron-based sister publication of Tire Business. Have an opinion on it? Send a comment or letter to the editor to [email protected]

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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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