Goodyear CEO: Tire industry at turning point

AKRON — Goodyear's Rich Kramer described the tire industry as being at an "inflection point," where technology and data are changing mobility completely.

The change is "no less revolutionary than the move from horses to the Model T," he told those attending the Akron Roundtable's monthly business lunch series on Aug. 17.

"Imagine a tire that can tell your vehicle not only that your inflation is low but can sense that you're carrying 500 pounds of cargo on tires with worn tread, driving on icy roads, and it automatically adjusts your vehicle's speed and handling while you sit back and enjoy the ride," he said.

The Goodyear chairman, president and CEO said that the key to success for the company — and the community of Akron at large — is to embrace the change with a "front-foot forward" mentality.

Kramer spoke at the Akron Roundtable event at the John S. Knight Center in downtown Akron to mark the company's 125th anniversary. Goodyear was founded Aug. 29, 1898.

"Our history has revolved around commonalities and patterns that have been repeated through generations of change," Kramer said. "Our founders certainly could not have pictured what the world would look like in 2023, but they started building a path that has led us to where we are today."

Kramer described inflection points during the company's history — "those moments and events that are often unexpected but after which nothing is ever the same" — like the introduction of the automobile. Instead of seeing automobiles as a threat to their carriage tire business, Goodyear evolved business to support the new industry.

"Military transportation hastened the development of pneumatic truck tires. A shortage of natural rubber in WWII was the impetus for Goodyear and other tire makers to work together to refine and master synthetic rubber," he said.

"Our historical pattern of confronting challenges head on, using lessons learned from the past and embracing new solutions gives us the confidence today that we can handle anything that's coming at us in the future."

Today's inflection point is a bi-product of technology, connectivity and convenience, he said. The drive for convenience is changing business models and consumer behavior.

"It's begun to affect the infrastructure needed to deliver on those expectations," Kramer said.

Goodyear sums up its approach to changes in mobility with the acronym FACES (fleets and autonomous, connected, electric and sustainable vehicles).

"Mobility is going to be consumed differently in the future, and we have to make sure that we're not only reacting to it but shaping it," he said.

Fleets: Use of shared pool cars and rideshare have opened a need for fleet service.

"Individual car ownership no longer seems to be the right-of-passage that it used to be," he said.

"Already, there's a rapid innovation and adoption of these, particularly on autonomous cargo transportation and delivery."

He said most of the success in this segment has been in areas like Arizona, where the climate is predictable, but Goodyear has been working on adapting the technology in diverse climates. Goodyear has been working with Gatik, a Canadian autonomous middle-mile delivery company.

"We're able to increase the places they can do business by being integrated into their vehicles."

"The car is already connected to your phone, to the vehicle manufacturer and the many apps tracking your location. Soon, we expect these vehicles to be connected to the road itself and to the surrounding infrastructure.

"Tires are the only point of contact between the vehicle and the road, and we view our products as an integral component to the complete vehicle system," he said. "Today, every new vehicle comes with a tire-pressure monitoring system. We've taken that a step further with a combination of sensors and algorithms that measures tire temperature, tire wear, tire load and even friction on the road."

"This started when Tesla, which was grossly underestimated, turned the automotive industry nothing but upside-down," Kramer said. "Ten years ago, if anyone here would have forecasted an E-Mustang, you should go buy that Powerball lottery ticket right now."

He said, Tesla is a perfect example of today's market, where competition can come from a start-up as much as an established player.

Kramer said, today, sustainability is an important consideration for consumers buying replacement tires and original equipment manufacturers.

"From reducing CO2 emissions to the materials used to make them, sustainability is now a clear mandate for the auto industry, including tires," he said.

"We've invested in new technologies and partnerships. We've set bold and aggressive goals for new product development — and enhanced our process for bringing those products to market faster. And we've even established a dedicated unit within our global operations and technology team, specifically called Beyond Tires."

Goodyear aims to have a tire made of sustainable materials by 2030. At CES this year, the company unveiled a tire made of 90% sustainable materials, "that passed all of DOT testing."

"Today, you can buy a tire that has sustainable soybean oil in it that takes the place of petroleum, or rice husk ashes that take the place of sand-based silicone. We're working on further bio-friendly materials, such as methane-based carbon black to reach our 100% sustainability goal by the end of the decade."

As Goodyear evolves what it does, Kramer said it also has changed how it does it.

"In 2020, we opened an innovation lab in San Francisco to build our knowledge and expand our vision of what's possible; to get out in the world and see different things of what's happening in this new mobility space."

The new lab produced AndGo by Goodyear, a real-time data monitoring platform for fleet vehicles to pro-actively schedule service.

For example, Kramer noted a last-mile delivery service it works with where "we help them to operate more efficiently by giving them the data to increase their uptime and lower their cost per mile. In other words, to be more efficient to drive their operations; being a value-added supplier to them for not only tires but through technology, digitization and information."

He said Goodyear is evolving from just a tire maker to a technology driven mobility company.

"The core of our strategy is really helping our customers and consumers to do what they do even better," he said. "That's what we do, that's what our purpose is. And though they may not have thought about it in these terms, I would suggest to you that's exactly what our founders did 125 years ago."

During a Q&A portion of the event, Kramer was asked about the recent agreement with Elliot Investment.

"In today's world, today's capital markets, activism is a reality," he said. "We value our shareholders, we value their input. We worked with Elliot, we came to an agreement with them relatively quickly, and I would say our discussions have been very practical, very collaborative, and very productive.

"We have the same goal which is to continue to improve the company and certainly to get our stock price back up."

The city of Akron shaped Goodyear, and as it grew, Goodyear shaped the city, he said.

"Its proximity to the burgeoning automotive hubs of Detroit and Cleveland, the ease of shipping and transportation thanks to the accessible waterways, the abundant workforce with all of the skills needed for the company to prosper — all these were factors in establishing Goodyear's industry leadership.

Kramer said more associates come to Goodyear from the University of Akron than any other university, "that's a big deal," he said.

"The title for the Rubber City may have been an appropriate name for much of its history, but I believe we could all agree that we're much more than just that now. If someone asked me to describe Akron in 2023, I'd say, 'it's a place where you can make it.'

"You can make everything from industry and business to arts and philanthropy. You can make what you've always wanted or what you've never dreamed of. You can make contacts, friends and mentors. You can make a career. You can make a life, and you can make a difference."