Top stories of 2023: Goodyear leads headlines

AKRON — For Goodyear, 2023 was a year with arguable highs — a 125th anniversary celebration, the ongoing integration of Cooper Tire & Rubber — and lows — natural disasters, fires, job cuts, plant closures and dissatisfied investors.

The moves promise to shape the world's No. 3 tire maker for decades to come.

That roller coaster of a year, capped by the Goodyear Forward reorganization plan and a departing CEO, is Tire Business' top news story of the year.

Goodyear disclosed its reorganization plan — created by the strategic and operational review committee of its board of directors — Nov. 15, the same day Chairman, President and CEO Richard Kramer announced his intention to retire in 2024 after 14 years of leading the company.

The plan, among other cost-cutting measures, calls for divesting the Dunlop brand, which has been part of Goodyear's portfolio since 1999, as well as its off-the-road tire and chemicals businesses. Shedding those would result in more than $2 billion in gross proceeds.

Goodyear's strategic and operational review committee was created July 25 in response to a letter from Elliott Investment Management L.P., a West Palm Beach, Fla.-based investment firm. The letter, sent May 25, outlined the firm's dissatisfaction with what it called Goodyear's poor stock performance.

Goodyear added three members to its board of directors in response.

Goodyear secured the rights to the Dunlop brand in North America and Europe as part of the dissolution of its global alliance with Sumitomo Rubber Industries Inc. in 2015. Dunlop is now sold primarily in Europe and the brand's sales represent about $700 million annually.

North American tire dealers contacted by Tire Business said they sell very little, if any, Dunlop tires, with Goodyear noting the divestment will have little impact on operations.

Goodyear's OTR business provides specialized tires for the mining and construction industries with annual revenue of approximately $700 million. It makes those products at its mixed-use Topeka, Kan., plant (that also makes light truck tires) and at its dedicated OTR plant in Tatsuno, Japan. The tires are made to a lesser extent at plants in Adapazari, Turkey, and Uitenhage, South Africa.

It's unclear how the divestment will impact the 77-year-old Topeka plant, in which Goodyear announced a five-year $125 million investment last year. The plant employs 1,600.

Goodyear started 2023 with cost-savings news. On Jan. 27, the firm said it was planning to trim its global salaried workforce by about 5%, or 500 jobs, by mid-year, citing an "uncertain" near-term economic outlook and a "significantly weaker" industry backdrop.

After Goodyear released its 2022 annual results, S&P Global Rating revised Goodyear's outlook to negative, from stable.

On April 11, a manufacturing plant in Tupelo, Miss., was hit by a tornado, idling operations at the plant for two months.

In May, Goodyear had a spot of good news with the announcement it was on target to achieve $250 million in synergy cost savings by mid-2023 from the integration of Cooper, roughly 50% greater than envisioned when the deal was announced in early 2021.

Shortly after, Elliott Investment sent its letter demanding changes. In response, the price of a Goodyear share jumped 21% in heavy trading. Goodyear agreed to meet with the group, resulting in the Goodyear Forward plan among other changes.

In July, the U.S. Department of Labor and the Mexican government sided with an independent union in a labor rights case at Goodyear's passenger tire factory in San Luis Potosi, Mexico. The union said Goodyear violated workers' labor rights. The following month, workers at the plant approved joining the union.

Goodyear saw two tragedies during the summer: two Goodyear employees died Aug. 9 in a crash during tire testing at the Nurburgring race track in Germany; and in late July, a Goodyear worker died following an injury at its Texarkana, Ark., facility.

A fire in August damaged the curing area of Goodyear's tire plant in Debica, Poland, leading sales in the EMEA region to be cut by $40 million this year and operating income to be cut by as much as $30 million.

On Aug. 29, Goodyear celebrated its 125th anniversary. The celebration included the restoration of the Goodyear sign above its former company headquarters in Akron.

In September, Goodyear announced plans to cut 1,200 jobs throughout its Europe, Middle East and Africa region to make the business unit "leaner, more efficient and customer-centric," resulting in a possible savings of $100 million.

Also in September, Goodyear said it would retool its Asia-Pacific operations to a third-party distribution and retail sales model, with the goal of improving profitability in Australia and New Zealand. The plan calls for eliminating about 700 positions, exiting nine warehouses and selling about 100 retail and fleet locations in the region.

Talk about shaking up the retail tire and automotive service industry.

Mavis Tire Express Services Corp. did just that in late May, disclosing it had acquired all of TBC Corp.’s retail business, comprising 595 NTB Tire & Service Centers and Tire Kingdom Service Centers.

In all, the deal — financial terms have not been announced — affects 203 Tire Kingdom Service Center locations in Florida and 392 NTB Tire & Service stores in 14 other states. The deal expands Mavis’ retail holdings to more than 2,000 stores across at least 28 states.

As part of the transaction, TBC will provide wholesale tire distribution for Mavis’ retail locations.

This ranks as the largest transaction in the retail tire business in the U.S. in the past 25-plus years, removing TBC out of the retail business altogether.

According to Tire Business estimates, the locations account for $2 billion in annual revenue.

The transaction created a bigger gap between Mavis, the No. 1 independent dealer in the U.S., and Monro Inc., which is No. 2, according to Tire Business data.

In April, the U.S. International Trade Commission (ITC) voted unanimously to retain antidumping and countervailing duties on off-the-road tires from India, ruling that to revoke them would “be likely to lead to continuation or recurrence of material injury” to the domestic industry.

The ruling came as part of the five-year (sunset) review process required by the Uruguay Round Agreements Act.

But the biggest decision happened seven months later, when the ITC voted unanimously to authorize a full investigation into allegations that certain manufacturers in Thailand are selling truck/bus tires in the U.S. at less than fair valuation.

A preliminary determination by the Commerce Department on duties is expected in March 2024, with a final determination expected in late summer 2024.

The ITC reached its decision based on testimony from a one-day hearing in early November and dozens of written submissions, predominantly from parties that oppose the investigation.

The United Steelworkers union initiated the investigation, based on research it conducted over several months in 2022-23 that claims Thai truck/bus tires are being dumped in the U.S. at margins up to 47.8%.

It was inevitable. All of the ordering that tire dealers did during the pandemic was sure to arrive.

The trouble was, most of it arrived at once, well after the pandemic had ended, in a time of reduced consumer demand and rising inflation.

The result was warehouses overflowing with inventory in the first half year. Tire dealers curtailed orders as inventory sat on shelves.

There are positive signs, however, that sales have begun to pick up and those overstocked warehouses are dwindling.

Late in the year, the U.S. Tire Manufacturers Association forecast that passenger truck tire shipments will reach 214.2 million units by year-end, up 0.2% over 2022 as well as 17% more than what was forecast at mid-year.

Meanwhile, replacement light truck tire shipments fell 5.6% from 2022 to 35.2 million units and medium truck/bus tires decreased 21.3% to 21 million units.

On April 1, a category EF-2 tornado tore through Goodyear’s passenger and light truck plant in Tupelo, Miss., idling the former Cooper Tire & Rubber plant until June.

Goodyear estimated that production lost due to the tornado cost the company up to $130 million in lost sales in the second quarter. Rated at 37,000 passenger and light truck tires a day, the 39-year-old plant is Goodyear’s third largest such factory in the U.S.

Meanwhile, a fire in mid-March halted production at Hankook Tire & Technology Co. Ltd.’s factory in Daejeon, South Korea.

Hankook disclosed Sept. 1 it had restarted production. The company said the cause of the fire, which broke out at the factory’s curing process area and spread to a nearby storage area, is still under investigation.

The 44-year-old Daejeon factory is listed as having capacity to produce 16.5 million units per year, comprising passenger, light truck, truck/bus and racing tires. Its output generated 16.4% of Hankook’s fiscal 2021 sales, amounting to over $900 million.

Hankook also cited the negative effects of the fire on its decision to withdraw as a supplier from the Super Taikyu sports-car endurance racing series in Japan.

Two of the three largest tire manufacturers by sales — No. 1 Michelin and No. 3 Goodyear — announced plans in the fourth quarter to close several tire plants, including one in the U.S.

Michelin North America, citing “evolving market demands,” will end tire production by year-end 2025 at its Ardmore, Okla., passenger tire plant and move the plant’s capacity to other Michelin plants in North America.

The decision to close the 53-year-old plant in southern Oklahoma — opened in 1970 by Uniroyal Inc. and acquired by Michelin in 1989 — will affect about 1,400 employees.

Rubber-mixing operations at the plant are scheduled to continue.

One month later, Michelin said the negative impact of low-cost imports, inflation and rising production costs would force it to close factories in Karlsruhe and Trier, Germany, and phase out truck tire and semi-finished product production in Homburg, Germany.

The restructuring measures will impact 1,410 employees at the facilities, which are to cease activities by year-end 2025.

The 52-year-old Homburg plant produces medium truck/bus tires and semi-finished products; truck tire retreading and related operations at that facility will continue.

The 93-year-old Karlsruhe plant makes tires for small and medium-sized trucks and semi-finished products.

In mid-November, two days after it announced its Goodyear Forward reorganization plan, Goodyear said it would close plants in Fulda and Fürstenwalde, Germany, impacting 1,750 jobs, as part of a strategy to improve its competitive position and reduce its production cost per tire its Europe/Middle East/Asia (EMEA) region.

Goodyear said it expects these actions to yield improvements to the EMEA’s segment operating income of about $280 million over a three-year period through year-end 2027.

Goodyear earlier had announced plans to cut production at the Fulda plant by 50%.

The 73-year-old Fulda plant is rated at 21,000 passenger and light truck tires a day, while the 117-year-old Fürstenwalde factory is rated at 10,000 units a day of the same.

Of the 1,750 employees expected to be impacted, 1,050 would be hourly workers, according to the German trade union IGBCE, which represents hourly workers at Goodyear’s plants in Germany.

The Fulda closing should be completed by year-end 2025, whereas the Fürstenwalde production phase-out will take until year-end 2027. The company will continue operating mixing operations at the plant in eastern Germany.

It isn’t every day that an overseas tire company announces plans to build a plant in North America.

On May 22, Seoul, South Korea-based Nexen Tire Corp. announced it was evaluating sites in the U.S. Southeast to build a tire plant, expecting to begin production there within the next five to six years.

Nexen is targeting eight states in the Southeast to construct the plant, according to Brian Yoonseok Han, CEO of Nexen Tire America Inc. As of mid-December, the company had not disclosed a site selection.

The plant would be Nexen’s third factory outside of South Korea, joining factories in China and Czech Republic, and its first new factory in nine years. The goal, Han said, is to start operations in the U.S. between 2028 and 2029, with a daily production capacity of 30,000 units.

Nexen said it is budgeting $1.3 billion to build the plant.

The tire maker plans to increase global production capacity roughly 15% to 16% by 2025 to 52 million units, versus 45 million units now. That will involve expanding production by 5.5 million units in Europe and 1.5 million in Korea.

Right-to-repair in the automotive service industry — giving consumers, and thus independent shops, access to vehicle data and the information, tools and parts needed to make proper repairs — has been a hot-button issue.

At the state level, Maine passed a vehicle right-to-repair law in November, becoming the second state, along with Massachusetts, to do so.

Similar laws were passed for electronic device and appliance repair in California and Minnesota.

Colorado voters approved a right-to-repair measure to allow farmers to repair their own equipment. In 2022, the state also passed a right-to-repair bill for motorized wheelchairs.

The Tire Industry Association (TIA) said there is some version of right-to-repair legislation being pursued in over 30 states.
Proponents said while the grassroots state initiatives are positive, there needs to be one federal law to set the standard.

The Right to Equitable and Professional Auto Industry Repair (REPAIR) Act — H.R. 906 — has had more movement than previous versions. It has 48 co-sponsors and passed out of sub-committee Nov. 2. TIA said it hopes for a vote by the Energy and Commerce committee early next year — setting up the possibility of a House vote.

Another top retailer got much bigger when Discount Tire/America’s Tire acquired Dunn Tire of Buffalo, N.Y., and its 25 retail outlets in western and central New York and Pennsylvania.

No financial terms were released. The acquisition marks Discount Tire’s entrance into the New York market and expands a limited presence in Pennsylvania.

The acquired locations will continue to operate under the Dunn Tire brand name and continue to offer a wide range of automotive maintenance and repair services, which represents a change from Discount Tire’s tires-only approach.

Discount/America’s Tire now operates nearly 1,170 stores nationwide, in 39 states.

Taken individually, they are just buckets of water in an ocean of industry mergers and acquisitions. But taken as part of a larger picture, the consolidations that have occurred in the wholesale business has reshaped the industry.

At least three are noteworthy.

The first occurred in the second quarter, when Turbo Wholesale Tires and Tire Wholesalers Inc. (TWI), two venerable businesses with decades of experience and extensive customer bases, announced they were combing operations under a common management structure designed to support additional growth.

Turbo, under the control of private-equity provider Kingswood Capital Management L.P., acquired Oak Park, Mich.-based TWI in May and brought the owners of the family-owned wholesaler in as partial owners and executives.

Financial terms were not disclosed. Turbo Wholesale and TWI will retain their separate identities in the marketplace.

In August, U.S. AutoForce expanded again, striking a deal to acquire family-owned Pacific Tire Distributors. The deal, which closed in mid-September, expands U.S. AutoForce’s presence in the Northwest.

U.S. AutoForce, a division of U.S. Venture Inc., is considered the second-largest independent wholesaler in the U.S., behind No. 1 American Tire Distributors Inc.

Late this year, K&M Tire Inc. finalized its purchase of Point S USA’s distribution operations in Colorado, including a 41,000-sq.-ft. warehouse in Denver. In addition, K&M will serve as the primary distributor for Point S members served by the Colorado facility.

The acquisition pushes K&M, the family-owned distributor based in Delphos, Ohio, farther west in its U.S. footprint.