Exclusive: Toyo Dumped From Truck Tire Partnership, Sues Conti, Yokohama - Tire Review Magazine

Exclusive: Toyo Dumped From Truck Tire Partnership, Sues Conti, Yokohama

Toyo Tire USA Corp. is scrambling to fill truck tire orders, having been dismissed earlier this year from the joint venture GTY Tire Co. by partners Continental Tire the Americas and Yokohama Corp. of America

In a lawsuit filed in January, Toyo claims that both CTA and YCA are attempting to prevent Toyo from selling any radial truck tires in the U.S. for five years, and that the partners have declared GTY Tire to be no more.

And that all may be the indirect result of the “business and capital alliance” partnership struck between Toyo Tire & Rubber Co. and Bridgestone Corp. in May 2008.

In January, the tiremaker filed for an injunction in federal court in an attempt to restore production of its tires pending the outcome of arbitration as called for in the GTY partnership agreement. The U.S. Ninth Circuit Court of Appeals has yet to hold a hearing on Toyo’s injunction plea, and Toyo’s outside counsel told Tire Review that the International Chamber of Commerce has finally seated an arbitration panel to hear its case.

As it stands right now, Toyo has been shut out of receiving most of the 290,000 radial medium truck tires it ordered from the GTY plant, and does not have available capacity at its other plants in Japan to make up the shortfall. Toyo would not say how many tires it had received from the GTY plant before it was cut off, only that the 290,000 tires it had ordered represented some 60% of its projected needs for the U.S. market – a total of approximately 440,000 tires.

In its lawsuit, Toyo claims that “Continental and/or Yokohama” began telling Toyo customers and prospective customers that “Toyo was expelled from the partnership, that Toyo was no longer going to be able to provide GTY-manufactured truck and bus radial tires” and “that Continental and/or Yokohama would sell such tires to Toyo’s customers and potential customers.”

Toyo denies rumors that its tire molds have been removed from the GTY plant and shipped back to Japan, and other rumors that it has cut off supplying wholesalers in favor of selling its limited supply direct to fleets.

“We continue to work closely with all of our valued customers to address their commercial truck tire needs,” the company said in a statement. “Toyo is grateful for and remains committed to its loyal customers and to providing first tier service in every area.”

For its part, a CTA spokesperson told Tire Review, “We can confirm that there is a lawsuit and arbitration that has been filed against CTA and Yokohama. However, it is our policy at Continental that we do not comment on pending litigation.”

By press time, Yokohama had not responded to repeated requests by Tire Review for comment.

GTY Tire was formed by the then General Tire & Rubber Co., Yokohama and Toyo to pool their technical and production resources to produce medium truck tires for the U.S. market. Under the partnership agreement, signed in November 1988, each partner would receive an allocation of tires, which would be produced at General’s Mt. Vernon, Ill., tire plant under the name GTY Tire Co.

According to Toyo’s lawsuit filing, there were a limited number of ways the partnership could be dissolved, and even then the remaining partners “were obligated to continue the partnership.” Further, if one of the partners were removed, the partnership agreement gave that partner the “’right and obligation’ to purchase its allocation of truck and bus radial tires for the remainder of the current fiscal year and for the two fiscal years thereafter.”

Toyo claims it is being denied that right under the agreement.

In its lawsuit, Toyo claims that CTA and YCA sent it a letter on Dec. 22, 2009 – just prior to the Christmas holiday – “purporting to expel Toyo from the partnership and to dissolve the partnership agreement.

“The joint letter claimed that the partnership dissolved because ‘Toyo had entered into an agreement with Bridgestone Corp. pursuant to which (Toyo and Bridgestone) had been promoting closer collaboration on tire technology,’” which was expressly forbidden under terms of the partnership agreement. (For additional information on that partnership, click here).

According to the Toyo lawsuit, the partnership agreement could be dissolved “If any partner should hereafter enter into a technology exchange or collaboration agreement regarding tire technology with a major competitor of the other partners in the tire business, upon joint written notice from two of the other partners. A major competitor shall be deemed to be any manufacturing company whose tire sales are ranked among the top six in the world.”

Toyo refuted CTA and YCA’s claims regarding the Bridgestone partnership, stating that “neither the May 16, 2008 press release nor any business and capital alliance agreement between Toyo-Japan and Bridgestone-Japan amounts to a ‘technology exchange or collaboration agreement.” Similarly, Toyo claimed in its suit, both Continental AG and Yokohama Rubber Corp. had previously entered into “similar technology agreements with Bridgestone, and Continental AG also has entered into a technology agreement with Pirelli.”

The Dec. 22 letter further stated, according to Toyo, that CTA and YCA would “automatically ‘confiscate’ Toyo’s partnership interest,” “acquired the right to purchase Toyo’s full allotment of truck and bus radials from GTY,” and “intended to dissolve the (GTY) partnership on Dec. 31, 2009.”

In its suit, Toyo said the three partners met on Jan. 8 at Toyo’s request to discuss the matter, but the result was that CTA and YCA only pushed the meeting back to Jan. 13, 2010, the date they then said the pair would end production for Toyo and dissolve the partnership.

While Toyo provided court documents and filings to Tire Review, it could not answer a number of questions due to the pending litigation.

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