Getting There: Goodyear Execs Discuss Strategy, Outline Goals for 2009 and Beyond - Tire Review Magazine

Getting There: Goodyear Execs Discuss Strategy, Outline Goals for 2009 and Beyond

rich kramer, president of goodyears north american tire unitAt Goodyear’s annual dealer conference in February in Washington, D.C., we sat down with some key company executives to talk about what Goodyear has in store for its dealers in 2009 and beyond. The following is an interview with Rich Kramer, president of Goodyear’s North American tire unit, Steve McClellan, president of the North American Tire Consumer business, Joey Viselli, Goodyear brand director, and Jack Winterton, vice president of consumer sales for North America.

How is Goodyear adapting its growth strategies in light of the economy, not just in 2009, but beyond?

Kramer: First of all, like everyone, we’re taking a look at all our expenses and asked ourselves whether we should continue to move forward with this meeting. We took a step back and said ‘What do we want to invest in and what don’t we want to invest in?’ And it really was an easy decision for us that this is something we definitely wanted to go forward with.

Attendance has been down at many events, in our industry and in others, and I think the number of people who came to this meeting proved that our decision was the right one. Our customers really want to talk about what’s going on in today’s world and how it impacts us, as well as getting together to talk about what’s going on in their own businesses. This is something we look at as an investment, not a cost.

That being said, we don’t look at the world with rose-colored glasses in terms of what’s ahead of us, but we also are very much focused in the fact that 2009 is not the end for us. We’re going to have to make tough decisions regarding a variety of things, including how we spend our money and what we do with our factories. But at the end of the day we’re not thinking that after this year, everything will snap back and be normal again. It’ll take some time, but that’s where we’re focusing, and we’re doing it with a positive attitude.

Those who just sit back and wait for it to pass are not going to make it. Finding opportunities amidst these challenges is what we’re really trying to do. I want everyone to feel the tension that this is not business as usual; they have to look at things differently. But I’m a firm believer that tension is what drives people to the next level. Whether it’s competitors, the economy or something else pushing us, we’re going to get to that next level.

Despite sales being down last year, we’re still looking at a good market because people are going to continue driving and they’re going to continue to buy tires. Our focus is on competing in the world as we see it and doing better than our competitors and better than we have in the past. The key is innovative new products that give our dealers something to sell and differentiate Goodyear in the marketplace. We have 12 new products coming out – that’s not by accident. Some might wonder why we’re putting new products out in such a tough time in the industry, but again, it’s our belief that we’re not playing for one year. These products are out there because we’re looking beyond that.

Consumers are still looking for what’s new and innovative and the value of those purchases. And that’s where we’re putting our products right now; they’re more in the mid-tier level and not up at the high end. We’re focusing on the middle, which is the largest segment in the market right now, when consumers are migrating to that even more because they’re seeking more value for their money.

We’re not talking about lower priced, cheap products, but rather the value, technology and innovation of Goodyear brand products at the mid-tier level – and that really means something to consumers.

Viselli: Goodyear has fundamental technologies and when we look at the marketplace and see where the consumers are leaning, we turn those into applied technologies. An example of that is the FuelMax, which is very timely to the marketplace. We’re here at the right place and at the right time.


Are there any concerns, for 2009 and beyond, with regard to changing production and plant operations in the U.S.?

Steve McClellan, president of the North American Tire Consumer businessKramer: Through 2008, we’ve managed our production levels efficiently within the rules we have, union or non-union. Clearly, we’re making fewer tires in our plants and that has a drag on our earnings, but we’ve managed that very effectively thus far.

We’re doing that to manage our inventory levels, focusing on cash. The lower the inventory we have, the better cash flow we have. Our inventory levels were one of the very positive things we ended 2008 with, and that was a direct result of managing the factories down. We envision doing more of that in 2009 just because of how the industry as a whole is doing.

McClellan: In cutting our inventory levels back, we made room for 12 new products. For the first time in years, we’re managing cash the right way. Customers are seeing high fill rates. Our quality of inventory has not been any better than it is right now.

Kramer: we really started managing production in April 2008 in anticipation of a tough economy. We were leaning forward into something that was coming, rather than leaning back and waiting for it to happen. Yes, we’ve had a headwind from an earnings perspective, but our cash and our inventory are in very good places now.

Winterton: That’s one advantage of our lead marketshare – we saw the trends early on last year and were able to get ourselves into position.


How could the possibility of one of the Big Three automakers going out of business affect Goodyear? 

Kramer: We’re very positive on what’s happened with Washington’s help relative to our Detroit customers, who we value very much. On the OE side, our business spans beyond just those three companies. We stay in contact with our OE customers on a regular basis. The Chevy Volt will have the Goodyear Assurance FuelMax tire on it, and many of the Ford models featured at the auto show have Goodyear tires as OE. Our relationship with Chrysler remains very strong as well.

I’ll refrain from commenting in terms of speculating on whether one will make it or not make it, but what I will say is that just like in the past, we will continue to support those customers to the extent it makes sense for us to do.

About five years ago, (Goodyear Chairman and CEO) Bob Keegan said we were going to manage our OE business on a more selective basis. Back then we had a much higher number of OE contracts than we do today. We decided we needed to look at the value of the fitments we’re on with the OEMs, and we’ve selectively managed our share with those companies. We’re going to continue to abide by that practice.

There are no plans by us to do anything dramatic relative to those OE contracts. I speak with those companies on a regular basis, and we’re going to support them in the best way we can. When the auto industry goes from selling 17 or 18 million cars a year down to 10 or 11 million, that has an impact on us, and we’re working our way through that.


You already mentioned the increase in mid-tier purchases by consumers. What are some other areas in which consumers driving trends right now?

Viselli: Tire trends are driven as much by OE as they are by the replacement market, obviously. As the OE business grows increasingly complex, so does the replacement side. Within that, there are big shifts in consumer behavior. Consumers want more capable vehicles and because of that, there’s been an increase in high performance tires. For example, Toyota Camrys are now available with V speed rated tires.

Consumers are also looking for new benefits, fuel economy being one of them. We tested FuelMax tires with consumers when gas prices were very high, and we tested them after prices came back down. Decreased fuel prices didn’t change the attitude consumers had toward increased fuel economy. Consumers have become “fuel strategizers” in this area, and we’re using our technologies to give our dealers something to sell in the marketplace.

Goodyear is currently OE on six of the top eight fuel-efficient vehicles. Even if it wasn’t a consumer-driven trend, it’s something our government is driving as well, with CAFE standards and other regulations. Our job now is to manage our dealers and set them up for success with our FuelMax technology.


What kind of feedback have you received recently from dealers regarding the challenges they face in today’s market?

Winterton: Based on this meeting, I think it’s a testimonial to the type of people we do business with that all our business seminars (offered throughout the conference) are jam-packed. People didn’t come here just for a vacation to tour Washington D.C., they made the investment out of their time to come here and learn. They told us when we first started doing these conferences that they wanted more hardcore business seminars and informational sessions, and we keep tailoring the meetings to fit what they ranked as being the most important topics for their businesses.

Most of them come to see the new products and hear what Goodyear has to say, but they also come to share success stories and hear other dealers’ success stories. This truly is a couple days of great information sharing, and it’s very gratifying to do business with some of the most successful independent dealers in the tire business.

Kramer: There really is an excitement that’s palpable within our dealer community about being here and sharing with each other. It’s really gratifying for us to listen to what our dealers wanted and then to turn around and adapt according to what they asked for.

Winterton: The ride-and-drive is a perfect example. A few years ago, we didn’t even do ride-and-drives. We started that when we launched the first Assurance, just to try and show dealers the differences in what the tire can do. We did that in 30 cities, and since then we’ve continued doing ride-and-drives based upon the feedback we received from our dealers.

Viselli: Based on dealer feedback, in 2008, we shifted a lot of our marketing to the Internet. Our online marketing has become a lot more shopper-focused. We had a 45% increase in click-through rates for consumers coming to our Web site and using our dealer locator to find a dealer near them. We’re driving traffic to our dealers’ Web sites more than ever before.

Also, Wrangler is doing some interesting marketing through online social networks, including offroadtires.com. It’s a very focused, passionate community that provides a great way for us to communicate directly with those enthusiasts.

McClellan: We understand what’s going on around us, and we’re certainly not going to ignore it. You can’t change what’s happening, but you can give dealers the tools to face these challenges. And we’re not going to leave them with any false hope – we’re going to deliver on our promises.

You May Also Like

Yokohama Rubber reveals 2024 motorsports activity plan

Yokohama said participation in motorsports activities is crucial to its efforts to strengthen the Advan and GeoLandar brands.

Yokohama-Nitrocross

Yokohama Rubber revealed its motorsports activity plan for 2024. The company said participation in motorsports activities is crucial to its efforts to strengthen the Advan and GeoLandar brands and is again participating in a wide variety of motorsports events around the globe, from top-category to grassroots events.

Yokohama Rubber will again supply its Advan tires to many teams participating in motorsports events, such as Japan’s Super GT, the Nürburgring 24-Hour Race and the Pikes Peak International Hill Climb. Yokohama Rubber’s GeoLandar tires will be supplied to teams participating in off-road races in North America and Asia, including the Baja 1000, King of the Hammers, the Mint 400 and the Asia Cross Country Rally.

TIA’s Advanced Farm Tire Service training to take place in June

The training class for technicians in the agricultural and farm tire industries is set to take place June 11-14.

TIA_training-
Maxxis-sponsored athletes make podium, overall top 10 at Mint 400

Maxxis athletes Michael McFayden, Ethan Ebert and Trey Gibbs had podium finishes at the Mint 400 on Maxxis RAZR XT tires.

2024-mint400-maxxis
Sun Auto Tire reveals winner of Ford Bronco Sport giveaway

Lowell Anderson entered the giveaway at his local Sun Auto Tire & Service store while receiving a routine oil change.

Sun-Auto-Bronco-giveaway
Nokian Tyres holds bracket challenge on worst roads in North America

In 2023, the tiremaker’s audience voted Quebec as the province or state with the worst road conditions on the continent.

Pothole-Protection-from-Nokian-Tyres

Other Posts

Gallery: 2024 Big O Tires conference and convention

Highlights from this year’s Big O Tires conference and convention, featuring a general session, trade show and breakout sessions.

Gary-Skidmore
Bridgestone’s Firestone Liberia rubber farm receives ISCC Plus recognition

According to Bridgestone, its Liberia facility earned the ISCC Plus certification for its efforts in reducing environmental impacts.

Firestone_Liberia
Ascenso Tires adds new OEM sales manager

Douglas Duesing has more than ten years of experience working in agriculture, construction and mining OEMs.

Ascenso-Douglas-Duesing-1400
Nexen Tire Motorsports drivers earn top placements at King of the Hammers

Nexen Tire Motorsports partnered with drivers across a variety of racing series both on- and off-road, including King of the Hammers.

Nexen-KOH