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Tire Kingdom Expands Reach With Mueller Buy

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North to Ohio

Tire Kingdom Expands Reach With Mueller Buy

TBC Corp.’s Tire Kingdom unit broadened its southeastern base with the addition of six new stores, then extended its reach from the sunny south into Ohio with the acquisition of the Mueller Tire & Brake’s 19-store retail operation.

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The late February action gave Tire Kingdom its first foothold outside the southeast, and a grand total of 207 retail outlets.

The family-owned Mueller Tire & Brake, founded in Cleveland in 1918, agreed to sell its retail stores and transfer location leases to Tire Kingdom for an undisclosed amount. Mueller posted sales of around $30 million in 2001.

The 15 Cleveland-area stores will retain the Mueller Tire & Brake name, while the four in Columbus will be converted to the Tire Kingdom moniker.

In a separate announcement, Tire Kingdom unveiled six new retail stores – four in Florida and two in North Carolina ®“ and announced plans to open six more in South Carolina, North Carolina and Louisiana by mid-2002.

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"The retailers that will lead the industry will need to be very efficient and have sufficient capital to sustain growth," said Scott Mueller, chairman. "Tire Kingdom has the infrastructure and financial resources to build on what we started. More importantly, Tire Kingdom shares the commitment to customer service and employee growth and training that has made Mueller Tire special."

Orland Wolford, CEO of Tire Kingdom, said, said the company has been looking for "the right opportunity" to enter Midwestern markets for some time. "We fully intend to provide an atmosphere that will allow the associates of both Tire Kingdom and Mueller Tire to achieve their personal objectives, while providing excellent service, products and value to our customers."

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Scott Mueller and his brother, Dean, will focus on building Dealer Tire auto dealership tire supply business. Dealer Tire sells a wide range of tire brands, as well as wheels and accessories, to some 4,000 car dealers across the U.S., with particular emphasis on German and Japanese vehicles.

Kumho Picks its Partner, Sale Deal Should Be Final by Mid-Year

A final deal is far from done, but officials of Kumho Industrial Co. have selected an international consortium bid led American investment bankers by J.P. Morgan Chase and Carlyle Companies as its "preferred partner" to buy an 80% stake in its global tire operation.

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The bid of the Morgan Chase, Carlyle and UBS Capital consortium was believed to be between $1.2 billion and $1.5 billion. Debt-laden Kumho Industrial is hoping to raise some $1.5 billion from the sale, but intends to retain management control of the tire business. Kumho Industrial said it planned to have a basic agreement in place in February, and the sale agreement finalized by mid-year.

The Morgan Chase/Carlyle/USB Capital bid bested one submitted by another American consortium that included Goldman, Sachs & Co. and Newbridge Capital.

Kumho Industrial is close to $4 billion in debt, according to reports, and posted a net loss for 2001 of $169.5 million. The firm is selling a majority stake in its Kumho Tire unit to raise cash for its ailing construction and airline businesses. Meanwhile, Kumho Tire reported sales of $1.1 billion in 2001, and its U.S. unit posted 2001 sales of $217.5 million.

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It was not expected that the sale deal would have any direct impact on the activities or management of Kumho Tire USA.

The 10th largest tiremaker in the world, Kumho Tire has two tire plants in South Korea and a third in China. Overseas reports indicate that Kumho is investing heavily to convert a bulk of its bias truck tire capacity over to radial production.

Goodyear Cuts 3,500, May Drop OE Business in Wake of 2001 Losses

After posting its worst annual financial results in a decade – a 2001 net loss of $203.6 million ®“ Goodyear Tire & Rubber Co. launched plans to improve its financial state by eliminating another 3,500 jobs this year and gaining higher prices on its OE tires.

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For the year, Goodyear posted worldwide sales of $14.1 billion, down 1.9% from 2000’s sales of $14.4 billion, while tire unit volume dropped four million units from the previous year. The net loss, impacted by after-tax charges, compared to a net profit of $40.3 million in 2000.

Goodyear last posted an annual loss in 1992 when it logged a negative net of $658.6 million.

The announced job cuts were expected to come mostly in Asia, Europe and Australia, where Goodyear is already closing or scaling back several plants. Last year, Goodyear eliminated some 10,000 jobs because of the company’s poor financial performance.

Though no firm plan has been announced, Goodyear said it was prepared to cut its OE business, particularly in low margins lines, unless it extracted better prices – and higher profits ®“ on its OE products. Discussions with U.S. and European automakers have apparently already begun, but Goodyear gave no indication as to what it was seeking in either price or profit improvements.

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Currently, OE tire sales account for 25% of Goodyear’s business, but the tiremaker loses approximately $60 million a year on OE sales.

The release of Goodyear’s financial results came less than a month after Standard & Poor’s lowered its ratings on tiremaker to sub-investment grade status – which some refer to as "junk status" ®“ because of the company’s poor operating performance and deteriorating long-term profit potential.

Explorer Vindicated as NHTSA Refuses Formal Investigation

The National Highway Traffic Safety Administration (NHTSA) refused to take on a formal defect investigation of the Ford Explorer, apparently ending a nearly two-year battle over whether the vehicle or the tires or a combination of the two were to blame for the hundreds of accidents and deaths that led multiple recalls of certain Firestone Wilderness, ATX and ATX II tires.

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After collecting and reviewing data provided by both Ford and Bridgestone/Firestone (BFS), NHTSA Administrator Dr. Jeffrey Runge stated flatly that "the data does not support Firestone’s contention that Explorers stand out from other SUVs with respect to handling characteristics following a tread separation."

Runge announced NHTSA’s non-action on BFS’s request for an investigation on Feb. 12.

NHTSA’s review also showed "no significant difference in the likelihood of a crash following a tread separation between Explorer vehicles and other compact SUVs," according to Dr. Runge.

Ford hailed NHTSA’s decision, saying that it was "consistent with real-world performance data showing the Explorer to be among the safest of vehicles and NHTSA’s previous finding that many Firestone Wilderness AT tires built before 1998 contain a safety defect."

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For its part, BFS spokesperson Jill Bratina, said, "NHTSA has made its determination."

Last April, BFS Chairman, President and CEO John Lampe called on NHTSA to open a formal investigation, supplying research data developed by Dr. Dennis A. Guenther, an engineering professor at Ohio State University. NHTSA considered Dr. Guenther’s research, even agreeing with some of his findings, but still found no reason to press an investigation into BFS’s claims.

No NHTSA Finding, But Goodyear Recalls 200,000 LT Tires Anyway

Despite an 18-month NHTSA investigation that found no defects, Goodyear Tire & Rubber voluntarily recalled some 200,000 Load Range E light truck tires that were linked to 15 deaths and over 125 injuries in tread separation accidents. Primarily used on 15-passenger vans and emergency vehicles, the 16-inch tires were sold under 51 different brand names, including Goodyear, Kelly-Springfield and an array of private brands.

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Goodyear said its action was "based on NHTSA’s concern and subsequent consumer advisory of a higher rollover risk of 15-passenger vans," but denied the recall was due to any defect in the tires.

NHTSA closed its investigation without comment, which started in November 2000, upon Goodyear’s recall announcement.

Goodyear produced some 27 million Load Range E tires between 1991 and 1999, and estimates that as many as 13 million remain on the road. Most of those tires went in commercial service, according to the tiremaker, on large commercial pick-up trucks, vans and SUVs that were modified for use as airport shuttles, school vans, delivery vans, work trucks, police and emergency service vehicles, church vans and in military applications.

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Dealers who believe their customers may have recall-eligible tires on their 15-passenger vans may call 1-866-797-8977 for additional information.

White House Favors Automakers, Rejects NHTSA TPMS Proposal

In what many feel was an obvious bow to lobbying pressure from automakers, the White House rejected a TREAD Act-mandated tire pressure monitoring system (TPMS) plan submitted by NHTSA, claiming the proposed standard was too costly to automakers and might negatively impact the propagation of anti-lock braking systems in new passenger vehicles.

Though NHTSA’s proposed standard left a lot to be desired in terms of tire safety effectiveness, the decision by the Office of Management and Budget (OMB) surprised many in the tire industry, which had supported a system that placed pressure sensors at each wheel.

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In its mid-February decision, the OMB told NHTSA to reconsider a TPMS that relies on feedback from a vehicle’s ABS, which experts claim is far less accurate but also less costly to automakers.

Instead, the OMB wants to allow automakers the choice of two different TPMS to install – ABS-based or the at-wheel system NHTSA proposed.

The OMB also indicated that it might ask NHTSA to create a regulation mandating ABS in all passenger vehicles.

TPMS regulations should establish an "appropriate standard that provides adequate warning to motorists when a tire is operating below an inflation pressure that can carry the vehicle load," said Donald Shea, RMA president and CEO. "Tire safety should be the overriding priority for the TPMS regulation," not which system would be less costly to vehicle or tire producers.

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While no federal law requires ABS, "a decision to mandate anti-lock brakes should have no bearing whatsoever on the tire pressure monitoring regulation," Shea said. "A tire pressure reserve regulation, however, will have a positive effect on tire safety."

RMA pointed out that even NHTSA’s proposed TPMS standard is flawed, as it would not warn drivers until tire pressure was insufficient to carry a vehicle’s maximum load. "The tire industry cannot support a tire pressure monitoring system rule that would permit tires to operate outside of industry standards without any warning to the driver," the RMA president said.

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The OMB placed no timetable for NHTSA to review and/or revise its TPMS proposed standard. The TREAD Act mandated that NHTSA have such a standard in place by November 2001. NHTSA did not submit its proposal for final review until late December.

The tire industry has repeatedly asked NHTSA to require a tire for a particular vehicle have sufficient inflation and load reserve. This would require automakers to adjust OE tire sizes and inflation recommendations on vehicles to allow for this "reserve."

Automakers hailed the OMB decision to recommend both ABS-based and at-wheel systems. "Both have been proven to alert drivers to low tire pressure, which is what Congress asked for. And one is a low-cost option," said Gloria Bergquist, spokesperson for the Alliance of Automobile Manufacturers.

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Bianconi Retires, Mannino Named PTNA President as move to Rome Grows Closer

Not only will Pirelli Tire North America (PTNA) a have a new plant and headquarters, it will have a new president and CEO to guide them. After 33 years of service, Carlo Bianconi has retired, replaced by Gaetano Mannino.

Mannino, the head of PTNA’s sales and operations in the mid-1990s, took the reins Feb. 1, coming back to PTNA after a stint as general manager of Pirelli SpA’s operations in Argentina. Mannino, who started his career with Pirelli in 1982, holds a doctorate in chemical engineering from the University of Rome and a master’s in foreign commerce from the Italian Institute of Foreign Commerce.

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PTNA plans to move into its new North American headquarters and manufacturing facility in Rome, Ga., in April. The headquarters building is virtually complete, and will house 55 when it opens. The company has started hiring people at the Rome facility to fill open positions created by the move from New Haven, Conn., and retirements.

The adjoining 400,000-square-foot MIRS (Modular Integrated Robotized System) plant will employ about 250 people. According to PTNA it will begin receiving and installing MIRS equipment by late-April, and should begin production in the last quarter of the year.

Canada Does its ‘PART’ with consumer ed campaign

The Rubber Association of Canada (RAC), with the cooperation of Transport Canada and the Canadian Automobile Association, launched that nation’s first consumer tire education effort – the PART Program. The RAC has created advertisements and consumers brochures for its PART Program ®“ pressure, alignment, rotation and tread ®“ which is based on the U.S. Rubber Manufacturers Association’s "Be Tire Smart ®“ Play Your PART" campaign launched in late 2000.

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According to a RAC study, 63% of Canadians don’t know that underinflation is the leading cause of tire failure, and 40% fail to adjust tire pressure for vehicle load. Transport Canada studies indicate about 70% of tires on the road are underinflated, and almost 90% of all vehicles have at least one underinflated tire.

"The results of this survey confirm there is a need for greater awareness of correct tire care practices," RAC President Glenn Maidment said. "Proper tire maintenance is crucial for road safety. Our objective, with the PART Program, is to educate drivers about the importance of regularly checking their tires. For example, if there are drivers who have not had their inflation pressure checked since the summer, their tires could be underinflated by 20-25% – that’s a potential danger."

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RMA Plans For Week-Long National Tire Education Program

The Rubber Manufacturers Association (RMA) has called for an industry-wide week-long campaign dedicated to educating drivers about the importance of tire safety. National Tire Safety Week, scheduled for Apr. 29 -May 3, aims to remind drivers to check their tires once a month for safer driving.

RMA has secured partnerships with several large tire dealers, as well as transportation and safety organizations, and was seeking the support of other industry groups for the week-long campaign.

"This week is a unique opportunity for the tire industry to come together to promote tire safety," said Donald Shea, RMA president and CEO. "We are pleased at the response we already have received from industry members, and we welcome more tire dealerships, local AAAs and local transportation departments to come on board."

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In addition to its members, RMA has secured partnerships with AAA, Sears and its NTB unit, and a number of large dealers including Big 10 Tires, Big O, Discount Tire, Les Schwab, Tire Kingdom and Merchant’s Inc.. The various partners will be distributing RMA’s educational tire care brochure. Additionally, RMA is working with its partners to schedule tire safety events in select cities. The week-long National Tire Safety Week program will be the culmination of a six-city tour across the southern United States, in which RMA will work with its local partners to educate drivers.

The "Be Tire Smart Tire Safety Tour" is tentatively scheduled to visit Baton Rouge, La., Jackson, Miss., Birmingham, Ala., Tampa/St. Petersburg, Fla., Columbia, S.C., and Raleigh, N.C., preceding National Tire Safety Week. The tour will stop in Tallahassee, Fla., Atlanta, Phoenix, and Austin, Texas, during the week. In each city, RMA will hold an event offering a free tire safety check for consumers, at which consumers can receive a free tire gauge and a tire safety brochure.

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Tana/Itra merger well underway after member vote

The votes are in, and as expected members of both the Tire Association of North America (TANA) and the International Tire & Rubber Association (ITRA) overwhelmingly approved a plan to merge the two organizations. Held independently in late January, TANA membership voted 812 to 23 to approve the merger, while ITRA members passed the measure 321 to 3. Two-third majority of all members casting ballots was needed for approval. Pending a few legal and regulatory details, the still-unnamed new association will "officially" come into being July 1. For now, the association is calling itself "TANA/ITRA Inc."

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While TANA/ITRA Inc. will be headquartered in Reston, Va., as previously announced, the merged association has been incorporated in Kentucky, not in the District of Columbia where TANA was incorporated. And it will fall under Kentucky’s non-profit corporation regulations.

"Another hurdle is behind us," said ITRA President Tom Raben about the vote. "It is great to see the members pass the measure by such a wide margin. We really have a tremendous amount of support."

"Internally, we want to proceed as if the merger has already taken place," said Steve Disney, president of TANA who will be the first president of the new group come July. "Effective mergers are orchestrated well before the legal date of the merger itself. We will be up and running on July 1, and to a degree, we already are."

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Since the merger proposal was announced last November, the two associations have worked furiously behind the scenes, functioning pretty much as a single entity. Ross Kogel Jr., executive vice president of TANA, was immediately named to the same post with the combined association, and he has undertaken a complete review of the staff and facilities.

Meanwhile, a number of joint committees were established to review the functions and services offered by both associations including government and public affairs, training and education, membership and retention, and strategic planning, and one committee dedicated to establishing new by-laws and management for the combined association.

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In the TANA/ITRA Inc. articles of incorporation, 48 members were named to the association’s board of directors, and the joint executive committee has met several times to discuss merger progress and to establish goals for the new organization.

Cooper Recalling 5,100 Tires

Cooper Tire & Rubber is recalling over 5,100 tires in three separate actions, including some 1,800 tires it produced for Del-Nat Tire Corp. The three recalls were all issued in mid-February, but not formally announced by either Cooper or NHTSA.

Recalled are more than 1,800 Delta Chaparral APs, in sizes P265/75R15 and P265/75R16, produced between August and October 2001. A NHTSA investigation showed that inadequate belt edge rubber coverage could lead to belt degradation

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Another 484 Cooper Discovery A/T radials, produced between Aug. 26 and Sept. 1, 2001, are being recalled due to possible pinholes in the upper sidewall.

Finally, 2,884 Cooper Discovery A/Ts are under recall due to possible innerliner tearing caused by improper mold ejection.

Of note ®ƒ

Am-Pac Distributors opened its 21st warehouse in early February, a new 50,000-square-foot facility in Memphis, Tenn. ®ƒ Michelin North America plans to invest some $56 million in its Ardmore, Okla., tire plant, adding Michelin brand production to the former Uniroyal plant that has already seen some $40 million in improvements over the last two years. ®ƒ Charles Schroeder acquired wire wheel maker Dayton Wheel Products in mid-February for an undisclosed amount. ®ƒ Even though it ruled Ford was not liable for an accident that left a California woman paralyzed, a Barstow jury ruled that the Explorer was "defective by design," making it prone to rollover problems. ®ƒ BMW recalled 1,300 of its 2002 5-Series cars because the tires – Continental ContiTouringContact CH95s ®“ may have suffered sidewall cuts on the vehicle production line. The impacted tires have DOT codes 4001, 4101 or 4201. ®ƒ Bridgestone/Firestone is building a 608,300-square-foot distribution center near Dallas, and is providing a year’s supply of tires to the Roanoke (Texas) Fire Department for its emergency rescue units. ®ƒ In a scheme to push natural rubber prices up as much as 30%, Thailand, Indonesia and Malaysia are reportedly cutting production by 10%, and are threatening to convert plantations over to cash crops like coffee and cocoa. ®ƒ Taiwan’s Federal Corp. posted 2001 sales of $89.4 million, a record for the company and 13.3% higher than 2000. Some $20 million of its sales were to dealers in North America. ®ƒ A Cincinnati-area Firestone Tire & Auto Service Center has been named in a wrongful death suit brought by a couple who lost their unborn baby in an accident they allege was caused by a rear tire that was severely underinflated due to an unnoticed crack in the wheel. The couple claimed they took their car to the store multiple times because the rear tire was losing air, before the February 2001 accident. ®ƒ Goodyear’s new customer satisfaction and safety program ®“ "Good to Go" ®“ at its company-owned tire stores includes inflation pressure checks and hand-torquing lug nuts as part of a detailed procedure of releasing a vehicle after service work has been completed. ®ƒ Commercial vehicle brake system maker Wabco and Groupe Michelin have co-developed a tire pressure monitoring system for commercial trucks and buses ®“ called Integrated Vehicle Tire Monitoring (IVTM). The system will hit the European OE and replacement markets this year. ®ƒ Goodyear’s Wrangler MT/R will be standard equipment on the 2003 Jeep Wrangler Rubicon, which made its debut at the recent North American International Auto Show. ®ƒ Using its own distributors, TBC Corp. is now supplying tires to company-owned Midas auto repair centers in a program that may expand to include 2,000-plus franchised Midas locations. ®ƒ For the third time in the last four years, readers of The Trucker named Michelins as the best truck tire in the driver newspaper’s sixth annual Reader’s Choice Awards. ®ƒ Hankook Tire Co. is shifting 30% of its tire production to China, allowing its plants in South Korea to focus on radial high performance tires. Hankook plans to boost annual unit production in China from 5.9 million to 10 million in the next five years. ®ƒ Carquest Auto Parts will hold its annual National Law Enforcement Torch Run for Special Olympics Awareness Day, on Apr. 6 in local communities of Carquest locations. ®ƒ Now in bankruptcy, Hayes Lemmerz will close two North American wheel plants, including its aluminum passenger wheel facility in Somerset, Ky., according to reports. ®ƒ TRIB’s Web site ®“ www.retread.org ®“ now features a message board where users can post comments and questions about retreads, rubber on the road, retread safety, and environmental issues. ®ƒ OK Tire Stores, with 215 franchised retail locations across Canada, will now offer tires from Continental and Pirelli, and signed NHL legend Gordie Howe as spokesman. ®ƒ Bandag’s Quality Design Systems (QDS) unit acquired Open Road Technologies, a commercial tire and retread information management system developer. ®ƒ Information about the annual Michelin/TANA scholarship program is now available at www.scholarshipprograms.org/fsp_michelin.html or by calling Michelin at 864-268-3363. ®ƒ SEMA Memorial Scholarship Fund program will now award scholarships to both college and vocational technical students. Information is available at www.sema.org, with applications due by May 31. ®ƒ Nihon Keizai reported that Sumitomo Rubber Industries is building a $78 million radial passenger tire plant in Jiangsu, China, that will come on-stream in 2004. ®ƒ TANA/ITRA will hold two one-day Commercial Tire Service Technician Training & Certification Seminars in the Birmingham, Ala., area on Mar. 20-21. Call 800-426-8835 or 502-968-8900 for registration details. ®ƒ New mandated federal diesel engine emissions standards, which require a 40% cut in nitrogen oxide emissions on engines sold after Oct. 1, are expected to dramatically increase the cost of new Class 6-8 trucks. ®ƒ Tire Barn Warehouse, with 21 retail stores in Indiana and two in Illinois, is now a member distributor of American Car Care Centers, covering the state of Indiana. ®ƒ Titan International replaced its $115 million credit line with a new $119 million financing package from GE Capital Corp. ®ƒ. Goodyear closed its 1,200-tire-per-day plant in Marikina, Philippines, due to soft market demand. ®ƒ Reports say that NHTSA is planning exploratory research into retreaded truck tires, including performance testing vs. new tires, and is seeking outside contractors to assist.

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Did You Know

23.8, 22.4

Average number of minutes U.S. workers spend commuting to work in 2000 and 1990, respectively, according to the U.S. Census Bureau.

72

Percent of sport compact car owners between the ages of 16-25, according to SEMA.

59

Percent growth of sport compact accessory sales – including tires ®“ between 1999 and 2000, according to SEMA.

47

Percent light trucks and SUVs comprise of all aftermarket product sales – including tires ®“ in 2000, according to Lang Marketing Resources.

14

Number of provisions in the TREAD Act that were supposed to be completed and in force by June 2002, according to NHTSA report.

5

Actual number of TREAD Act provisions completed by February 2002, according to NHTSA report.

0

Number of times the phrase "tire registration" appears in entire TREAD Act legislation.

 

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