Despite posting third quarter losses of $105.9 million, with the anticipation of further negatives in the fourth quarter, Goodyear Tire & Rubber Co. officials insist that its cost-cutting moves are on track to help turn around the financially struggling tire giant.
Goodyear told Wall Street analysts that it will save some $350 million this year through its cost-cutting initiatives, which include the closing of its Huntsville, Ala., plant and some non-tire facilities, and the recently announced elimination of another 1,200 jobs world wide. Goodyear’s goal is to reduce operating costs by at least $1.5 billion by 2006.
The negative third quarter results came even as global quarterly sales reached a record $3.9 billion, up from $3.53 billion for the same period last year. But pre-tax charges of $56 million for various restructuring moves, including the cutting of 500 management jobs at its North American plants, and a $49.3 million for liability claims hurt net results.
For the fourth quarter of 2003, Goodyear said it would take about $300 million in charges related to closing the Huntsville plant and to planned reduction of 1,200 jobs by the end of this year.
Still, there are some positive signs. The troubled North American Tire unit posted third quarter sales of $1.79 billion, its highest quarterly results in two years and up some 3% over the same period last year. Unit shipments, on an overall basis, are down three million tires compared to 2002, with most of that negative coming on the OE side.
Year-to-date sales through the first nine months of the year are nearly on par with 2002, even with the slow start in the early part of this year. However, North American Tire lost $31.8 million in the third quarter, and has lost some $100 million thus far in 2003.
In another cost-cutting move slated for 2004, Goodyear will reportedly ask that employee spouses switch to health insurance offered by their employers. This new policy would not apply to non-working spouses or those working for companies that don’t offer health coverage.
USPS Irks Industry With New National Retread Bid Plan
The United States Postal Service (USPS) wants to expand its purchase and use of retreaded tires, but a new bid proposal by the agency may end up hurting U.S. retreaders.
The financially troubled USPS said that it wants to increase usage of retreaded tires on its vehicles, but it needs to consolidate its purchasing systems to save money. Currently, the USPS buys all of its retreads through local suppliers, and there are nearly 200 individual and distinct contracts for local or regional service. Its recent request-for-bid seeks one national retread supplier.
The Tire Retread Information Bureau (TRIB) and Tire Industry Association (TIA) have both written USPS officials to express concerns that such a contract might cut those very same small retreaders out of USPS business.
While both TRIB and TIA admit the smaller retreaders may be awarded subcontracts under any national agreement, there is no guarantee they will see any business under the new contract plan. Even then, as subcontractors for a national contract, smaller retreaders would have no control over pricing.
Noting that the U.S. retreading industry has dramatically shrunk over the last decade, in a letter to USPS officials, Becky MacDicken, TIA’s director of government affairs, said, "If the USPS lets the contract to a larger firm that stays within its own network of retread facilities, or if there is a change of heart by the USPS in a couple of years, there may be no independent retreaders left."
In her letter, MacDicken cited two retreaders that currently have local or regional contracts with the USPS ®“ Community Tire Retreading in St. Louis and Tire Recappers in Nashville, which get 10% and 70%, respectively, of their total business from work for the USPS. "Neither company will be able to bid on the national contract due to their size," she said. "These are the types of businesses that will suffer at the hands of a national contract."
At press time, there was no word if the USPS would reconsider its contract plans.
SEMA Showgoers Top 105,000; Tire Industry Loses Own Annual Event
Every year the Specialty Equipment Manufacturer Association (SEMA) Show grows larger and more vital to the automotive aftermarket. No real surprise then that this year’s numbers topped 105,000 visitors for the first time, a record turnout, according to SEMA, and an increase of some 30% over the 2002 show.
But while there were record numbers of visitors, exhibitors, meetings, hospitality suites and other events, there was one casualty. After years of sharing space with the larger SEMA event ®“ including two years as part of the "performance wheel and tire" section of the multi-hall show ®“ the International Tire Expo (ITE), the tire industry’s lone remaining annual trade show, had its seventh and final run.
Next year, the ITE will be dropped in favor of "Performance Wheel and Tires, Sponsored by TIA." In 2004, SEMA showgoers will find a brand-new convention hall section filled with performance tires, wheels, bolt-on products and the equipment needed to install and service them.
Before it was time to pack up and get out of Las Vegas, TIA reported it has more than 4,700 paying members with plans to sign on many more. TIA officials also told attendees to watch for the first-ever, comprehensive TIA member directory early in 2004. This follows on the heels of the association’s new bi-monthly publication for members, Tire Industry Today.
New TIA President Larry Morgan laid out his agenda for the coming year, with special emphasis on technician training and the creation of a national image-building promotion campaign funded through a checkoff program. "Our plan going into 2004 is to develop, fund and implement a similar checkoff program that will benefit every TIA member," he said. "We want this to be a multi-year program that will give our industry a statistical edge in consumer confidence for all of us and the tires we sell."
Morgan also pledged to show the strength of TIA to the state tire dealer associations and join with them in working toward common goals.
"We will explain how TIA will be operated as a business with a firm commitment to a fiscally responsible line-item budget. Our trained lobbyists will work with TIA members in Washington, D.C., and we will promote consumer education and training for dealer members and their employees."
Perhaps the most striking messages from the incoming TIA president were tied to TIA activities and services. "There are 222 million vehicles out there right now," he said. "To properly service those vehicles and their owners, TIA will deliver enhanced training programs to its members who are called upon daily to service all types of vehicles and customers."
One of Morgan’s goals is to increase membership substantially. "There are opportunities out there for all of us, but only if we unite, grow and support each other as fellow TIA members," he said. Toward that end, TIA and American Car Care Centers announced a program whereby all ACCC dealers will become TIA members (see Tire Review, November 2003).
Another of TIA’s strategic goals centers around what it calls "the certified store concept." "This is all about TIA members receiving specialized training and testing in order to become certified tire and service centers," Morgan said. "By being ‘certified,’ the tire dealer will build greater trust and confidence with his customers."
TIA announced at the show that members participating in the certified store program, scheduled for launch in 2004, will be able to take advantage of the Motorists Assurance Program (MAP) automotive accreditation.
TIA will incorporate MAP’s passenger tire and wheel uniform inspection and communication standards into its overall menu of offerings for dealer members. MAP’s standards cover underhood and undercar systems, and members that participate will automatically fulfill some of the basic requirements for MAP accreditation.
Michelin North America/TIA Scholarship Award winners included Lacey Speck from Eastwood High school in Pemberville, Ohio ($10,000 scholarship); Erin Raisner of Vacaville High School in Vacaville, Calif. ($5,000); and Stephanie Yang of Kilborne High School in Worthington, Ohio ($5,000).
Annually, Cooper Tire & Rubber Co. presents $20,000 to a lucky dealer attendee of TIA’s Breakfast With the President event. This year’s winner was Peggy Fisher, president of Fleet Tire Consulting and a member of the TIA Board of Directors.
John Buettner, longtime TIA staffer, was honored for his 20 years of service to the assocaiaion. Buettner is also executive director of both the Indiana and Illinois state dealer associations.
ASE Offers Computer-Based Tech Certification Testing Next Year
The National Institute for Automotive Service Excellence (ASE) will offer technician certification tests in a computer-based format starting in January 2004. ASE will offer 20 tests in three categories ®“ including regular and recertification exams ®“ through a computer-based test (CBT) delivery system at more than 200 locations nationwide.
"The CBT test format was developed in response to industry requests for more frequent access to ASE certification tests," said Bill Kersten, senior vice president of operations. "By offering this format in addition to the traditional paper-and-pencil, twice-annual test administrations, ASE has greatly increased the availability of achieving certification."
Initially, ASE will offer certification tests for its Automobile Series (A1-A8), the Advanced Level (L1) and Parts (P2), and will consider adding to the test series in the future. CBTs will be administered at secure, proctored test centers, rather than over the Internet, according to ASE, to protect "the integrity of the ASE certification process."
Technicians can register for CBT tests by calling 800-525-6929 from Jan. 5 through Feb. 9, 2004, and tests will be administered between Jan. 20 and Feb. 15, 2004, including on weekends. ASE said the ASE/CBT Call Center will answer questions and set up testing appointments. Individual test centers will have different hours and days of availability, including one weekend day. One registration fee covers the entire two-week testing period.
The registration fee is $68. The regular and recertification test (A1-A8, P2) fee is $35 each and the Advance Level test (L1) is $70. Recertification test fees have a $90 maximum total, not including the registration fee, which means that after registering for three recertification tests, additional tests are free.
Goodyear, Michelin Earn Wheel Positions With Volvo and Mack
Goodyear Tire & Rubber Co. and Michelin North America both earned new supply agreements with Volvo Trucks North America.
Goodyear will now be the standard medium truck tire on all Volvo brand trucks. The three-year deal with Volvo Trucks North America includes continuation of Goodyear’s standard fitment contract with Volvo subsidiary, Mack Trucks Inc.
Meanwhile, Michelin announced that it also signed a three-year deal with Volvo and Mack. Michelin brand medium truck radials can be specified on Volvo VN tractors, Volvo VHD trucks and tractors, and on Mack brand tractors. TR
Winter CTS Training Tour Dates Set
TIA has set the dates and locations for the Winter 2004 Commercial Tire Service (CTS) "Truck Tire Training Tour." The training tour features a series of back-to-back, one-day technician training and certification seminars, which allows companies to split their workforce so that all employees have access to the program.
TIA said that the Fall 2003 Tour trained 244 technicians in 10 different cities across the country. The cost is $250 for each technician needing a copy of the TIA CTS Manual, or $175 for those who already have a copy. Every participant must have a copy of the manual in order to take the certification exam.
The Winter 2004 CTS Tour kicks off in Philadelphia on Jan. 27-28. From there, the tour continues to Richmond, Va., on Jan. 29-30; Columbus, Ohio, on Feb. 3-4; Cincinnati on Feb. 5-6; Chicago on Feb. 10-11; Madison, Wis., on Feb. 12-13; Des Moines on Feb. 17-18; Salt Lake City on Feb. 19-20; Portland, Ore., on Feb. 24-25; and Seattle on Feb. 26-27.
A complete list of locations with registration information is available on TIA’s Web site at www.tireindustry.org.
Seven More tiremakers Set Price Increases
The annual year-end tire price hike bonanza continued with seven more tire producers planning increases over the next few months.
Effective Dec. 1, Continental Tire North America boosted prices by 3% to 5% on Continental, General, Semperit and private brand medium and heavy truck tires and OTR tires.
Goodyear increased prices on all of Goodyear, Dunlop and Kelly Springfield branded and private brand passenger and light truck/SUV tires by 2% to 3% as of Dec.1. Prices for its branded and private brand commercial tires were increased by 4% to 6%, and retread material prices were boosted up to 6%, also effective Dec. 1.
Also effective Dec. 1 was a 3% to 5% increase by Kumho Tire USA on all of its passenger and light truck/SUV tires. Kumho had previously taken a 5% increase on its commercial tires, effective Nov. 1.
Michelin North America said it was increasing prices on its Michelin and BFGoodrich brand replacement commercial tires by "an overall average of 5%," effective Jan. 1 for direct-bill fleet accounts and Feb. 1 for dealers.
Hankook Tire America announced a Jan. 1 price increase of 2% to 4% on all of its passenger, light truck/SUV and medium truck tires. Meanwhile, Yokohama Tire Corp. said it was raising prices from 3% to 5% on all of its commercial tire lines, effective Jan. 1.
Bridgestone/Firestone North American Tire and Bridgestone/Firestone Canada jointly announced an across-the-board price increase of up to 5% on all Bridgestone, Firestone, Dayton, associate and private brand replacement and OE passenger, light truck/SUV, medium truck, OTR and agricultural tires. Those increases take effect Jan. 1.
Amerityre Starts Poly Tire Testing
Amerityre Corp., which some two years ago began heavy development work on airless polyurethane passenger tires, announced in mid-November that it had begun production of a limited number of prototype urethane tires based on its "air, no-air" run-flat technology.
Amerityre said ARCUS allows the tire to operate normally with or without air pressure. Amerityre Chairman Richard Steinke said the prototype tires were undergoing extensive testing, and additional prototypes will be sent to an independent laboratory to determine if the tires comply with applicable U.S. DOT standards. Steinke said testing should be completed in January 2004.
Third National Tire Safety Week Set – Apr. 25 – May 1
The Rubber Manufacturers Association (RMA) confirmed just before the start of the 2003 SEMA Show that it is moving forward with plans for the third annual National Tire Safety Week (NTSW).
Since its inception in 2002, NTSW participation has grown, with more and more dealers and suppliers participating each year. Last year, more than 4,000 tire retail outlets participated.
NTSW 2004 will take place Apr. 25 to May 1. NTSW is part of RMA’s "Be Tire Smart – Play Your PART" program, which is dedicated to educating drivers about the importance of tire care and safety.
For the 2004 program, RMA is seeking to extend its reach by recruiting additional partners in the tire industry, state highway safety officials, and others.
"Our goal is to reach every American motorist with crucial tire care and safety information, and the most effective way to do that is to enlist the active participation of industry partners across the country," said Don Shea, RMA president and CEO. "That’s why we are encouraging all tire dealers to join us to promote important safety messages to motorists."
For information on NTSW and RMA’s "Be Tire Smart – Play Your PART" program, visit www.rma.org or contact RMA at 202-682-4800.
-American Tire Distributors’ 14th annual charity golf tournament, held Oct. 13 in Charlotte, N.C., raised more than $40,000 for Loaves & Fishes, a non-profit that provides food to people in crisis.
-Toyo’s Proxes RA-1 is now the spec tire for all classes in the SCCA Pro Racing SPEED World Challenge Series beginning in 2004.
-Groupe Michelin paid a reported $28 million for a 15% stake in India’s Apollo Tyres, and owns a 51% share of a joint venture it formed ®“ Michelin Apollo Tire ®“ which plans to build a $70 million tire plant in India.
-Automotive Warehouse Distributors Association will officially become part of the Automotive Aftermarket Industry Association on Jan. 1.
-Honeywell is expanding production of its Beltec fiber in Europe, Asia and possibly in North America "to meet the growing need for tire cap plies" by tiremakers worldwide.
-BFGoodrich Mud Terrain T/A KM-shod vehicles are being used on the 32,000-mile Longitude Expedition, a nine-month circumnavigation of the globe to raise funds for Parkinson’s disease research and awareness.
-At its dealer meeting, held in conjunction with the ITE/SEMA Show, Bridgestone/Firestone said it would revive its decades-old "Where the Rubber Meets the Road" Firestone ad theme.
-Bob Merrill, owner of Horsepower AutoCare in Windham, Maine, was named the NAPA/ASE Technician of the Year.
-Bridgestone/Firestone and TRIB are offering free heavy-duty dual head pressure gauges to listeners of the Open Road Café radio program.
-Uniroyal’s tie-in with youth soccer resulted in a $286,000 donation of soccer equipment to programs around the U.S.
-Tread Rubber Manufacturers Group donated $21,500 to TRIB during the recent ITE/SEMA Show.
-Goodyear’s Two-Piece Assembly OTR "tire" won Construction Equipment’s Top 100 Award for 2003.
-Goodyear will re-badge the race tires it supplies for NASCAR’s Craftsman Truck Series to Goodyear Wrangler for the 2004 season.
-TRIB news releases and other tire repair and retreading materials will be available in both Spanish and French next year.
-The Coalition for a Level Playing Field, the parts jobber group that sued a number of auto-part retailers over price discrimination issues, reached a settlement with four unnamed companies, which were defendants in the group’s original suit.
-Michelin North America’s sale and auction of Bib bobbleheads earlier this year netted $250,000 for the Special Olympics.
-Pirelli Tire North America launched the "Pirelli Driving Experience," a traveling dealer-oriented ride-and-drive program. See www.us.pirelli.com for details.
-Equipment maker Gehl Co. now offers Arnco SuperFlex flatproofing as optional equipment on select skid-steer loaders and telescopic material handlers.
-Myers Industries paid a record $564,350 settlement for using unlicensed computer software.
-Wal-Mart said it will open some 50 new discount stores and another 80 "supercenters" in the U.S. next year.
-Carefree Tire has opened a new distribution center in Chattanooga, Tenn.
-Goodyear’s new Eagle Ultra Grip GW-3, a winter UHP tire, is now available in 21 sizes ranging from 15- to 18-inch wheel diameters and 35- to 65-series aspect ratios.
-European Action Programme for Road Safety establishes strict minimum standards for such commercial vehicle safety devices as ABS, rear view mirrors, side protection, and anti-splash tires; the regulations start in 2006.
-Groupe Michelin has begun test production at its new passenger tire plant near Moscow, and plans to reach full two-million-unit-per-year capacity by 2006.
-Vredestein Hi-Trac was ranked top in Auto Express magazine’s annual test of H-rated tires.
-Falken has brought a DOT version of its off-road RS-01D rally tire to the U.S., in sizes ranging from 175/65R14 to 215/60R15.
-Nokian Tyres purchased Grimstad Vulk As and Mandal Vulk As, gaining four locations and one retread plant in southern Norway.
-Titan International met minimum share price requirements and has remained in good standing with the NYSE.
-Goodyear Dunlop Tyres U.K. will end tire production at its historic Wolverhampton, England, passenger and light truck tire plant by early 2004, eliminating some 400 jobs.
-Bridgestone/Firestone’s Aiken County, S.C., plant was named one of four manufacturers of the year by the South Carolina Chamber of Commerce.
-Bridgestone/Firestone disputed a November report on CBS News that it was destroying Firestone Steeltex tires intended as evidence in a California class action suit. The report showed tires being shredded at a recycling facility located near the tiremaker’s LaVergne,Tenn., plant.
-Chuck Telle, president of Telle Tire & Auto Service in St. Louis, was inducted into the Missouri Tire Industry Association’s Hall of Fame.
-RMA has partnered with six chemical and asphalt trade groups for a first-ever conference on rubber modified asphalt, scheduled for May 17-19, 2004, in Grand Rapids. Mich.
-Targeting truck and OTR tire dealers and end-users, Yokohama Tire has added a commercial tire section to its www.yokohamatire.com Web site.
-News reports said Groupe Michelin plans to increase its investment in Chinese tire production by "several hundred million dollars" over the next decade.