Taking a Big Step
Reports Say Georgia Site of Planned Toyo Plant
It’s existing capacity stretched to the limit, Toyo Tire & Rubber Co. took a giant step forward, announcing on Feb. 17 plans for a new $150-million passenger and light truck/SUV tire plant that would come on stream in 2006. News reports out of Atlanta in early February indicated the company received approval to build the plant in Bartow County, Ga., about 60 miles north of Atlanta. Toyo said the plant would have the capacity to produce two million consumer tires per year.
Company officials said Toyo had been incrementally increasing production capacity at its two passenger tire plants in Japan to meet growing North American demand, but "these plants have little capacity for further expansion," and "local production (in Japan) is expected to help hedge against currency fluctuation risk."
Toyo, the world’s 10th largest tiremaker, with 2003 tire sales estimated at $1.4 billion, also operates a joint venture plant in China, has a joint venture OTR plant in Japan, and is a partner with Yokohama Rubber Co. and Continental Tire North America in the GTY Tire Co. plant in Mt. Vernon, Ill., which produces only medium truck tires.
Toyo officials said the new plant would be located in the eastern U.S., and the location would be chosen from "several candidates." However, the Atlanta Journal-Constitution reported on Feb. 3 and Feb. 5 that Toyo had received zoning approval in Bartow County.
Toyo’s U.S. sales and marketing arm, Toyo Tire USA Corp., is based in Cypress, Calif. There was no word from the parent company on how or if the new plant would have any impact on the sales and marketing operations.
With the move, Toyo would become the third Japanese tiremaker with its own dedicated production facility in the U.S.; Bridgestone Corp. was the first when it bought the former Firestone Tire & Rubber Co. plant in LaVergne, Tenn., in 1983; Yokohama Rubber Corp. acquired a plant in Salem, Va., when it purchased Mohawk.
"Producing Toyo tires at a U.S.-based facility will more fully enable us to serve our customers in North America," said Yoshio Kataoka, Toyo’s president and CEO. "Our greatest demand is in the North American market.
"We take very seriously our commitment to the communities where our facilities are located," said Kataoka. "Toyo is, and will remain, a good corporate citizen and a good neighbor."
DeWine Tire Age Bill Pulled After TIA Objections; May Resurface
On Feb. 11, the Tire Industry Association (TIA) announced that it had stopped a proposed federal bill that would have required tiremakers and retailers to provide to consumers in writing the exact date of manufacture for the tires they sell.
The "Tire Safety Awareness Act of 2004" that Ohio Sen. Mike DeWine proposed in late January would also have required the National Academy of Sciences to conduct an extensive study on the effects of age on tire performance and how those results impact vehicle safety and should be communicated to consumers.
TIA and SEMA issued a combined objection to the bill three days after DeWine made his proposal. The groups contended that forcing retailers to provide "born-on" dates for the tires they sell without firm scientific evidence may erroneously suggest to consumers that age signifcantly impacts tire reliability.
"TIA knew that the mandate on dealers was premature without a study being completed," said Becky MacDicken, TIA’s director of government affairs. "Without any available scientific data on tire aging, the mandate would have put a huge liability on our tire dealers and caused greater consumer confusion and potential inventory nightmares."
DeWine said he will continue his efforts to pass a bill to improve tire safety.
Conti Saves Money by Outsourcing Warehouse, Logistics Operations
In a move to cut operating costs, Continental Tire North America (CTNA) has retained Exel to take over its tire warehousing and logistics management operations in North America.
Headquartered in the U.K. and with operations around the world, Exel is no stranger to the tire industry. Since 1995, Exel has run five Goodyear distribution centers in the U.S., and in July 2002 it was retained to be Goodyear North American Tire’s "lead logistics and shipping provider," and now runs all of its warehouses and trucking operations.
Terms of the agreement were not announced, and the agreement will be finalized by Apr. 1, according to CTNA.
According to CTNA, Exel will assume management of the tiremaker’s warehousing and logistics at its five North American plants and seven warehouses in the U.S. and Mexico.
CTNA did not indicate how much money its deal with Excel will save the company. It is expected that CTNA will post a loss of more than $100 million for 2003.
Goodyear Wants $650-Million Loan to Repay Debt; SEC Investigates
Just days after announcing it was taking on an additional $300-million loan, Goodyear Tire & Rubber Co. changed its mind and decided to seek a $650-million loan. The announcement came just one day before Goodyear’s annual dealer meeting in Orlando, Fla.
About a week later, the tiremaker reported that it was under investigation by the Securities and Exchange Commission for several accounting irregularities. News of the SEC investigation sent Goodyear stock down nearly 10%, to $8.96 a share on the day of the announcement.
The new loan, arranged by JPMorgan and Citigroup, is in addition to the $1.3-billion credit line it arranged last year. Goodyear said the new $650-million loan would be used to repay some of that existing debt and meet short-term operating costs.
In yet another financial move, Goodyear also announced its intention to issue a private offering of approximately $650 million in senior secured notes. The company said it would use the proceeds from bond sales to prepay its U.S. term loan facility, reduce a portion of its U.S. revolving credit facility and repay other debts.
Analysts estimate that Goodyear faces some $3 billion in debt, including pension fund shortfalls but not counting current credit lines and loans. Goodyear posted losses of $332.4 million for the first nine months of 2003. At press time, the company had not indicated when it will report full-year results.
Truck Tires Grow, Rest Level in 2003 Shipments
Medium truck tire shipments in 2003 ®“ both OE and replacement ®“ saw their biggest increases in years, according to preliminary tire shipment data released by the Rubber Manufacturers Association (RMA). Meanwhile, shipments of passenger and light truck tires saw only modest growth.
Despite a wild year of carmaker and dealer incentives, it doesn’t appear the OE market had such a good 2003. Compared to 2002 shipments, OE P-metric tire shipments actually fell 4.9%, according to the RMA, totaling 54.54 million units. Meanwhile, OE shipments of LT-metric tires fell 4.2% vs. 2002, reaching just 7.95 million units for the year.
LT-metric replacement tire shipments saw slight growth of just 1.9% vs. 2002 to 34.26 million tires, while replacement P-metric shipments increased 2% to 194.39 million tires.
Imports of P-metric tires, however, grew substantially, jumping 15.8% vs. 2002 to 81.68 million, and LT-metric imports increased by 12.8% vs. 2002 to 19.61 million units.
Medium truck tire shipments saw the most significant gains, perhaps heralding recovery for the U.S. economy. OE shipments of medium truck tires grew 7.7% over 2002 to 4.16 million tires, the greatest number of OE tires shipped since 2000’s 5.59 million units. Replacement shipments increased 5.4% over 2002 numbers, reaching 15.52 million units, the most in at least seven years. At the same time, imports of medium truck tires dropped 1.6%, totaling 8.23 million tires.
Goodyear Outsources HR to Save $45 Million
In a move the company said would save $45 million over the life of the deal, Goodyear has outsourced a large part of its corporate human resources operations to Dallas-based ACS.
Under the 10-year contract, ACS will provide much of Goodyear’s North American human resources services, including payroll, medical benefits administration, call center, training, recruiting and staffing, as well as global relocation services.
As part of the contract, announced Feb. 2, Goodyear also transferred some 100 of its corporate human resources staff to ACS.
The tiremaker already outsources much of its warehousing and logistics operations to an outside party.
According to Goodyear, ACS will provide "improved human resources services and support, as well as more efficient processes and cost savings," and the contractor will "institute a major technology upgrade for Goodyear’s HR information system, allowing for greater efficiencies and lower costs."
"ACS has distinguished itself as a leader and pioneer in the business process and human resources fields," said Kathleen Geier, Goodyear senior vice president of human resources. "We are extremely impressed by the breadth and scope of the HR services we will be receiving as part of this agreement with ACS."
Cooper to Increase U.S. Capacity with New Capital
Cooper Tire & Rubber Co. is investing $32.1 million to increase capacity at three of its plants by 2.4 million tires. Most of the additional capacity will be dedicated to passenger, high performance and light truck/SUV tires.
The biggest capital investment will be made at Cooper’s Albany, Ga., plant, where the company will spend $19.4 million for new tread lines, four new tire building machines, 16 new curing presses and 56 new employees. Using its "cell production process," Cooper said it would increase Albany’s capacity by 1.39 million tires with half the number of workers needed in traditional manufacturing.
Cooper’s Texarkana, Ark., plant will see a $5.2-million investment in eight curing presses, additional tire building stations and 25 more employees, boosting its capacity by 560,000 tires annually. The Tupelo, Miss., plant will get six new curing presses and other equipment and 35 new employees under a $7.5-million investment there, boosting the plant’s capacity by 511,000 tires per year.
Cooper is planning numerous size additions to its Zeon UHP line ®“ including a new H-rated tuner market tire ®“ and to its Zeon XST, Discovery Sport HP and Discovery HT Plus light truck/SUV lines.
ACCC and Michelin Re-up on Relationship
American Car Care Centers (ACCC) extended its partnership with Michelin North America, signing a three-year contract extension in mid-January to supply its network of 1,100 ACCC dealers with Michelin, BFGoodrich and Uniroyal brand tires, as well as its American Radial lines, produced by Michelin. ACCC President and COO Len Lewin (right) signs the new contract as Jim Micali, MNA’s chairman and president looks on. Michelin has supplied tires to ACCC since the marketing group was founded in 1993.
OF NOTE
Pirelli Tire North America has earned OE fitments on the 2005 Ford Mustang (P Zero Nero in size P235/55ZR17), the Ford 500 and Mercury Montego (P6 All Season in size P225/55R18), and the new Ford Freestyle crossover vehicle (P6 All Season in size P225/60R18).
According to reports, Nokian Tyres will build a $120-million tire plant near Leningrad Oblast that will be operational in 2005; the tiremaker did not deny the reports but did say that it may expand its venture with Amtel in Russia.
Quarryville, Pa.’s Stoner Inc., maker of automotive cleaners, lubricants and coatings, was one of seven winners of the 2003 Malcolm Baldrige National Quality Award.
BFGoodrich is now the official tire of the American Speed Association Late Model Series, and BFGoodrich Traction T/A radial racing tires will be used by all competitors.
Bridgestone/Firestone North American Tire is sponsoring the Stars & Stripes Show Truck Events, a series of vehicle beauty competitions at four major truck events.
Bridgestone Corp. has increased prices on its passenger, LT/SUV and medium truck tires sold in Asia, Oceania, the Middle East, Africa and Russia. Increases will average 5% and vary by product and market.
Gardner Denver’s Champion air compressor unit celebrates its 75th anniversary this year.
For the third straight year, British Columbians voted O.K. Tire Stores as a Consumers’ Choice Award winner.
Reports out of Europe say Goodyear has patented a devulcanizing process that preserves the chemical composition and molecular weight of reclaimed tire rubber, making it suitable for re-compounding into new products.
After its attempt to sell its Bendix brake friction business to Federal-Mogul Corp. went unfulfilled, Honeywell now plans to bolster the product line with new products, advertising and technology.
Tenneco Automotive is offering limited lifetime warranties and 90-day, risk-free trial offers on its premium Walker exhaust, Monroe shock and strut, DynoMax performance exhaust and Rancho off-road suspension products.
SmarTire Systems is outsourcing some production of its pressure monitoring systems to Hyundai Autonet.
Specialty Products Co. purchased Light Racing Inc., maker of off-roading suspension components.
Retreading supplier Robbins was awarded ISO 9001:2000 quality certification.
The Greater Brownsville Improvements Corp. is working to retake the 200-acre parcel and millions in cash incentives it gave Titan International in 1996 to build a now-closed tire plant there.
Michelin North America said it would boost OE passenger and light truck/SUV tire prices by an unspecified percent sometime in the first quarter of 2004.
Goodyear earned supply agreements with Volvo in Europe and Brazil and became a standard tire supplier for Freightliner.
John Fiedler, the former Goodyear exec who joined the Cooper board of directors in April 2002, retired from the board and was replaced with Laurie Breininger, an executive with American Standard Companies.
Michelin North America has earned optional OE fitments for its PAX System run-flats on not-yet specified Honda and Nissan models.
U-Haul trailer rental locations have been instructed not to rent towable trailers to owners of Ford Explorers; the company cited the cost of defending itself against product liability suits as the reason for the policy.
Goodyear says it will repair its Spirit of America blimp, which crashed in early December near its Carson, Calif., base.
Royal Tire’s Tire One marketing group plans to add some 30 associate dealers this year.
Arnco SuperFlex flatproofing is an available option for Volvo skid steer loaders.
Through Mar. 31, service shops buying NAPA Brake and Chassis’ "Precision Engineered POS Kit" will have the chance to win a new Hummer H2.
Groupe Michelin signed an eight-year, $1.2-billion deal to outsource completely to IBM its information technology management and maintenance in Europe and North America, shifting some 600 Michelin employees to IBM.
