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With Lips Tight, We Try to Explain the Goodyear-SRI Implosion


Looking at the Goodyear-Sumitomo kerfuffle, there have been a lot of questions about the future of the Dunlop brand in North America and what the potential ramifications of this rather odd divorce.

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For background, on Feb. 13 we learned that Goodyear had filed for dissolution of its joint venture with Sumitomo Rubber Industries, a partnership that dated back to 1999.

Stating that SRI had engaged in “anticompetitive conduct in violation of applicable antitrust law,” Goodyear CFO Laura Thompson said the company “began arbitration proceedings seeking the dissolution of that global alliance.”

While neither side is willing to talk, it has been suggested that the “anticompetitive conduct in violation of applicable antitrust laws” that Goodyear claimed may, in fact, involve a federal investigation. Whether that is the case and/or if such is focused on SRI’s tire business, golf gear business or some other operation is unknown.


Signed in September 1999, the Goodyear-SRI alliance launched Goodyear Dunlop Tires Europe (GDTE) and Goodyear Dunlop Tires North America (GDTNA), both 75% owned by Goodyear and 25% by SRI, as well as another joint venture for tire sales in Japan 25% owned by Goodyear and 75% by SRI.

There was also a tire technology aspect, 51% owned by Goodyear and 49% by SRI; a purchasing company 80% controlled by Goodyear; and both companies could buy stock in each other.

Basically, the alliance gave Goodyear the rights to the Dunlop brand on those two continents, and aided Goodyear’s distribution in Asia. It was a very Goodyear-friendly deal, and all Goodyear could lose is Asian distribution.


On Feb. 13, SRI said it was aware that Goodyear had filed a dissolution petition with the International Chamber of Commerce (it was filed on Jan. 10), but offered no other comment at that time. Experts suggest, though, that it will take months – even years – for the Chamber to act and the alliance to be unwound.

“We are ready to negotiate for the dissolution of the alliance if Goodyear strongly hopes so,” SRI president Ikuji Ikeda said at a press conference in Tokyo later that week.

Goodyear execs don’t see a scenario where they don’t have control of the Dunlop brand in North America and Europe, or would lose the Goodyear-Dunlop plant in Buffalo. They’re not sure, though, how things will ultimately play out in Asia.


European tire industry blogger Ryan Hughes wrote a rather thorough synopsis of the situation in his Feb. 26 post in

“It is important to note that SRI can rightfully require Goodyear to buy its ownership interests in both GDTE and GDTNA. SRI can execute the same in circumstances like bankruptcy or violation of terms. SRI also has exit rights to compel Goodyear to purchase its joint venture shares under two possible conditions.

“Also, there is another clause pertaining to both the partners’ reputation. It cites that SRI can enforce exit rights if Goodyear, GDTE or its North American wing, GDTNA acts so as to mar the Dunlop brand’s tire business. It can force Goodyear to purchase its joint venture stake also if SRI’s share ownership in GDTE or GDTNA falls below 10% of the joint venture’s equity capital.


“In any of these cases, Sumitomo requires to give Goodyear a written notice about its intention to execute exit rights, within three months of the date these become exercisable.

“A negotiation process would determine the purchase price, and if necessary a binding arbitration procedure would be carried out for the same.”

So the short of that is Goodyear will likely end up with 100% control, and as chairman and CEO Rich Kramer said during the analyst call on Feb. 13, Goodyear is in good financial shape.

But once all of this is sorted out, what will Goodyear do with the Dunlop brand, at least here in the states? Continued benign neglect certainly isn’t an option, not in a market where mid-tier tires are capturing the most attention. It has no second-brand fall back position; the equally neglected Kelly-Springfield brand cannot fill in should the unthinkable happen and Goodyear lose Dunlop.


SRI has its Falken brand, and can step up its already stated plans to build Falken out around the globe. And it has its own brand, which has been tied tightly to the struggling Sears Auto Centers (well, all of Sears is struggling) and TBC Corp.-owned stores.

It’s been a zany last five months. Wonder what will happen next?

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