Execs Say Dealers Should Believe in Goodyear’s Rebound
On Feb. 7 in Orlando, Fla., Robert Keegan, Goodyear’s chairman and CEO, addressed dealers with optimism ®“ and humility. "What a difference a year makes," he began. The 2003 dealer meeting, according to Keegan, was a preamble to serious changes that would occur within the company’s ailing North American Tire division.
The two-day 2004 Goodyear dealer meeting included presentations by Keegan and North American Tire division executives, a trade show, breakout sessions and dealer workshops.
Citing big wins in Goodyear’s truck OE business and the three-year union contract signed in September, Keegan described 2003 as a year of pluses and minuses. "Despite our financial challenges, we are still investing in new businesses and entering new markets," he said.
A day earlier on the same stage, Jon Rich, president of Goodyear’s North American Tire division, called 2003 a tale of two years. "In the first half (of 2003), tire manufacturers saw shipments decline 4%," noted Rich. "In the second half, we started to see things turn around. There was 5% growth, leading to a net overall increase of 1%." He added, "We saw dramatic increases in our truck tire business in the second half of the year, and that’s a sign the economy is picking up."
"This is the start of something big," said Keegan in his speech, "and not just simply because of the new Assurance product line. The Assurance launch is one of many actions and changes that are helping to set the stage and celebrate the momentum of Goodyear’s turnaround. Assurance isn’t the only arrow in our quiver."
A New Reality
Keegan detailed the overall strategy for North American Tire in 2004 and beyond: "North American Tire, today, has one direction, one winning set of strategies and one agenda," he said. "This is our new reality."
This new reality, Keegan said, is continually being formed by seven strategies, which he calls "reasons to believe." "I came to this meeting hugely energized about our business, our relationships and what we’re going to do moving forward," he said. "That confidence is based fundamentally on seven reasons to believe that we will be the best company in our industry."
Those seven strategies, according to Keegan, are:
1. Maintain an exceptional leadership team
2. Invest in quality, new products and low-cost manufacturing
3. Aggressively lower cost structure and reduce expenses
4. Leverage distribution capabilities more fully
5. Build on brand strength
6. Lead the way in product introductions
7. Create an advantaged supply chain.
"Those seven reasons to believe, collectively, are extremely powerful," Keegan concluded. "If we commit to these behaviors and focus on these seven reasons to believe, we will turn this great company around."
Expecting a Rebound
Rich said that North American Tire is positioning itself for a financial turnaround. Last year "will go down as one of the most difficult, financially, in the history of North American Tire," said Rich. "At the same time, I am confident the steps we took have positioned our company for a rebound in 2004. We still have a long way to go.
"We took dramatic steps and made the tough decisions," Rich said. "There were 4,200 fewer workers by the end of the year. We closed our Huntsville, Ala., plant. We reduced capacity by 7%," he recalled.
"This year, we will add lean manufacturing to our Six Sigma efforts," said Rich. In addition, "we are raising the bar (in supply chain) with what we call OTIFNE ®“ On Time, In Full, No Errors. If the tire’s not there, you can’t sell it," he told dealers. "No longer will orders go into the endless black hole of backorders." Part of that new OTIFNE strategy is the addition of available-to-promise (ATP) dates, which sources told Tire Review would be available on Goodyear’s Tire HQ dealer Extranet by Mar. 1. ATP dates are expected to reduce lost sales and backorders caused by stock outs.