There is a theory that all news stories are born equal. The level of their importance increases as the story reaches the top of the pile on the news editor’s desk. The Firestone recall moved latent news about possible problems with Goodyear tyres to the top of the pile. The National Highway Traffic Safety Administration have 58 complaints against Goodyear, 46 of which were filed after the announcement of the Firestone recall. Goodyear is facing a pincer movement, on the one hand being accused of being too slow in their introduction of changes made to the Load Range E tyre to improve safety, and on the other of carrying out a “silent recall”. Learn more about this in TYRES & ACCESSORIES’s December edition.
The sharp drop in prices of Goodyear shares over the past three months has put extreme pressure on Goodyear’s top management. Possible reasons for the drop include increased raw material costs and apprehension among shareholders that the Dunlop acquisition could have a negative impact on results in the year 2000.
The association VDA has calculated that 3.8 million new cars were registered 1999 in Germany; 2% more than in 1998. The association is expecting a decline in registrations for the year 2000 of between 2 and 5%.
Unions working for car manufacturers Daewoo, Ssangyong, Hyundai and Kia are opposing the sale of car manufacturer Daewoo to foreign businesses, believing that such a sale would lead to job losses and pose a danger to the domestic supply industry.
With the exception of Peugeot, Porsche and Beru, other share prices from automobile and tyre companies have fallen to an all-year low. Companies in this category include DaimlerChrysler, Volkswagen, Kiekert, Delco Remy, Delphi, Phoenix and Johnson Controls, as well as Continental, Cooper, Yokohama, Toyo and Goodyear.
Nokian Tyres has terminated the agreement, made in November 1997, with Tofan, under which the Romanian manufacturer produced some agricultural and industrial tyres for the Finnish company. The reason given was that Tofan was unable to meet quality expectations.
In December, Taiwanese tyre manufacturer Cheng Shin, producer of the Maxxis brand, opened a technical centre in Georgia where the company employs five people. Cheng Shin already has an R&D centre in Taiwan, employing more than 150 technical staff. The company does not plan to open other R&D centres outside Taiwan.
China Tire Holdings, listed on the NY Stock Exchange since 1993, has brought a law suit against Goodyear in Ohio. Amongst other things the Chinese company accuses Goodyear of violating the RICO statutes and is seeking US$ 3.5 bn in actual and punitive damages from the American rubber giant.
This year Deutsche Goodyear will invest a total of 50 million marks in new production facilities at its Philippsburg factory while simultaneously introducing more flexible working hours. Having obtained the agreement of the works council to a seven-day week (now 21 shifts per week instead of the former 17 shifts), productivity at the German Goodyear factory is now set to increase once more. The additional capacity thus created will be utilised chiefly to produce high-speed tyres, whose market importance in Germany has been rising steadily for several years. Central to the investment is super-modern machinery for the further improvement of product quality in the manufacturing process for high-speed tyres -–a market segment of central importance to Goodyear’s strategic development. “The production volume of five million tyres at Philippsburg will remain unchanged for the time being”, declared Leo Ruf, a member of the management, “but the share of high-speed tyres in our annual production will go up by 700,000 to approximately four million units.” The background: Since 1995 demand for technologically sophisticated tyres in high-speed categories of more than 240 km/h (speed indices W, Y and ZR) alone has grown by over 200,000 units per year in the German market. This interesting niche is estimated to double from 1.5 to at least three million units by the year 2001.
Dr. Hans-Joachim Nikolin, Chairman of the Semperit supervisory board and board member of Continental AG, confirmed during a supervisory board meeting of Semperit Reifen Ges.m.b.H. in Traiskirchen in mid-December that the Semperit factory at Traiskirchen will play an essential strategic part in the introduction of a new manufacturing process. Continental has developed a European strategy for the Modular Manufacturing Process (MMP), envisaging three MMP factories, each responsible for the supply of one large European region. The Traiskirchen factory has been chosen to supply the South and East European markets. The decision about a second MMP location to supply Western Europe is said to be imminent, whereas a suitable supply plant for the North European region has not yet been found. The production plan for the year 2000 gives 1.5 million car tyres made by the standard and one million by the MMP process, a total number of 2.5 million units as originally planned. However, since the manufacturing process of MMP tyres is less complicated than the standard production process, a reduction in the workforce is inevitable and cannot be compensated for by the planned increased output of 825,000 commercial vehicle tyres in the year 2000. The MMP tyre is produced in modules allowing the cost-effective production of smaller lots, and a fast reaction to the requirements of the market. MMP is therefore primarily designed as a means of reacting fast to developments in the replacement markets, and only in exceptional cases would it be considered for original equipment. This production process does away with the necessity to make a large variety of products at the standard factories, thus freeing them for large-series production.
Dunlop GmbH (Hanau) expects further turnover and profit increases in the 1999 tyre business. Turnover will rise by almost ten per cent over the previous year to 1.64 billion marks. The pre-tax group profit will be significantly above the 1998 level of 133 million marks. The good business development is due to consistently strong demand for Dunlop tyres both in original equipment and in replacement. High winter tyre sales figures also contribute to this development, representing approximately 20 p.c. in Dunlop’s total German production. Dunlop 1999 winter tyre sales will probably have gone up by 16 p.c. over 1998. Since 1994 Dunlop GmbH has doubled its car tyre sales. During the last few years the Hanau tyre manufacturer has made progress in the high-performance tyre segment far above the market average, and the company operates a profit-sharing scheme for its employees. Against the industry trend, the Dunlop payroll has increased by almost 21 p.c. since 1991, with the number of people working for Dunlop GmbH at the end of November 1999 reaching almost 5,000. If one leaves out the former subsidiary Dunlop TECH, which ceased to belong to the contributing members of the Dunlop GmbH group in the middle of last year, the figure is similar to that of the previous year.
Vergölst’s truck tyre service had a very successful run in 1999. More than 14,000 trucks and coaches/buses were fixed on motorways and highways by Vergölst’s puncture service in 1998 – equivalent to 38 calls-out per day –, a figure far exceeded in 1999. This Vergölst round-the-clock truck tyre puncture service has been available seven days a week (including holidays) since 1987. So far the breakdown service has operated from the various service centres, but for the last two years or so the company has increasingly used “servicemobiles” which work independently and are responsible only for trucks, thereby providing even faster help in each individual breakdown. The servicemobiles not only help with truck tyre punctures on the road. They service customers’ vehicles wherever they are – tractor units or trailers – either at the customer’s own premises, in a motorway service area, or while loading, unloading or being repaired at a truck workshop. The mobile truck tyre service is continually being enlarged above the current 50 servicemobiles. The target is mobile service coverage at traffic junctions and at centres of commerce. In sea ports such as Bremen/Bremerhaven, Cuxhaven, Hamburg, Kiel, Lübeck-Travemünde, Rostock (being developed) and Sassnitz/Stralsund the mobile port service has been in operation for several years, making the tyres of trailers safe before they start out on their journey along German roads.
The two cooperatives team Reifen-Union/Top Service Team KG (currently about 400 outlets) and Vereinigte ReifenFachhändler GmbH (VRG; currently about 200 outlets) have agreed a far-reaching cooperation on all levels, including the servicing of large customers and fleet management. An important ingredient is the immediate creation of a company called “Team Reifen Partner” GmbH + Co. KG (TRP), which will gradually incorporate both VRG and new companies as members. VRG members will still have to approve this measure officially in a meeting at the end of January. The team group, to date with a membership of 25 regionally successful tyre traders and as such the number one marketing group in the tyre market, will thus embrace also smaller and medium-sized tyre trading companies, whose members have already given their official consent to the plan. The new group based on the team/VRG cooperatives with more than 600 outlets is set to expand its base. An essential precondition for tyre dealers with local and regional operations and aspirations also to serve trans-regional customers, especially fleets and leasing companies, is full geographical coverage throughout Germany. At the same time the new partners want to coordinate their procurement and stocking policy and improve their purchasing terms and conditions.