Increased costs to offset increased savings in fourth quarter, says Cooper Tire

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Continuing ripple effects of the Firestone recall and the 9/11 terrorist attacks make consumers leery of spending and market predictions tricky, said Cooper Tire & Rubber Co. executives at a press briefing on the company's third quarter results (see related item).

Tom Dattilo, Cooper's chairman, CEO and president, feels any increases in efficiencies in the fourth quarter will be offset by higher raw material costs, "which is an important factor in increasing margins," he said.

Noting that some of the major players in the market have already raised their tire prices, Datillo said Cooper is also looking at increasing prices "sooner, rather than later," and may make a decision in the next couple of weeks.

"The fourth quarter does not look as strong as we thought it would be because of an absense of strong tire demand," Dattilo said. And growth in Cooper's third quarter came from lower margin products, such as "Pep Boys' opening price tires."

"Price competition we hadn't seen in awhile has intensified," he said.

Cooper brand tire sales have increased, Dattilo noted. And Cooper's order fill rate remained at or near the company's goal of 95%.

The company is working hard on the manufacturing end of the business concerning "lean concepts" and efficiency improvements. But Dattilo believes raw material costs will continue to go up slightly through next year, maybe coming down in the second half, depending on what's happening on the world market.

Noting that Cooper's North American passenger and light truck tire sales declined just 1% during the third quarter compared to an overall replacement tire industry decline of nearly 8%, Dattilo said, "We always feel we can beat the market by several percentage points."

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