Goodyear: 'Innovations are rewarded in a tough economy'
Even in a tough economic climate, "the market continues to reward innovation," said officials of the Goodyear Tire & Rubber Co. during a conference call to discuss its first quarter results. See related item, "Goodyear posts sales, income loss for 1Q."
Goodyear Chairman, CEO and president Bob Keegan and Darren Wells, executive vice president and chief financial officer, pointed to the Assurance Fuel Max tire as one of the company's current market success stories due to customer demand that has "surpassed expectations." The mid-tier tire delivers low rolling resistance without losing any traction, handling capabilities or tread mileage, Keegan said.
Mid-tier branded tires are high-value-added products, noted Keegan, with pricing that's attractive for both Goodyear and consumers. Keegan said the reason to go after the mid-tier market is that it is a relatively strong segment in today's economy, plus the company's success in this segment lies in its ability to launch new targeted products quickly. Plus the tires incorporate features "directly addressing critical consumer needs," such as lower fuel costs.
Keegan noted its dealers have been "energized"by the company's reaction to the market. A survey of dealers who attended the company's recent annual dealer meeting showed they had an "unprecidented understanding of the company's objectives."
Throughout the year, Goodyear will continue with its plan to reduce units by 15 million to 25 million, reduce inventory levels, cut staff levels (a reduction of 3,800 people was made this year, which is in addition to the 4,000 workers cut in 2008), freeze salaries and work at selling its non-core assets.
The commercial truck tire market will continue to be weak in the second quarter, Keegan said, and the original equipment market remains a concern. "Overall business with the Detroit Big Three is less than 7% of our global sales," Keegan pointed out.
On the plus side, the Chinese market is rebounding, Germany and Italy are showing improvements as is India. Miles driven are showing an upswing. Although it's not clear that the market is stabilizing yet, the company is "encouraged by emerging positive factors," Keegan said. There may be a demand "snap-back" due to pent up consumer tire demand.
Wells added that raw material costs may decline in the second quarter, and the company is "positioned to take advantage of the recovery when it happens."