Kramer: 'The tire industry is a growth industry'
In his first speech as Goodyear Tire & Rubber Co. CEO and president, Richard Kramer told shareholders that he is confident in Goodyear’s ability to grow as global economies recover.
Kramer, the 19th person to lead Goodyear in the company's 112-year history, replaced Bob Keegan as CEO and president at the annual Goodyear shareholders' meeting, held at the company's headquarters in Akron, Ohio, earlier today (April 13). Keegan remains chairman of Goodyear.
An abridged transcript of Kramer's remarks, which addresses not only Goodyear's 2009 results but also the company's future, follows.
"While our 2009 financial results reflected the obvious negative impact of the global recession, as I assess the state of the company, there were many major achievements in 2009 in the areas of top line, cost and cash.
"Those achievements not only helped us through the worst of the downturn, they helped position Goodyear for future success as the economy rebounds. I’ll highlight just a few.
"Our unparalleled new product engine continues to produce award-winning and category-leading products that are gaining broad acceptance and are generating demand in the marketplace. For example, in North America, Fuel Max was named 'Best of What’s New' by Popular Science magazine. And the Goodyear Fortera TripleTred, Assurance TripleTred and Wrangler DuraTrac all received Consumer Digest magazine’s 'Best Buy' designation.
"In Europe, where consumers rely heavily on the tire performance test results of respected enthusiast publications, Goodyear EfficientGrip, DuraGrip, OptiGrip and UltraGrip tires were standouts, receiving numerous accolades during 2009.
"Our Goodyear EfficientGrip 'fuel efficient' tire was actually noted in a newspaper article as the industry leader in fuel economy by a major competitor. Now, from my perspective, that type of comment from a competitor comes with a significant measure of credibility.
"And in Asia-Pacific, the Goodyear Eagle F1 Asymmetric, Wrangler and DuraPlus all won 'Best Tire of the Year' honors.
"And the impact is substantial, as the associated benefit of price/mix improvements combined with lower raw material costs delivered a net benefit of over $300 million to our bottom line last year.
"We also completed our four-point cost savings plan with $730 million in savings during 2009. This was accomplished by increasing our continuous improvement efforts, increasing our purchasing savings, and decreasing both our manufacturing costs and spending, through improved productivity.
"We continue to progress with our efforts to improve our advantaged supply chain. Year-end 2009 inventory levels were more than $1 billion below the previous year-end levels.
"We also completed landmark labor negotiations in North America that will improve our U.S. manufacturing competitiveness with total savings of approximately $500 million over the four-year life of the agreements.
"As I have told the Steelworkers, we are committed to making tires in the United States. The contract we negotiated gives us the opportunity to change how we work with a goal of substantially increasing our productivity -- which is a must for us to succeed.
"Having recently visited a number of our factories, I am seeing signs of engagement and improvement by the entire workforce -- salaried and hourly alike -- which give me confidence that significant progress is happening.
"And our liquidity position and balance sheet continued to improve. Thanks to actions taken to reduce our working capital requirements and the completion of a $1 billion bond offering in some of the toughest financial markets we have ever experienced, we’ve been able to continually strengthen our balance sheet and liquidity.
"All of these positive actions in 2009 give us a degree of confidence in our ability to capitalize on the opportunities as the tire industry recovers.
"Let me elaborate on my optimism for the future. We have a very strong portfolio of brands globally led by the Goodyear brand.
"Our current market strength in the high-growth markets of the world -- in Asia, particularly China, Latin America and Eastern Europe -- positions our teams to leverage many of their core capabilities aimed at capturing a significant percentage of that growth potential.
"We firmly believe that we have a winning combination based on our product offerings, our industry-leading network of tire retailers, our marketing proficiency and our unmatched speed-to-market capabilities.
"And operationally, when you factor in our gains in the supply chain, in SKU reductions and simplification of work, and combining the benefits of our cost savings initiatives, we are very well positioned to benefit from a global economic recovery.
"It is very clear to me that we continue to be focused on the right drivers of our business, and those business drivers will continue to define and support our global growth plans with an emphasis on the emerging markets.
"As I reflect today on assuming my new leadership role, I would like to share with you a few thoughts and perspectives.
"Certainly upon being appointed to my new role, the first emotion was one of excitement -- not only for the opportunity to lead this great company, but also to be able to participate in an industry more than 100 years old that will experience explosive growth in some markets as a population of new drivers emerges.
"Make no mistake, the tire industry is a growth industry, and after 100 plus years, few industries are able to say that. Now, that’s what gets me excited.
"I’m also excited about the opportunity that growth will provide to Goodyear. As tire complexity increases at rates previously unheard of, Goodyear’s global presence, broad technical capability and addiction to speed as a trademark of our pace of change all provide us with a clear competitive advantage during this period.
"And, as I look forward, I am privileged to lead a team whose dedication to Goodyear -- and commitment to success -- is second to none.
"I recently visited our businesses in Europe, Latin America and Asia, in addition to my interactions in North America, and the common thread I see are highly capable leaders developing high performance teams that think from the market back. It is truly a privilege to lead this team.
"While excited and confident about our future, I am also very realistic about our challenges given the remaining uncertain global economy as well as an increasingly competitive tire industry.
"However, I am looking forward to the responsibility of my new role, and I’m ready to make whatever tough decisions are required to deal with the challenges we will inevitably face.
"I am also committed to excellence in everything we do: from people development, to operating efficiency, to supply chain, to enhanced customer service. And finally, we will remain a customer-centric company. We will strive to earn our customers’ business every day with the industry’s best products packed with innovation.
"The Goodyear Tire & Rubber Co. has so much for which to be proud: a long, storied history; accomplishments like the first tire on the moon; numerous tire innovations -- far too many to list; a regular place among Fortune’s 'Most Admired' companies; a recognition as one of America’s greenest companies, which will only be enhanced by our leadership in fuel efficient tires; and, of course, much more.
"So, you can certainly understand why I am so proud to assume the role of CEO as Bob Keegan’s successor. Thank you."