Goodyear looks to the Far East for more tires

May 5, 2006

Goodyear Tire & Rubber Co. will have "multiple suppliers of tires in China by the end of the year," Goodyear Chairman and CEO Bob Keegan told investors yesterday.

The Akron, Ohio-based tiremaker wants to source more tires from low-cost manufacturers, he says.

This will allow the company to place more focus on the production of high-margin tires.

Manufacturing low-cost tires under Goodyear's present North American cost structure "will remain difficult," according to Keegan.

However, Goodyear will be highly selective in the low-cost suppliers with whom it chooses to work.

"Critical focus in our Asian sourcing strategy is... qualifying the supplier."

In related news, Keegan said that Goodyear realizes it has "to reduce the cost of manufacturing and supplying" private brand tires. "Ours is not a (market) share game there; it's a margin game."

Yesterday, Goodyear reported net income of $74 million on record first-quarter sales of $4.9 billion for the first quarter of 2006.

That compares to income of $68 million on sales of $4.7 billion for the same period in 2005.

Goodyear officials credit the sales increase to higher pricing and a more-favorable product mix -- mainly in the company's North American Tire business.