Goodyear prepares to reduce OE market share if returns don't improve

Feb. 8, 2002

"Our strategy for OE will be driven by profitability and returns on investment," says Goodyear Tire & Rubber Co. Chairman and CEO Sam Gibara. "We're not trying to reduce our volume at OE; we're trying to make it profitable."

However, Gibara says the tiremaker is ready to reduce its OE involvement if returns are not commensurate with investment.

"Investment is getting more intensive for us" due to the proliferation of OE sizes, types and applications, plus "tighter specs."

In addition, "consumer and purchasing behavior has changed. The loyalty factor isn't as significant, which means for us (that) returns are coming down."

Selling huge numbers of tires to auto manufacturers has become less important to Goodyear, according to Gibara. "When we had inflexible staffing levels, supplying OE could still be seen as an attractive proposition. Now we have more latitude (due to flexible manufacturing), volume significance isn't what it used to be."

However, the company intends to increase the presence of its run-flat tires at the OE level.

Gibara believes "the run-flat is going to become a reality on a big scale."

Goodyear officials are discussing OE sales with customers in Detroit and Europe, according to Gibara. He declined to reveal details of the meetings.