Goodyear prepares more investments

Close to complete a program of expansion that added contributions in excess of $ 240 million in the last two years, Goodyear, third largest tire manufacturer in the world, begins to prepare a new round of investments in Brazil. The subsidiary of the company expects by the end of this year the go-ahead group matrix in Ohio, in the United States, to bring forth what is being called internally "second phase" of development of business in the country, following the resumption of brand investments to face the growing competition of imported and the arrival of new tyre manufacturers.
The first phase focused on the development of high performance tires for passenger cars and light utility vehicles, along with the modernization and expansion of the factory in Americana, in São Paulo. The direction of the company in the region does not give many clues to what will be the next step, but added that it requested the American controller the approval of another "important contribution" in Brazilian operation.
Some studies commissioned from consultants to identify consumer preferences of tires, as well as the most promising market segments, should be completed soon to guide the next steps in the company. According to Jaime Szulc, President of Goodyear in Latin America, the idea is to understand, from an efficient database, what products are tailored to the needs of the local market and, from there, to keep the focus on them.
Although vehicle sales in Brazil have more than doubled in the last decade, the automotive market cake came to be divided by a growing number of tire tracks. Last year alone, imports surpassed 26 million tires, a volume that filled out 40% of consumption and that would justify the construction of two factories in the country, according to Anip, the entity representing the national industry of tyres. At the same time, new groups were established with production units in Brazil-the last one was the fifth largest producer of Sumitomo tires in the world, which recently began producing in Paraná.
"When you have honey, the bees come, there's no way. We have a wonderful market, but companies must now fight like never before by share [market share], "says Szulc. Goodyear's response to the fierce competition has been expanding market coverage toward new segments-especially in high value added tires-and eliminate less profitable products in the quest for greater commercial and industrial efficiency.
As a result of the latest investment, Goodyear, second Szulc, doubled the production capacity of rows that are in the "target market", as the high performance tires fitted to luxury cars. The Executive is cautious when opening numbers, but cites as an example the segment of large imported cars, in which the manufacturer coverage jumped from 7% to 68% with the latest releases.
He says the performance of Goodyear in Brazil was very sustained this year by increasing the production of vehicles, but that in 2014, about 60% of the sales growth will come from new products placed on the market.
At the same time, the company aims to eliminate between 30% and 40% of tires that don't add value, for example, with the overlap of products that compete in the same market. Szulc says Goodyear, in some cases, gets to have two or three choices of tires within a single measure, which confuses consumers and generates production inefficiencies.
The strategy already produces good fruit on the results of the group. Yesterday, to disclose the balance of the third quarter, the company reported that Latin America, where Brazil is the largest market, had 82% growth in operating profit, compared to the same period in 2012. In the three months ended in September, Goodyear earnings in the region totaled $ 89 million.
The performance reflected the improvement in the price mix of products sold, given the growth of the volumes in the market with regard to replacement tires sold to automakers, where margins are tighter. Such a factor if combined lower raw materials costs, offsetting negative impacts of conversion of results for dollar amounts, higher selling expenses and administrative provisions and the fall of 4.3% in the total volume of tires sold in the region, to 4.5 million units between July and September 2013. In the first nine months of the year, the gains in Latin America totaled $ 231 million, a high of 42.6%.
The sum of all operations in the world, Goodyear had net income of $ 166 million in the third quarter, a record result for the period and 51% above the figure of a year earlier. Despite the 5% drop in global sales, which totaled $ 5 billion, the results of Goodyear were favored by the reduction in the costs of raw materials and the improvement of production levels.