GENEVA-Goodyear's negotiations with Poland's tire makers may be just the tip of the iceberg in terms of Goodyear's interest in eastern Europe, according to William J. Sharp, Goodyear Europe president and general manager.
In its annual report, Goodyear said it is pursuing acquisitions and business development in the new market economies of the former Communist states.
Speaking at the Geneva Auto Salon earlier this year, Sharp said Poland offers the best opportunity now, based on its population, economy, vehicle park and activity by the major vehicle makers.
However, the company is bullish on the potential for business growth in the near future in the Czech and Slovak republics, Ukraine, Belarus and the Baltics. Longer term, the company is looking at Russia and other former Soviet republics, where there are still many rules and regulations to be straightened out.
The company points out in the annual report that it gained an original equipment supply contract with Russia's car maker, Avtovaz, and that sales in central and eastern Europe grew rapidly in 1994, with new distribution points being added.
The primary goal of manufacturing in Poland is not to have a low-cost source of tires for western Europe, Sharp said, but to service the Polish market and build a base for the push eastward. Nonetheless, the Goodyear veteran acknowledged having manufacturing capacity in Poland would give Goodyear more flexibility in developing its custom brand activity in Europe, a high-priority business area.
Goodyear is said to be interested in working with both TC Debica S.A. and Stomil Olsztyn S.A., but negotiations have lasted more than six months now, delayed at least once by changes in the government.
Sources in Poland indicated privatization authorities are driving a hard bargain-perhaps too hard.
Goodyear also is investigating manufacturing opportunities in Europe for non-tire products, in part because of pressure from globally operating OEM customers on suppliers to have manufacturing near the auto assembly plants. Goodyear last manufactured such products in Europe in the 1970s.
The company does supply some accounts from plants in North America, but the important OE customers are demanding their suppliers be closer to their assembly plants as just-in-time deliveries become more common.
``This is a core opportunity for us,'' Sharp said of non-tire products. ``It's a question of timing, though.''
Goodyear's operating income in Europe was down 4.3 percent last year to $212 million, while sales revenue edged up 2.1 percent to $2.28 billion. As such, Europe represents 17.8 percent of earnings and 18.6 percent of sales.
Goodyear Europe, which includes Turkey and Morocco, produces 35 million tires, Sharp said, with 17,000 employees at 15 facilities, including 10 tire plants. The company claims to be No. 1 in farm tires, No. 2 in truck tires and No. 3 in passenger car tires in the region.
Goodyear is ``satisfied'' with its OE presence in Europe, supplying all the ``major'' accounts, Sharp said.
Most of the firm's OE customers have now relented on pricing, Sharp added, in light of the spiraling raw materials prices. The company does supply a low-rolling resistance optimized tire to specified OE accounts, Sharp said, but the ``firm is not convinced it's the way to go'' in the retail market.
In the aftermarket, although the firm decided several years ago to reduce its direct involvement in retailing, Goodyear's national sales companies are experimenting with a variety of retailing concepts designed to make the independent dealer a more viable and, hopefully, a bigger buyer of Goodyear products.
In Germany, for example, where the company has transformed more than 100 ``Kempen'' retail stores into franchises, Goodyear has created a fast-fit-type outlet, called ``Quick Reifenmarkt/Marken Discounter,'' at three Kempen sites not taken over by franchisees.
And in the United Kingdom, Goodyear has transformed 120 of its 200 ``Tyreservices'' outlets into ``Hi-Q'' stores, with more emphasis on customer service.
Goodyear also recently shuffled its management team in Europe, making the following changes:
Jarro Kaplan, managing director of Goodyear Turkey and a 26-year Goodyear veteran, became sales and marketing manager for Europe, replacing Marco Molinari, who was appointed chairman and managing director of Goodyear Great Britain. William K. Stokel, general manager of Goodyear Spain, takes over Kaplan's post in Turkey; Antonio Corsi, director of consumer tires, assumes the GM's duties in Spain; and Howard Steele, manager of sales and marketing Asia, succeeds Corsi.