Groupe Michelin and Goodyear's major investments in the Polish tire industry emphasize one key characteristic of large rubber companies: They're risk takers.
Michelin's $262 million investment plans in Stomil-Olsztyn S.A. and Goodyear's $220 million expenditure plans on TC Debica S.A. are relatively safe. Poland has advanced the furthest toward capitalism among the former communist states of eastern Europe, and has had the highest economic growth rate in Europe for the past few years. Additionally, it is well-situated for the firms to serve the rest of central Europe and the former Soviet Union states.
Additionally, the potential for the two newly privatized tire makers is good.
It's still a risk, though. It wasn't long ago that Poland had a stagnant, centrally planned economy. Change takes time, and political stability will be a concern in all eastern European nations for decades.
But Goodyear and Michelin had no choice but to enter this market now, and in a big way.
Conventional wisdom previously said for a company to be a real player in the global tire business, it had to have a presence in the three major markets-North America, Europe and Japan. Now, with the big markets maturing, tire makers need a solid presence in the smaller, but faster growing, regions like eastern Europe, Latin America and China.
There's more risk there, certainly. But if you don't get in early, a company could be left behind. And that's the biggest risk of all.
Jack Hodson knew his stuff.
For 20 years he demonstrated that with his ``Hodson Report'' newsletter. A chemical engineer by training and experience, Hodson helped keep his readers abreast of activities in butadiene and steam cracker operations with his monthly publication, which was widely circulated in the synthetic rubber field.
Hodson, who died Nov. 25 in Houston at the age of 75, was an affable person, always willing to share his insights with others. That's why reporters from this publication often called him for his perspective concerning butadiene feedstocks and their affect on SR pricing.
He was a good source, and a good guy.