Skip to main content
Sister Publication Links
  • European Rubber Journal
  • Plastics News
web
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • ITEC
    • Automotive
    • Tire
    • Non-Tire
    • Suppliers
    • Silicone
    • Latex
    • Coronavirus
    • Executive Action
    • Government/Legal
    • Opinion
    • Technical Notebooks
    • International Elastomer Show
    • Women in Tire & Rubber
    • HEXPOL Sponsored Content
    • Goodyear recognized by Lockheed Martin as 'elite supplier'
      EV tire advancements to help secure future
      Lambillotte: Only question on AVs is timing
      CAR official says EV future brighter than autonomous
    • Hot topics at virtual CES: AVs, air taxis and drones
      Apollo to raise prices of Vredestein brand tires
      China's tire production up in 2020
      Renault to form JV with U.S. hydrogen specialist Plug Power for fuel cell vans
    • Apollo to raise prices of Vredestein brand tires
      China's tire production up in 2020
      Smithers webinars focus on performance materials in green tires
      Ferentino Tyre opens Sri Lanka plant; eyes exports to U.S., Europe
    • WCCO task force navigates pandemic, expands communications
      JobsOhio funding gives Sperry & Rice room to grow
      TRAC's Glenn Maidment caps 51-year rubber industry career
      LafargeHolcim looks to solidify U.S. presence with Firestone Building Products purchase
    • Engel starts distribution of its Wintec brand in Europe
      ANRPC notes rubber price recovery
      Bostik investment expands its adhesives offerings
      Smithers webinars focus on performance materials in green tires
    • Safic-Alcan extends distribution agreement with Momentive
      Momentive aims to grow silicone presence in Asia-Pacific region
      IRP Medical solidifies portfolio with KDL deal
      Rubber lab services firm Ace reports record year
    • WCCO task force navigates pandemic, expands communications
      ASTM cancels April meetings as COVID-19 continues impact
      Paycheck Protection Program funding reopens Jan. 15
      Detroit Auto Show canceled; alternative event being planned for September
    • ARP Materials adds technical sales manager
      Jack Murphy joins Akron Dispersions
      Adriano Alfani named Versalis CEO
      Maroon Group adds to Southeast sales team
    • Hot topics at virtual CES: AVs, air taxis and drones
      Paycheck Protection Program funding reopens Jan. 15
      Taiwan tire makers propose settlement of import duties case
      Lobbying group unveils policy agenda to speed transition to EVs
    • Column: Pandemic looms over everything in life, business in 2020
      Column: Lessons from the 2020 Best Places to Work
      Editorial: Silicone hit hard by pandemic, expected to bounce back
      Column: Still far way from normal
    • Effects of multiple repurposed materials for reinforcements of standard rubber compounds
      Impact of peroxide blends on the cure rate and aged properties in HNBR
      Techniques to detect long chain branching in polymers
      A comparative study looking at effects of curing kinetics and batch variation on SBR injection molding and numerical analytics
    • WORD panelists say evolution, authenticity keys to success
      IEC keynote: Communication key to logistics
      IEC speaker: Specialized elastomers may reduce spread of life-threatening pathogens
      Rubber Division seeking abstracts for Spring Technical Meeting
    • WORD panelists say evolution, authenticity keys to success
      New video celebrates women in rubber industry
      ITEC panelists say women can thrive in tire industry
      Rubber Division planning second Women of Rubber event
    • Sponsored By HEXPOL Compounding
      Faster Access to Your Polymer Compounding Experts Around the World
      Sponsored By HEXPOL Compounding
      Take a walk thru a HEXPOL Lab
      Sponsored By HEXPOL Compounding
      HEXPOL offers a unique selection of High Performance Elastomers to match your application requirements
      Sponsored By HEXPOL Compounding
      It’s what you can’t see that makes the Difference at HEXPOL
  • Blogs
    • Products
    • Wacky World of Rubber
    • New Products: MonTech introduces 1,500 kN lab press
      New products: 3M introduces new durable, pliable medical adhesive
      New Products: Lanxess launches energy-efficient PU elastomer
      New Products: MonTech automates bale cutter for safety, productivity
    • Wacky World of Rubber: How Trelleborg, teens sealed a spot in the world record book
      Wacky World of Rubber: Of chicken and feet, but not chicken feet
      Wacky World of Rubber: Time to go mattress shopping
      Wacky World of Rubber: Because nothing says football like 'frunk' shrimp
  • Newsletters
    • Rubber in Automotive
    • Silicone News
    • Latex News
    • Sign Up for Newsletters
    • Hot topics at virtual CES: AVs, air taxis and drones
      Apollo to raise prices of Vredestein brand tires
      China's tire production up in 2020
      Renault to form JV with U.S. hydrogen specialist Plug Power for fuel cell vans
    • Safic-Alcan extends distribution agreement with Momentive
      Momentive aims to grow silicone presence in Asia-Pacific region
      IRP Medical solidifies portfolio with KDL deal
      Rubber lab services firm Ace reports record year
    • Jack Murphy joins Akron Dispersions
      Synthomer optimistic, raises earnings forecast
      Top Glove reopens COVID-hit factories with enhanced precautions
      Malaysia electronics group to enter rubber gloves sector
  • Multimedia
    • Videos
    • Photo Galleries
  • Directory
  • Resources
    • Classifieds & Mold Mart
    • Sponsored Content
    • White Papers
    • Sponsored By HB Chemical
      The Company Behind the Inventory
      Sponsored By French Oil Mill Machinery
      Process Improvement, Cost Reduction with Custom Press Systems
    • Sponsored By Uncountable Inc.
      Cooper Standard deploys lab informatics platform to synchronize R&D
      Sponsored By Elkem
      LSR Select™: A solution to improve your financial impact in molding applications
      Sponsored By HEXPOL Compounding
      Peroxide Cureable Silicone Injection Molding
      Sponsored By HEXPOL Compounding
      Understanding and Selecting Performance Additives for Rubber Compounding
  • Data
  • Events
    • RPN Events
    • RPN Livestreams/Webinars
    • Industry Events
    • Past Events
    • ITEC Library
    • International Silicone Conference Library
    • 2021 Healthcare Elastomers Virtual Edition
      2021 Rubber in Automotive Virtual Edition
      2020 International Silicone Conference Virtual Edition
      2020 ITEC Virtual Edition
  • Advertise
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. News
March 07, 2005 01:00 AM

King of the farm: Titan to buy Goodyear´s ag tire business

Brad Dawson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    QUINCY, Ill.—Rather than dispel the latest rumor about their businesses, tire makers Titan International Inc. and Goodyear took the easy way out: they proved it is true.

    After weeks of industry speculation, the companies announced Feb. 28 Goodyear is selling its unprofitable North American farm tire business to Titan for $100 million. The deal includes Goodyear´s Freeport, Ill., plant, equipment and about $47 million in inventory.

    The sale also includes a licensing agreement—which will last for a minimum of seven years—allowing Titan to make and sell Goodyear-brand farm tires for the North American market. Goodyear will receive royalties from the sale of those tires, a company spokesman said.

    Quincy-based Titan, which reported 2004 net sales of $510.6 million, expects the acquisition to boost annual revenues by about $225 million, said Maurice Taylor Jr., the company´s president and CEO, more than doubling its estimated tire-related sales. Titan never has posted total annual sales above $700 million.

    Titan´s senior lenders will fund the transaction, and the company plans to raise $125 million in long-term debt or complete a public convertible bond sale to reduce the senior debt, the firm said. Federal Trade Commission validation of the sale could be done in 15-30 days, Taylor said, and he´d like to complete the sale—which requires government, regulatory and union approval—by April 15.

    Goodyear will remain in the farm tire business outside of North America.

    A good deal

    Taylor said the transaction truly is good for both sides. Titan obtains a competitor´s business—which also happens to carry a huge name in U.S. tire making. The company plans to make Goodyear its premium brand (with Titan as the second), and coupled with its wheel business, will be the top wheel and tire maker to the agricultural sector in North America, he said.

    "We´re proud Goodyear chose us, and we told them we´d not only protect their name but enhance it," Taylor said.

    There have been no long-term discussions regarding Kelly-brand farm tires, which also are produced in Freeport, though Taylor did say the brand would be available for the next year.

    Goodyear—which posted net sales of more than $15 billion in 2003—will lose about $200 million in annual revenue with the sale. It considers only its consumer and commercial tire segments core businesses, the spokesman said, and has found the farm tire side to be "challenging" to its bottom line.

    The agreement allows Goodyear to sell a non-core asset, yet also lets the Goodyear brand continue to live on in the hands of Titan, which considers the farm business as core, said Jonathan D. Rich, president of Goodyear´s North American Tire unit. Nearly 62 percent of Titan´s 2004 sales were generated via the agricultural segment.

    "Goodyear tires have been a part of the North American farm for more than 100 years," Rich said. "It was important to us to continue to have Goodyear farm tires as part of the North American farming community."

    Rich also said in a Feb. 28 letter to Goodyear employees the transaction is a cost-control measure and a cash improvement in a non-core area for the company. Goodyear obviously will save money because it won´t be making any more investments at the Freeport plant, the spokesman said.

    Efraim Levy, an analyst with Standard & Poor´s Equity Group, said the sale makes sense because Goodyear´s farm tire business hasn´t been making money. Now the company doesn´t have to invest in it any more, can focus on its core businesses and use the proceeds from the sale toward reducing debt.

    While Goodyear´s top competitors, Michelin North America Inc. and Bridgestone/Firestone, still have ag tire manufacturing operations in North America, there should be no ego value in keeping up with its competitors, Levy said. "The primary driver for Goodyear is to shore up its own operations," he said. "They don´t have to do everything everyone else is doing."

    More tire choices

    Farmers will benefit from having more choices in the ag market, and so will Titan dealers, Taylor said. "We´re going to have much larger selection and faster reaction time and continue to be the low-cost producer in the market," he said. "We´ll have the largest and best dealer network, bar none. This deal fits us like a glove."

    Titan has about 1,000 tire stock keeping units—about 100 unique to the company—with the bulk manufactured at its Des Moines, Iowa, tire plant, Taylor said. Goodyear has about 1,100 SKUs, with about 100 of them unique.

    Combined, Titan will offer about 1,200 SKUs, with an equal mix being distributed between Des Moines and Freeport, Taylor said. Titan will decide by June whether to relocate its Titan Tire headquarters to Freeport or keep it in Des Moines.

    The company owns two other idle tire factories—in Natchez, Miss., and Brownsville, Texas—and has had assets associated with both sites on the selling block. However, now some equipment may be usable in the operational facilities, he said.

    "We´ve had offers to buy some of the equipment, but we haven´t gotten the price we wanted," he said. "When we close the deal, we have some tire building machines in Natchez that could increase our efficiencies in Freeport, and some other equipment that we can move to Des Moines. Over time, we´ll get a handle on what we have to move in, use or move off."

    Depending on how business develops in the market after the sale, Brownsville may have a future in Titan´s plans, though Taylor wouldn´t detail the possibility. In March 2004, Titan said a joint venture with an unnamed Asian partner could be based at the Brownsville site, but nothing developed.

    As for the Freeport plant, which opened in 1964, Taylor said it will require little work to suit Titan´s needs. He said it is a "beautiful facility," and Goodyear has invested a lot of money to make it that way.

    Goodyear said once the deal is completed it will phase out some smaller farm tire capacity at factories in Topeka, Kan., and Medicine Hat, Alberta.

    Titan vs. USWA—again?

    The largest—and maybe only—stumbling block to the Titan/Goodyear deal is approval by Freeport´s 725-plus hourly workers, represented by United Steelworkers of America Local 745. Taylor´s unsteady relationship with the union is well documented, starting with the location of the tire industry´s two longest labor strikes: Titan´s Des Moines and Natchez plants.

    The successorship clause in the Steelworkers/ Goodyear contract, which expires in July 2006, requires that a potential new owner reach a contract agreement with the union before the sale is completed. Taylor said while the feelings haven´t changed—"I´m not their favorite person, they´re not mine"—he believes what he plans to offer will be a good deal for both sides.

    Titan´s proposal will include no wage or cost-of-living allowance cuts during the term of the contract, Taylor said, and an extension through Nov. 15, 2010. If the extension is approved, there would be no cuts during that time, as well as a guarantee not to close the plant, he said.

    Taylor also said he will offer the site´s 457 workers who have 25-plus years of experience the option to get full retirement from Goodyear. Others will have their time capped and be entered into the Steelworkers pension plan, he said, just like the work force in Des Moines after the strike ended in 2001.

    Goodyear has agreed to pick up legacy costs, including pension and retiree medical, associated with their soon-to-be former employees, Taylor said.

    The USWA´s initial reaction to Titan´s taking over in Freeport was negative. Steve Vanderheyden, Local 745 president, said the union is "far from optimistic" about reaching an agreement with the company.

    "Based on our preliminary discussions on Titan´s long history of adversarial labor relations and hostility to the USWA, it doesn´t appear that Titan is interested in meaningful negotiations with a goal of reaching a contract offer acceptable to our members in Freeport," he said.

    Taylor conceded it could take time but said he believes it is in the best interests of the workers in Freeport to come to terms. "I´m the best thing they´ve got right now," he said. "They can say no, but Goodyear can always close the plant, too."

    ´Let the big dogs fight´

    It may take about six months to get everything "sorted out" from the acquisition, Taylor said, provided it eventually is completed. He expects to see good results sooner rather than later and said he believes the fit of the two companies´ businesses will be beneficial at many levels.

    For example, Titan provides a large portion of the wheels for log skidders in the U.S., but doesn´t make the tires. Goodyear, however, does make them, Taylor said, and that provides an opportunity to capture a bigger part of that market.

    Titan wants to fight the smaller battles, he said, and is happy to take on the ag sector while Goodyear takes on its bigger markets. Michelin and Firestone present big challenges, but Taylor, not surprisingly, is confident.

    "(Goodyear) has its own war with other companies, and in our teeny world it´s a little different," he said. "We´ll just let the big dogs fight, and trim the tails of the little dogs ourselves."

    Letter
    to the
    Editor

    Rubber & Plastics News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Rubber & Plastics News delivered straight to your inbox, free of charge.

    Subscribe Today

    Subscribe to Rubber & Plastics News to get the best coverage and leading insights in the industry.

    SUBSCRIBE
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter

    MISSION

    To serve companies in the global rubber product industry by delivering news, industry insights, opinions and technical information.

    web
    Contact Us

    2291 Riverfront Pkwy, Suite 1000
    Cuyahoga Falls,
    OH 44221

    Customer Service:
    877-320-1726

    Resources
    • About Us
    • Digital Edition
    • Contact the Staff
    • Advertise
    • Order Reprints
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Partner Sites
    • Tire Business
    • European Rubber Journal
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    • Automotive News
    • Crain Brands
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • ITEC
      • Automotive
      • Tire
      • Non-Tire
      • Suppliers
      • Silicone
      • Latex
      • Coronavirus
      • Executive Action
      • Government/Legal
      • Opinion
      • Technical Notebooks
      • International Elastomer Show
      • Women in Tire & Rubber
      • HEXPOL Sponsored Content
    • Blogs
      • Products
      • Wacky World of Rubber
    • Newsletters
      • Rubber in Automotive
      • Silicone News
      • Latex News
      • Sign Up for Newsletters
    • Multimedia
      • Videos
      • Photo Galleries
    • Directory
    • Resources
      • Classifieds & Mold Mart
      • Sponsored Content
      • White Papers
    • Data
    • Events
      • RPN Events
      • RPN Livestreams/Webinars
      • Industry Events
      • Past Events
      • ITEC Library
      • International Silicone Conference Library
    • Advertise
    • DIGITAL EDITION