Titan Tire International Inc.'s feet are planted firmly in agriculture. Goodyear's aren't.
That's how a $100 million sale of Goodyear's North American farm tire business takes root, a deal that means something to Goodyear and a lot more to Titan.
Goodyear gets to lessen its exposure in a business that hasn't been profitable, while it still will make and sell farm tires overseas. Beyond the argument of how a business is awarded the ``core'' designation at Goodyear-the chemical business that couldn't be sold now is core, a farm tire business that has a buyer isn't-the company will make out from the deal.
Goodyear has agreed to cover some pension and retiree costs of the operation's employees, but in the long run the firm is reducing its work force by at least 725, a big savings. Additionally, it won't need to invest in the unit's Freeport, Ill., farm tire plant, while it gets royalties for Titan's use of its name.
The Goodyear name-that's worth a lot, and Titan knows it and will use it. Titan chief Maurice Taylor Jr. said the Goodyear farm tires will be Titan's premium brand, and the Titan products No. 2.
The purchase will give Titan a big lift in the ag market, and make it a $700 million company.
There's no real downside for Goodyear, but Titan is sticking its neck out a bit. The tire and wheel maker is accumulating debt and taking on a loss-making business, while coming off just its first profitable year since 2000. Titan, however, is totally committed to the ag business and has a much better chance of turning a profit with the operation than would a reluctant owner.
It's quite interesting that just a few weeks ago Taylor hinted his company was ripe for acquisition. Maybe this deal, installing the firm as a bigger player in the ag tire and wheel business, will make it even tastier to a potential buyer.