AKRON—With the miserable global economic woes of 2009 in the rearview mirror, Goodyear's new president and CEO is optimistic the remainder of 2010 and beyond holds real promise for the tire maker.
Last year was anything but a lost cause, however, despite a net loss and drop in sales for 2009, Richard J. Kramer assured those in attendance at the company's 2010 Annual Shareholders Meeting April 13.
In fact, the firm achieved a number of important goals during the year, despite the recession, which have put it on a proper course for recovery, he said.
The tire maker recorded a loss of $375 million in 2009—compared to a loss of $77 million in 2008, as sales slipped to $16.3 billion from $19.5 billion. But in the fourth quarter Good- year's net income jumped to $107 million compared with a loss of $330 million in 2008's final quarter, giving the company something to build on as it entered 2010.
The 40-year-old Kramer, who at the meeting officially became the 19th person to lead Goodyear as president and CEO, cited several accomplishments in 2009, including:
c completion of Goodyear's four-point cost reduction plan with about $730 million in savings during the year, bringing the total to $2.5 billion over a four-year span;
c a drop in inventory levels by $1 billion resulting from production cuts and supply chain improvements;
c successful new products, including Assurance Fuel Max in North America, Eagle F1 Asymmetric in the Asia-Pacific region and EfficientGrip in Europe; and
c completion of what he termed “landmark labor negotiations” in North America that will improve the firm's U.S. manufacturing competitiveness with savings of about $500 million over the four years of the contract.
Kramer said he is confident in Goodyear's future because of the firm's position in high-growth emerging markets, strong brand portfolio, new product offerings, strong retailer network and solid supply chain capabilities.
The hot markets include Asia, in particular China; Latin America; and Eastern Europe. The growing market strength “positions our teams to leverage many of their core competencies aimed at capturing a significant percentage of that growth potential,” he said.
“We are very well-positioned to benefit from a global economic recovery. It is very clear to me that we continue to be focused on the right drivers of our business, and those business drivers will continue to define and support our global growth plans with an emphasis on the emerging markets.”
Because cost reduction is an ongoing effort, Kramer said, Goodyear aims to cut its gross costs over the next three years by another $1 billion.
“As tire complexity increases at rates previously unheard of, Good-year's global presence, broad technical capability and addiction to speed as a trademark of our pace of change all provide us with a clear competitive advantage during this period,” he said.
Kramer succeeds Robert J. Keegan, who remains with the company as executive chairman. He began working closely with Keegan after Kramer joined the company as vice president of corporate finance in 2000, and he described Keegan, 62, as “a passionate competitor whose contributions as CEO have helped reshape an entire industry.”
In 2003 Kramer was named senior vice president of strategy. He spent three years as executive vice president and chief financial officer and another three years leading Goodyear's North American Tire business. In June 2009, he became chief operating officer of the firm.