Partnerships at their birth are doomed to destruction. That's typical in business, and definitely in the rubber industry, when companies form a joint venture.
Each wants something out of it—a cash infusion, entrance into a market, a tax shelter, access to technology or production. If the parties don't have hidden agendas, those benefits can flow to each partner. But there's rarely a permanence to a joint venture, since the needs and ambitions of companies change with time.
All of which makes for interesting events concerning two long-running, successful rubber industry joint ventures.
The first concerns GTY Tire Co. Established 22 years ago, GTY is a partnership created by Germany's Continental and Japan's Yokohama Rubber and Toyo Tire that manufactures truck tires at a factory in Mount Vernon, Ill. For all those years the plant has churned out millions of tires for the three companies, operating as a model of cooperation.
That is, until Toyo got in bed with Bridgestone Corp. in late 2008. The Japanese firms signed a wide-ranging technology exchange that Conti and Yokohama consider a breach of their arrangement.
The two companies booted Toyo from the venture and shut off its tire supply from Mount Vernon. The case is in the courts now, with the most recent news an injunction that forces Toyo's partners to cough up the tires it expected.
Despite the competitive nature of the tire industry, the GTY arrangement seemed to have found a joint venture sweet spot for the partners. Times have changed, and now perhaps that's turned sour.
That is not the case at all at another long-running cooperative venture—Freudenberg-NOK G.P. This is a U.S.-based manufacturer owned by partners Freudenberg & Co. in Germany and NOK Corp. in Japan.
Since its formation in 1989, Freudenberg-NOK has grown into a major force in sealing and vibration control, a billion-dollar company known for it innovation. It's a rubber industry, and a joint venture, success story.
The latest from Freudenberg-NOK is the creation of an Office of the Chief Executive, replacing the structure that had a president and CEO, most recently held by Moshen Sohi, who has moved up at parent Freudenberg. Sohi said this new structure, not common in the U.S., works well to strengthen and perpetuate a joint venture.
Considering Freudenberg-NOK's track record, we'll take his word for it.