FINDLAY, Ohio—Cooper Tire & Rubber Co. is in the midst of one of the biggest consumer tire launches in its history and is marketing it with a comprehensive, focused program aimed at gaining higher visibility.
The introductions include four premium products, with two high-performance Zeon-brand passenger tires and two Discoverer light truck tires.
“What's behind this for us, we have a brand identity we want to establish in the marketplace,” said Christopher Ostrander, 42, the president of Cooper's North American Tire Operations since January.
“And when you look at the products that we are launching right now, that is really the cornerstone of our brand identity and positioning our brand in the value-added, performance-related products for our customers.”
It's not just in passenger and light truck tires, though, where Cooper is launching new products. The tire maker also intends to introduce several commercial truck tires later this year, under the Roadmaster label. Made at Cooper's plant in Rongcheng City, China, the Roadmaster brand—which includes the wording “engineered by Cooper” on the sidewall—is experiencing a lot of momentum, Ostrander said.
“We've got several product launches on the Roadmaster that are coming out,” he said. “So those launches are ongoing throughout this year and will give us a full range of the RMT (radial medium truck) products that's going to allow us to continue to grow that business.”
Cooper stopped selling Cooper-brand truck tires three years ago.
Above and beyond that, “on the innovation side, there are some very exciting opportunities we're looking at, some game-changing, disruptive-type of opportunities from an innovation standpoint on the materials side that our advanced engineering product group is looking at and progressing,” Ostrander said.
Leading that charge is Chuck Yur-kovich, vice president of global technology, who established the advanced engineering group several years ago. Its mission, Ostrander said, “is really doing nothing but looking at those disruptive technology opportunities.”
Ostrander joined Cooper in January from Eaton Corp., where he was vice president and general manager of the torque control products division, a position he'd held since 2008. That job later expanded to include global sales and marketing responsibility for the commercial vehicle and aftermarket group for Eaton Automotive.
After five months at Cooper, Ostrander said he was most impressed with the culture of the industry, “the closeness of how our dealers, as a manufacturer, how closely we work together.
“It really is more like a family in terms of how you do business, rather than what I'm used to coming from more of the OE world.”
He said he was not looking to leave Eaton when he was approached about the opportunity at Cooper. He considered several factors: the people and culture, and Cooper's prospects, products and innovation.
He also weighed personally and professionally his ability to impact what Chairman and CEO Roy Armes and his leadership team had in terms of their vision and strategy for the business.
“I felt that my strengths coming from the OE world and where I'd been over the last six years working with Eaton and some of my past could really help Cooper get to their strategic vision,” he said.
A 1991 graduate of West Point, he served in the military until 1997. “I think the biggest thing the military does, especially coming out as an officer directly from college, is it puts you right in the line of fire in respect to leading people of all different backgrounds.
“So I was a 22-year-old kid coming out of college and within nine months I was leading a group of 35 people in my first platoon and having complete authority over what we were doing and the strategy of what we were doing and how to execute the mission that we were given.”
As president of North American operations, Ostrander oversees the day-to-day operations of Cooper's largest business segment. His responsibilities cover manufacturing, sales, marketing, logistics, distribution, supply and developing the product strategy.
The North American unit, which does not include Mexico, reported 17.8-percent higher operating earnings in 2010 of $130.7 million, as sales surged 20.8 percent to $2.42 billion. This strong performance helped push corporate sales up nearly 21 percent to $3.36 billion.
The momentum continued into the first quarter, as North America Tire raised operating income 58.3 percent to $21.5 million on 21.9-percent higher sales of $647.9 million.
Cooper's emphasis on removing costs and allowing the firm to be competitive in terms of pricing helped propel the company's performance over the last few years, Ostrander said.
He also emphasized the strategy of moving product quality and performance to the high end of the tier 2 segment. “So when you combine taking cost out of the business and having a quality-oriented product, those are the recipes of a successful company,” he said.
Cooper's strong customer base and successful performance also are factors, added Phil Caris, Cooper's vice president of sales and marketing.
Like nearly every tire maker in North America, Cooper has struggled to fill customers' orders, as surging demand outstripped supply. While Ostrander wouldn't put a number on Cooper's fill rate, he did say the company has made significant strides in this area, especially in light truck/SUV tires, based on some of the capacity upgrades made at the firm's North American tire plants.
It should see further improvement in 2011, with plans to increase production by 10 percent during the year. This will come from expansions at Cooper's plants in Mexico and China, and the rest through additional mold capacity and efficiencies at its factories in Tupelo, Miss.; Texarkana, Ark.; and Findlay.
The bulk of the added capacity will be targeted at North America but also used for Cooper's growing markets in China and its export market out of China, Ostrander said.
Cooper gets most of its tires for North America from its U.S. plants and will source about 15-20 percent of its total volume this year from China and Mexico and other global sources, he added.
Like the rest of the industry, the company has had to deal with the relentless rise in the price of raw materials used in tire manufacturing. “I think the biggest challenge the industry is facing is just with the degree of volatility that we've had with raw materials,” Caris said.
This has led tire makers to raise tire prices numerous times over the past several years.
From an industry standpoint, Ostrander said, “consumer demand is going to be influenced by the price of the product, and when you take a look at trying to recover raw materials through either pricing mix or efficiencies you can only do so much with each one.”
He described pricing as a balancing act, with the company trying to weigh how much of a price increase to pass through versus how much the raw material cost rises, “but also trying to balance it with the efficiencies of the business and the mix of the product that we sell through our dealers and private brand channels.”
Ostrander said the firm is “starting to see a little bit of a reprieve on the raw materials, but it's kind of a mixed bag because there are some shortages of some raw materials out there. We've had some flooding down in the South where it's affecting carbon black and SBR production.”
But with consumer demand, as he described it, “flat out,” there's a question of how much of the price increases consumers are going to absorb. “I don't know that there's a whole lot of room for them to absorb much more,” he said.