Goodyear Chairman Says Global Opportunities Abound for Auto Industry
1 September 1999
Goodyear Chairman Says Global Opportunities Abound for Auto Industry
DETROIT, Aug. 31 -- The accelerating globalization of the
automotive industry presents an array of opportunities to provide customers
with better products, faster and more conveniently than ever before, according
to Samir G. Gibara, chairman, chief executive officer and president of The
Goodyear Tire & Rubber Company.
Gibara said that despite operating at less than 70 percent of capacity, no
other industry "has moved more dynamically and energetically over the past two
years than the auto industry." The Goodyear executive was today's keynote
speaker at Auto-Tech 99, the annual conference of the Automotive Industry
Action Group, at the Cobo Conference Center here.
"At face value, this seems to be a recipe for failure, or
self-destruction," Gibara said. "But the reverse has been the case, the
industry has prospered."
He cited several major trends positively impacting the industry, including
the exponential growth in developing regions; a proliferation of new,
high-demand products; a deflationary economy; impressive productivity gains;
growth of market-based economies; and the elimination of trade barriers.
"Another significant factor has been that spectacular technological
developments have enabled the automobile industry to provide its customers
with completely new products with significant value-added benefits at little
additional cost," Gibara said.
Continuing this success in the 21st century will require that industry
leaders make decisions with an eye on what he called "The four C's," cycle
times, consolidation, customers and change.
Gibara credited the expanding use of computers with helping auto makers
reduce the time it takes to design and engineer a new car from six years just
a decade ago to less than two years today. In turn, he said, component
suppliers have had to reduce the amount of time it takes to develop their
products.
"The upshot in terms of reducing new product cycle time from concept to
market has been nothing short of spectacular," he said of Goodyear's efforts.
"Five years ago, 40 percent of the tires we sold in this country were less
than three years old. Now, that percentage has climbed to almost 80 percent,
making Goodyear the most innovative company in our industry."
Gibara said the improvements will continue as the Akron, Ohio-based tire
maker expands use of its advanced manufacturing process known as IMPACT.
"This revolutionary new system represents a breakthrough in terms of product
quality and uniformity, product cost, productivity and manufacturing
flexibility."
IMPACT, which is an acronym for Integrated Manufacturing, Precision
Assembled, Cellular Technology, was introduced 18 months ago and will be
operational in six Goodyear locations in the next two years. Goodyear expects
it to be in use in all of its tire plants around the world within 15 years.
Citing examples involving auto makers and suppliers on three continents,
Gibara said industry consolidation has "moved at a staggering pace." He said
these moves are driven by the globalization of the economy as well as the
economies of scale available in research and development, purchasing,
manufacturing, logistics and information technology.
Gibara said the trend is illustrated by Goodyear's global strategic
alliance with Japan's Sumitomo Rubber Industries, Ltd. The alliance, which
takes effect Sept. 1, is expected to increase Goodyear's sales revenue by 20
percent and make it the world's largest tire maker.
Goodyear's return to industry leadership, he said, "is a source of pride
within our company. Not because it gives us bragging rights, but because it
will bring rewards to our shareholders, our customers and our associates."
Consolidation goes beyond mergers and acquisitions, Gibara said. It also
embraces the standardization opportunities presented by global agreements that
seek to increase trade by removing costly duplicate regulations, standards
testing, and procedures.
Customers, Gibara's third "C," drive everything that is done in the auto
industry. "Where would we be without them? Whether you are a small component
supplier providing parts to a major OEM, General Motors, Ford or
Daimler-Chrysler supplying cars or trucks to large national fleets, or
Goodyear selling its latest run-flat tires to a mother driving the family van,
the well-known cliche, 'the customer is king -- or queen,' still rings true."
Gibara said the companies that succeed in the 21st century will not be
those that merely sell a product to customers, but rather those that sell a
consumer benefit. "People buy tires to avoid potential problems," he said.
"We try to appeal to their emotions and to their need for safety and
security."
Goodyear has been successfully doing this for decades, according to
Gibara. In the 1970s, it introduced the first all-season tire, which offered
traction in all weather conditions. In 1991, it unveiled the Aquatred tire,
which raised wet-traction expectations almost overnight.
The latest example is Goodyear's aggressive promotion of its run-flat
tires that can travel up to 50 miles at 55 miles per hour with no air
pressure. "The emotion behind this product," Gibara said, "is that, given the
choice between changing a tire on a busy highway at night with the rain
beating down on your head, and confidently driving up to the next tire
dealership to get help, who wouldn't want run-flats?"
None of the first three "C's" is possible, he said, without the fourth --
change. "If ever an industry has experienced change in the way it does
business, it's the automotive industry." Over the last 20 years, individual
companies, and entire segments of the industry have "re-invented" themselves
almost on a continuous basis.
"Change is not only here to stay, but will increase at a faster pace than
ever before," Gibara said, citing forecasts that global trade, which amounted
to $2 trillion in the mid 1970s, now stands at almost $7 trillion and is
expected to hit $11 trillion in less than five years.
"To remain competitive in the long run, companies must be able to think
globally and act locally," he said. "Successful companies must be able, at
the same time, to have a global strategic vision of their future, as well as
the ability to execute their strategic plans effectively in very different
local markets around the globe. Only world-class companies combine both
long-term planning and effective day-to-day execution in a constantly changing
environment."
AIAG is a not-for-profit trade association of more than 1,600 automotive
and truck manufacturers and their suppliers. Goodyear has been a member since
the group's founding in 1982. AIAG provides an open forum where members
cooperate in developing and promoting solutions that enhance the prosperity of
the automotive industry.