Sumitomo alliance would make Goodyear largest tiremaker

AKRON, Ohio (Feb. 4) — Goodyear Tire & Rubber Co.’s $1-billion US global alliance with Japan’s Sumitomo Rubber Industries Ltd. would make it the world’s largest tire producer with $15 billion in revenues.

The partnership, which is scheduled to take effect Sept. 1, would give Goodyear control of Sumitomo’s operations in the United States and Western Europe.

Goodyear, currently the world’s third-largest tire producer behind Japan’s Bridgestone Corp. and No. 2 Michelin SA of France, would also acquire 10% of Sumitomo’s stock, worth about $88 million. Sumitomo would acquire the same dollar value of Goodyear’s stock, or about 1% of Goodyear’s shares, the companies said.

The new deal would build on a current manufacturing agreement between Goodyear and Sumitomo. Sumitomo makes Goodyear-brand tires for Nippon Goodyear, while Goodyear supplies Dunlop-brand tires to Sumitomo’s U.S. factories.

Separately, Goodyear announced a cost-cutting plan that will result in the layoffs of up to 2800 employees, about 3% of its workforce. Most will result from the closure of Goodyear’s plant in Gadsden, Ala.

Like other tiremakers, Goodyear suffers from excess production capacity, in large part because today’s radial tires last four times longer than the bias-ply treads of the 1960s, so people don’t have to replace them as often.

Goodyear reported that tire sales grew less than 2% in the fourth quarter of 1998. It blamed cooling sales on “weak emerging markets, volatile foreign currencies, and brutal competitive actions.”