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Ford Seeks Goodyear Tire Deal

FlyAU

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Ford Seeks Goodyear Tire Deal
Thursday, September 7, 2000
Ben Klayman, Reuters

DETROIT — Ford Motor Co.(F.N), struggling with the fallout from Firestone's tire recall, is talking with Goodyear Tire & Rubber Co.(GT.N) about supplying tires for its 2002 Explorer sport utility vehicle, the current version of which is solely equipped by Firestone, Ford and Goodyear said Wednesday.

"We are in talks with Goodyear. We haven't made any final decisions yet," Ford spokesman Frank Sopata said, declining further comment.

The Ford-Goodyear talks increase pressure on Firestone, a unit of Japan's Bridgestone Corp.(5108.T), which was blasted along with Ford in Congressional hearings on Wednesday.

U.S. lawmakers said the companies and the National Highway Traffic Safety Administration (NHTSA) did not act quickly enough to initiate Firestone's recall of 6.5 million 15-inch tires. Most of the tires are equipped on Ford vehicles, particularly the Explorer.

Firestone recalled the tires because of peeling treads and blowouts linked to at least 88 deaths. U.S. highway safety officials are investigating.

Akron-based Goodyear would be the third company supplying tires for the redesigned Explorer, due out early next year, joining Firestone and France's Michelin.(MICP.PA) It would be another blow for Firestone, which has increasingly seen its long-standing relationship with Ford strained during the recall.

"We have been in discussions with Ford for quite some time concerning the feasibility of potential supply for the 2002 Explorer, but nothing official has come out of those discussions," Goodyear spokesman Chuck Sinclair said.

Ford has said the new Explorer was always scheduled to have two suppliers, but a third would almost certainly mean less business for Firestone.

A source familiar with the talks did not know how the Explorer tire business would be divided among the three tire makers, but added "capacity (at Goodyear) is not going to be an issue."

While the current Explorer uses 15- and 16-inch tires, the new model will use only 16-inch tires, Ford said.

Goodyear — already boosting the output of similar 15-inch tires by 500 percent at its plants to help Firestone in its efforts to replace the recalled tires — has about 20 percent to 22 percent of Ford's original-equipment business.

Also Wednesday, Deutsche Banc Alex. Brown analyst Rod Lache cut his earnings estimate for Goodyear and Cooper Tire and Rubber Co. (CTB.N) He said rising raw material costs, weakness in the euro, slowing auto production and rising labor costs in light of Firestone's generous new labor pact outweigh any gains in market share made at the expense of Firestone.

"We think it quite possible that there will be little upside to earnings expectations for either Goodyear or Cooper Tire in (the second half of 2000), despite accelerating volumes and despite growing conviction that tire manufacturers will be able to raise prices," Lache said in a research report.

He cut Goodyear's third-quarter estimate 8 cents to 32 cents a share and lowered Cooper's estimate for the same period by 6 cents to 33 cents a share. He maintained a rating of "market perform" on both stocks.

Lache said some investors may look beyond a near-term earnings weakness, anticipating 2001 gains at Goodyear and Cooper from Firestone's U.S. market share losses. But he is not willing to believe it as earnings disappointments, a risk of Firestone discounts to regain market share and the possibility of Bridgestone replacing the Firestone brand with the untarnished Bridgestone brand make any gains unlikely.

If Goodyear did gain market share in the United States, a 2 percent boost could translate into nearly 70 cents of incremental earnings per share annually, Lache added.
 


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donkey boy

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Thinking of the original Goodyears that are on my '97 XLT, I'm not very excited; Probably they are better than Firestone, but not a whole lot. OK Ford, you are going in the right direction: The "Good" in the tire's name is good, just replace now the "year" by "rich", and we all are happy. Actually, if Michelin already is a supplier for Ford, just go with Michelin, also for the SUVs.

[Edited by donkey boy on 09-08-2000 at 06:34 AM]
 








The Godfather

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I personally like Coopers. I've had them on every car (my familly included) I've owned and I've never had one problem. The compound seems much harder that any other brand. I had a set of Firestones on when I bought my SHO, one of the tires almost blew out of me, 5in cut along the bead..factory defect, and I put a set of Coopers on. It rides 100% better. I don't think Cooper has any contracts but I'd like to see them get one.

BTW, I worked on the thruway this past summer, most of the blow outs I went to were Firestones, not just the Wilderness. After this incident with my car, I will NEVER own Firestones again.
 




TPLYNCH

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My father was on a bus coming back from Atlantic City this past weekend when a tire blew out. Fortunately the driver was able to control the bus and came to a safe stop. Just for the hell of it, my Dad decided to check the tire brand. Wouldn't you know....... FIRESTONE !!!!!! When it rains it pours I guess!
 








Brian97V8

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I heard for the new ones they are using 3 tires. Firestone, Goodyear and Michelin. I for one would go with Michelin even though I have original Goodyears on now and have had no problems yet
 




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