Cooper Go Goes to Goodyear
Goodyear Tire & Rubber Company has announced that they are acquiring Cooper Tire & Rubber Company, strengthening their position in the market, and expanding the number of brands where the rubber meets the road.
Akron, Ohio-based Goodyear, one of the world’s largest tire companies, picked up Cooper, no slouch itself at fifth in size among tire companies. For the foreseeable future, Cooper will remain in Findlay, Ohio, but for how long? Integration is the word of the day, and that means not only combining production here and around the world, but consolidating operations, and with that, customer service.
That last item, customer service, touched a nerve exposed by a call to Xfinity, a Comcast brand, whose support is handled by non-native speakers of a language not recognizable as English. After half an hour of discussing an increase in monthly charges, the agent put me on hold, only to never return. Yes, reduce the number of customer service representatives and watch the time spent waiting to speak to an agent rise. Outsourcing calls to some third-world country will also not win any fans. Isn’t the whole point in brand-building to retain loyal customers, and attract others based on their positive comments?
With all the legal mumbo jumbo about the actual close of the buy-out by Goodyear, it won’t take place until sometime in the second half of 2021, well after the honeymoon is a distant memory. What happens to Goodyear’s value-priced Kelly tires, Fulda, Sava, or even Dunlop? If they’re not familiar to you, then you’re not what the tire companies call a tier 2 or tier 3 buyer. Bargain brands are often sold to warehouses and big box stores, or to mom-and-pop tire shops with one lift if they’re lucky. This allows the latter to be competitive, make a decent margin, and stay in business. Chain stores like Discount Tire or Les Schwab have nice showrooms, clean service bays, and brand-name tires that most consumers are familiar with.
Enthusiasts have to wonder about the fate of Cooper’s Mickey Thompson and Dick Cepek brands, renown in drag racing and off-road. Goodyear’s own drag racing tires may pose a conflict, just as the Cepek and Mickey Thompson off-road tires are more specialized, niche market products. As with any acquisition, merger, or consolidation, only time will tell, just as Coca-Cola and Pepsi have reduced the number of brands available including Pibb Extra, Tab, Vault, Surge, and Powerade.
[Images: Goodyear, Mickey Thompson]
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Interesting, the Goodyear blimp in the picture isn't actually a blimp. It's one of ZEPPELIN LUFTSCHIFFTECHNIK's semi-rigid airships. You can tell by the side and aft mounted vectored propulsion units.
I've experienced the acquisition of an another company, and those "synergies" mentioned in press releases are mostly focused on back office operations. Payroll, A/P, General Ledger, accounting, finance, legal, purchasing, HR, customer phone support, etc., etc., are consolidated to one location. The winner is not always who acquired who; I've seen it based on who had the superior software package supporting the function in question such as Payroll + HR + Benefits + Electronic Time Sheets riding on one single software platform as opposed to riding on 3 or 4 separate programs. Teams are organized to move important data from one software platform to the surviving platform. Once this is accomplished, "early out" programs are dangled. Those that remain are given an ultimatum of accepting a job 200 to 500 miles away from their current location or terminated with less generous severance packages. All of the above is completed within twelve months with a sense of urgency. Usually, IT support is already outsourced, but that vendor will jockey to obtain both sides of the deal. The operational functionals (design, manufacturing, distribution, etc) are handled with a fine tooth comb. Plants are scrubbed for duplications and overlapping products. Plant managers may be moved around to groom them for future promotions. Design is usually consolidated, but I've also seen where production site support folks keep their jobs (If the plants are not producing, there is no product to sell). Distribution is a delicate subject. Don't want to upset your jobbers, vendors, or big block customers. Field managers are given a pre-prepared script to read from and directed to wine, dine, and smoke a peace pipe with customers to keep them in the fold. Better to hear it from a familiar face than to read about it in an "inflammatory" news report. Duplicates in the C-Suite are usually provided with Golden or Silver parachutes based on their level of responsibility. Any outstanding stock options are used as leverage to keep those exiting from taking jobs with competitors or to just keep quiet. One CEO is usually kicked up to Chairman of the Board while the other CEO keeps his job with the whole shebang under his control. Five to six years later, the hysteria of another consolidation takes place and all are jockeying for new positions again.