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Goodyear Tire - The World's Largest Tire Maker

Frank Seiberling's Research And Development Company

Text By Bill Senefsky, Photography by Courtesy of Goodyear, Marshal Astor

Frank Seiberling founded the Goodyear Tire and Rubber Co. in 1898. Seiberling borrowed $3,500 from a brother-in-law to purchase a straw goods factory on the edge of Akron, Ohio. He purchased used equipment and converted the facility to produce bicycle tires, pneumatic tires for carriages, horseshoes, and hoses.

Seiberling entered the carriage tire business by attempting to produce his products under license from a patent held by the Consolidated Tire Company. His application was refused, but undaunted, he immediately engaged in a two-year court battle. His reasoning was that Consolidated held a monopoly in this market and could thus grant licensing on a selective bidding basis. Seiberling proved to be a tough businessman, because during the long court proceedings, all profits from the sale of his carriage operations had to be held in escrow until a final verdict was reached.

Looking for a new opportunity, his company entered into automotive tire production in 1901. Beginning its policy of innovation, Goodyear introduced its straight-side tire in 1905. This product was revolutionary, as it was quickly detachable from its rim. It also carried the company's Wingfoot trademark that was personally designed by Seiberling. Many historians feel this highly accepted and popular tire made Goodyear a household name.

Though Seiberling founded the company, David Hill was the first president, as he purchased almost one third of the company's initial stock offering. Interestingly, the company named two others as president before Seiberling became its chief executive in 1906.

Goodyear Becomes The World's Largest Tire Maker
The company opened its Detroit shop operation in 1907, which supplied Henry Ford 1,200 tires for his new-world car, the Model T. Within 24 months, Goodyear's automotive tire production rose to 36,000 units with sales of $4.25 million. In 1910, the company produced one third of all the original equipment tires on American automobiles.

Researching new markets, the company began airplane tire production in 1909. Increased interest in aviation allowed it to purchase a new method of bonding rubber over fabric. The new rubberized material was soon utilized for airplanes and early dirigibles entering production in 1910. Goodyear's tire production techniques pushed output from 250 units per day in 1916, to a remarkable 4,000 tires a day by the end of World War I.

In fact, Goodyear became the worlds largest tire producer in 1916. Sales boomed from $110 million in 1916, to $223 million in 1920.

Bankruptcy Looms
Goodyear lost most of its government contracts at the end of WWI. Though the economy recovered briefly, a recession hit in 1920, forcing massive sales loss and unemployment. In an attempt to increase capital, the company offered direct stock sales to both its employees and customer base. As the recession deepened, the company had to turn to bankers for relief. Goodyear accepted temporary refinancing to the tune of $18 million from a banking syndicate headed by Goldman, Sachs & Company and A.G. Becker. This first effort failed, as the stock book value fell from $75 million to $0 by the eve of 1921.

With its assets now handled by a New York law firm, an outside investment firm of Dillon Read was brought in to manage the struggling concern. As expected, company founder Frank Seiberling and many other managers were forced to leave Goodyear. Only Paul Litchfield and George M. Stadelman remained. Undaunted, Seiberling and his group started the Seiberling Rubber Company.

Outsider E.G. Wilmer brought in new management, and by making minimal changes, reduced company debt by a whopping $41 million in 30 days. Sales roared back to $123 million within 24 months. Wilmer became board chairman in 1923. Mr. Litchfield moved into the first vice presidency position. By 1926, the company became the largest rubber producer in the world. That same year, Paul Litchfield assumed presidency of the company.

The Makings Of The Goodyear Blimp
Litchfield believed in broadening the company's product base, and he greatly expanded Goodyear's involvement in lighter-than-air craft. No stranger to this field, Goodyear produced all of the United States' airships after 1911, so it was a given that the company would enter into a government contract to develop and produce the USS Akron and USS Macon dirigibles for the U.S. Navy in 1928. Goodyear's goal was to prove the value of airships for global air transportation. Using the Navy as a springboard into this market proved to be unfortunate when the USS Akron crashed in 1931 and the USS Macon was lost off the coast of California in 1935. But it was the Hindenburg (built by Goodyear's German competitor Luftschiffbau Zeppelin) disaster of 1937 that killed the last glimmer of hope for the airship industry.

Globalization
The company's global interests began in 1910, when two Canadian plants were constructed. Factories were added in London, England, and Australia in 1912. Product distribution covered northern Europe, Russia, the Caribbean, Central America, and South America. By the end of the '30s, Goodyear had plants in Argentina, Brazil, Indonesia, and Sweden. Rubber plantations were established in Costa Rica, Indonesia, and the Philippines. In total, the company managed 18 foreign subsidiaries, 7 factories, 7 plantations, 37 company branches, and 28 depots, along with hundreds of distributors in North America.

In 1929, two textile mills were added in Alabama, along with another in 1933. In 1935, Goodyear added the Kelly-Springfield brand, which was positioned as a subsidiary. A year later, an additional manufacturing plant was purchased in Akron, Ohio.

Chemigum, the company's first synthetic rubber material, was patented in 1927 and mass-produced in 1935, with tires utilizing it in 1937. Pliolite-a new compound that bonded rubber to metal-was launched in 1934. Pliofilm, a new packaging product, also appeared. Company diversity continued with Airfoam, a cushioning material developed for mattresses and seats, and Neolite, a material for heels and toes also made from synthetics.

Goodyear Defense Contractor
By 1939, when hostilities began again in Europe, the company was actively engaged in the production of 200,000 gas masks a month for the U.S. Army. Goodyear Aircraft (GAC) utilized the company's Akron airship air dock for the production of parts for the B26 medium bomber, 132 blimps for the Navy, and the production of the Corsair fighter beginning in 1943, and later, parts for the B29 Superfortress.

As was the norm in wartime, Goodyear managed the operation of a plant producing propellant charges for more than 600 types of artillery shells. The government also asked the U.S. rubber producers to build new synthetic rubber plants for styrene and butadiene. Goodyear supervised the construction of three such facilities, owning and operating two of them. At war's end, immediate new tire consumption after wartime rationing produced profits of $25 million. By 1948, peacetime sales had reached $705 million. The sales kept rolling, and by 1951, Goodyear became the first rubber company to top $1 billion in sales.

The company invested its profits once again in its core business by purchasing a new rubber plantation in Brazil. Two more Goodyear rubber-manufacturing plants were added to its Alabama facility after an $11.5-million investment, making it the largest tire-producing facility in America. With rubber consumption doubling that of the pre-war era and the addition of synthetics, Goodyear added a synthetic rubber plant in Beaumont, Texas, for the production of the company's new product, Natsyn.

The late-'50s saw the construction of a 7,200-acre proving ground, along with the company's re-entry into racing. Foreign operations were consolidated, and the company expanded its aeronautics arm with the addition of Litchfield Park in Arizona. This subsidiary produced the Subroc antisubmarine missile and produced components for the Apollo moon missions.

By the mid-'60s, Goodyear had purchased two specialty wheel manufacturers, along with adding its 10th tire-producing facility in the United States.

Like other American tire producers, Goodyear faced the radial tire challenge in the '70s. Unlike the others, it immediately began revamping its factories. The new concept, first introduced by Michelin in the late '40s, controlled barely 8 percent of the U.S. market in 1972. Goodyear utilized its sales success from its Polyglas fiberglass reinforced tire line to move into the new technology. In a mere four years, radial tires equipped 45 percent of the U.S. market. Goodyear suddenly became the world's largest radial tire producer.

The company built its Lawton, Ohio, manufacturing facility in 1979, along with a new technical center in Akron. It also planned on further diversifying into oil, natural gas, and atomic power. In fact, the company had already made sizable investments into these markets. A surprise takeover attempt by Sir James Goldsmith forced the company to sell the majority of its non-core operations. Sadly, Goodyear Aircraft went on the sales block, along with the famous Airdock.

By 1990, Michelin had become the world's largest tiremaker, with its purchase of BF Goodrich and Uniroyal. The company's other competitors-Firestone and General-were also purchased by offshore concerns. A full 10 percent of the company's workforce was eliminated, and a modernization program was begun. New products were introduced, including the Eagle lineup. The Aquatread (all-season radials) was also added.

The Modern Tire Manufacturer
The mid-'90s found the company again reaping healthier profits of $13.17 billion. Global expansion entered the picture with purchases and joint ventures. Tire plants in China and India were bought along with hose manufacturing. With another tire manufacturer purchase in Europe in 1996, the company again had production facilities in China, Europe, India, and Latin America.

An agreement was reached with Sumitomo Rubber in Japan-a deal that allowed the respective concerns to manufacture tires for each other in Asia and North America. More than 860 Penske Auto Centers, and 300 Montgomery Ward shops were also purchased.

In 1996, Goodyear introduced the Infinitred, with its lifetime warranty. A year later, the company's EMT run-flat tires launched. Though this product was excellent, its release was met with mixed reviews. Ride quality and the initial high price were issues.

The rest of the decade appeared to be good. Goodyear continued to leverage its assets. Its subsidiary, Kelly-Springfield, shut down its singular operations to reinforce Goodyear's own version of tier positioning. The Dunlop brand was purchased to reinforce both a tier and global presence. Internationally, the markets got tougher due to manufacturing and cost concerns. Noting the global changes, Goodyear's traditional dealer base created its own multi-brand concept in-house with multi-brands. This obviously cut into brand loyalty and sales.

With the economy slowing and pressured with increased costs in terms of labor, materials, and multi-brand marketers, the company mounted a back-to-basics blueprint.

Focusing on its core business, Goodyear again began selling off non-core businesses and concentrating on debt reduction. From 2001 to 2004, Goodyear struggled through a tough period, but the company continued its basic business plan.

The company's long-term success in technology helped once more, with the launch of its Assurance brand. Though the industry also began to recover as a whole, this brand launch was a turning point. The company continues to re-define itself internationally. With its foreign markets continuing to gain brand penetration and its North America home front stabilizing, the Goodyear brand continues to build market share.

SOURCES
Goodyear Tire & Rubber Co
1144 East Market Street
Akron
OH  44316
330-796-2121
http://www.goodyeartires.com
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By Bill Senefsky
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