In 2021, Goodyear will be a great success after joining hands with the powerful companies of Gupta. The mutual support of the market share and sales volume of both sides helped Goodyear to firmly sit in the top three position in the world. However, behind the brilliant achievements, there are such "fatal" crises as employee death, commercial compensation, and doubtful sales.
Topeka Factory Reproduces Fatalities
Now when it comes to Topeka Factory, the news has jumped from its "expansion" to "employee death". According to local media reports, on September 24, 2022, 59 year old Timothy Cole was injured while working in Goodyear's Topeka factory. Because of his serious injury, the man was later taken to Topeka Hospital where he was declared dead. It is reported that he has worked in Goodyear for 28 years.
At present, the Occupational Safety and Health Administration (OSHA) has been involved in the investigation. However, as the survey lasts for six months, the final results will not be released until the end of March next year. According to incomplete statistics, this is the sixth fatal accident in Goodyear's domestic factory in the United States in recent eight years, and also the second fatal accident in Topeka factory in eight years.
Commercial disputes, fines exceeding half a billion
Although the cause of the employee death accident in 2022 has not yet been investigated, the 7-year trade secret dispute between Goodyear and Coda Development S.R.O. ushered in the trial result in September - Goodyear was sentenced to a high fine.
It is reported that in September 2022, the jury of the Cleveland District Court of the United States decided that Goodyear would pay Coda US $64.8 million (about 450 million yuan) in compensation because it found that Goodyear "intentionally and maliciously" used confidential and proprietary automatic pneumatic tire technology developed by Coda. They are punitive damages of US $62 million and compensatory damages of US $2.8 million.
After the verdict came out, Goodyear made a statement. "We are disappointed in the verdict and will consider all our options. Goodyear believes that the jury's verdict on the misappropriation of 5 of the 12 suspected trade secrets should be overturned. That is, the compensation is far less than the amount Coda seeks, and the punitive damages will be limited to three times the maximum compensation."
But even if the statement is so, the payment of compensation has become an inevitable fact.
170000 product recalls
After four years of investigation, Goodyear announced the recall of 170000 G159 RV tires with 275/70R22.5 specifications in 2022. The reason for the recall is to worry about the defects of the tires - under the conditions of the existence of this market segment, when the tire is overloaded and under inflated, the tire may have tread separation and other failures.
In fact, the earliest investigation on Goodyear's tire product began in 2018 - there were many complaints about the use of this tire on Class A RV at that time. It is reported that according to the investigation results of the Office of the Inspector General (OIG) of the Ministry of Transport, G159 has resulted in 9 "accidents" in which one person died and 13 people were injured. As a substitute for the recall, Goodyear provided G670Rv as a substitute for the recalled G159 tires.
On October 3, 2022, the National Highway Traffic Safety Administration announced that its investigation of this tire product was ended because Goodyear issued a recall order. However, it also mentioned that the end of this investigation does not constitute NHTSA's discovery that there are no safety related defects in other types and sizes of tires outside the recall scope. If circumstances permit, the agency reserves the right to take further action. However, due to the earlier production date of these tires (February 1, 1996 to January 31, 2003), the National Highway Traffic Safety Administration (NHTSA) cannot determine how many of the 173237 tires it sells are still in use. No one can figure out how much compensation will be involved in these recalled tires.
From employee death compensation, litigation compensation, tire recall, to the previous expansion of Topeka factory, as of the end of November 2022, Goodyear had to pay more than 180 million dollars (about 1.25 billion yuan) in compensation, while Goodyear's profit in the first three quarters of this year was only 306 million dollars (about 2.134 billion yuan). Goodyear has lost at least half of its profits in the first nine months.
In addition, Goodyear's expenditure is still increasing in the back and forth "tossing" Goodyear's assets.
Production capacity adjustment, Goodyear continues to bleed heavily
In fact, even the seemingly beautiful alliance of powerful countries is now also in danger. In June 2022, Goodyear launched several "slimming plans" for Goodyear. However, along with the production capacity and brand of Goodyear, Goodyear's wallet may also be "thin".
First, earlier this year, Goodyear announced that it would stop producing and selling tire products of the Dick Cepek brand owned by Goodyear. Then, in order to achieve the operation rate synergy of 250 million dollars in 2023, Goodyear approved the plan of "reducing the number of redundant global administrative personnel and closing redundant Goodyear tire warehouses". Some Goodyear tire warehouse distribution centers will not be guaranteed.
Finally, in the fall of this year, Goodyear decided to close its motorcycle tire factory in Merkesham, England, before the end of next year. The approximate production capacity rate of these motorcycles will be transferred to the factory in Monluxon, France, which Goodyear plans to reorganize.
In addition, Goodyear plans to phase out Avon and Cooper racing projects, Cooper European Technology Center (ETC), materials projects and office jobs. The disintegration of these factories, projects and old employees once again painted a solemn and stirring color on this M&A, while also squeezing Goodyear's expenditure.
The layoff of hundreds of employees of Goodyear, the 16.5 million euros (120 million yuan) investment involved in the "modernization" of the French factory of Monluxon, add up to a series of costs -- Goodyear will spend more than 200 million dollars in the past two years.
After the "blood" is out, Goodyear's business will improve? At present, it's hard to say.
Dark clouds cover future sales
Goodyear said in a letter to investors issued on October 3: "The decrease in adjusted net income reflects the decrease in segment operating income, the increase in interest expenses and the adverse impact of foreign exchange on performance after consolidation and adjustment."
In Goodyear's forecast for the fourth quarter, we also saw the uncertainty of the profit performance of the "old brand strength" in the tire industry. It said that, compared with the fourth quarter of 2021, the inflation and (non raw material) inflation in the fourth quarter of 2022 would bring Goodyear's income of 250 million to 300 million dollars.
Goodyear, which has only experienced a year of "bumper harvest" due to increased expenditure and decreased income, will probably ride the "roller coaster" of performance again in the second half of 2022. Only this time, no other small partners like Gupt can solve problems together······
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