US-based Cooper Tire & Rubber Co is a major producer of replacement tyres for passenger car and light truck applications. It also manufactures radial medium truck tyres and materials and equipment for the truck tyre retread industry. The company posted sales of nearly US$2.1bn in 2004 with operating profits of US$63m, writes Matthew Beecham.
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Cooper Tire & Rubber is organised into two operating segments: North American Tire Operations and International Tire Operations.
- North American Tire Operations produces tyres for passenger car and light truck applications. These are mainly sold in the US replacement market.
- International Tire Operations produces tyres for passenger car, light truck, racing and motorcycle applications. Its main markets are the UK, continental Europe and Scandinavia.
Headquartered in Findlay, Ohio, Cooper Tire & Rubber employs 8,739 people at nine manufacturing facilities (eight in North America and the other in the UK) and 17 distribution centres dotted across five countries. In addition, Cooper operates 14 technical centres and offices across North America, Europe and Asia.
Last year, the company sold its Cooper-Standard Automotive and inner tube businesses for some US$1.2bn.
In an exclusive interview with just-auto, Matthew Beecham talked with Phil Caris, vice president, marketing & sales and Dewey Beach, director of product management, Cooper Tire & Rubber about how its tyre business has developed over the past year and prospects for growth..
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By GlobalDatajust-auto: How has the company changed since you sold Cooper-Standard Automotive and your inner tube businesses last year?
Phil Caris: “Over the past year, we have re-focused on the tyre side of the business. We have reduced our debt, purchased some shares and made an 11% investment in Kumho Tire. We have really taken a step back and focussed our business on three main areas: The North America market, which has been our largest market and will continue to be our largest market, at least in the short term. The second area of our focus is on the Asian market with primary emphasis on China. The third key region of the world is Europe with our operations in Melksham, England. We expect to continue to invest in Europe and grow our business there as well.”
just-auto: What are your ambitions for expansion into Asia?
Phil Caris: “We see Asia as our high growth emphasis over the next 5 – 7 year period. We believe that our growth in China will come through acquisition as well as organic growth. We need to follow an acquisitive approach in China if we are going to meet our goals. We also have a 50/50 joint venture with Kenda Rubber so we shall grow our business that way as well. We are currently building a tyre plant with Kenda for radial passenger car and light truck tyres in Jiangsu Province, China. Our expectations are that it will start producing tyres in mid-2006. The venture allows us to establish our first foothold in China, understand how to manage operations in the country and help us from a capacity perspective for both our European and North American operations.”
just-auto: Cooper Tire & Rubber also has an agreement with the Huangzhou Zhongee Rubber Company under which Huangzhou Zhongee is supplying radial medium truck tyres (RMTs) annually to Cooper Tire. Again, I guess this move is designed to enable Cooper Tire & Rubber to expand its current offering of RMTs without significant capital outlay?
Dewey Beach: “That is correct. We have worked with them very closely for the past year, making sure that we have a relatively smooth transfer of our technology into their manufacturing operation. We are really phasing out the radial medium truck manufacturing business at our Albany plant in Georgia, US and relocating it to China. We want to ensure that we get the Cooper radial truck tyre developed into the Chinese facility that meets all of our current every day specifications. It should be as transparent as possible from our customers’ perspective.”
just-auto: What are your plans for growth in the mature European tyre market?
Phil Caris: “Our plans in Europe are really to focus on growing the Avon and Cooper brands on a steady basis. We shall continue to invest in our European facilities to ensure that we continue to produce state-of-the-art quality products.”
just-auto: What should your brands mean to the consumer?
Phil Caris: “The Cooper brand is our flagship brand. I think consumers view it as an exciting, changing brand. We have made a lot of investment in entering into new segments, raising the awareness of the brand and really trying to reach out to the younger consumer. The Avon brand is one which is really connecting the car enthusiast here in the US and is marketed through Tire Rack. The brand is developing a kind of buzz of being a ultra-high performance brand here in North America.”
just-auto: Is your approach in terms of brand development different in Europe?
Phil Caris: “I think in Europe, the association will be the same with the brand. The Cooper brand is not as established in Europe as it is in the US. Avon is really considered a performance brand and closely associated with motorsport whereas the Cooper brand is more traditionally linked to the 4×4 segments although we are going to be developing a lot of new products in the ultra-high performance segment. We are trying to position both as quality performance brands that the consumer will enjoy.”
just-auto: And in Asia, what are you seeing there?
Phil Caris: “The Chinese market will be a really interesting one to watch unfold. Because the relationship to the car is so new to almost everyone in China, their relationship with the different types of tyres and brands will also be a new experience. So it is really fertile ground and a very exciting time to be entering that market.”
just-auto: If we turn back to the North American market, have there been any changes in the North American car parc that has led to changes in the tyre market?
Dewey Beach: “We see passenger tyres trending to larger rim diameters; there are a lot of 17, 18-inch wheels and a few 19-inch wheels. These are vehicles where performance is becoming an important criteria here so we are seeing an increase in speed ratings. I think the standard rating now for a passenger car go from T to H, V and Z. So you can see it as North America following Europe in some of the performance applications from a speed rating standpoint.”
just-auto: Are you developing run-flat tyres?
Dewey Beach: “We are developing the technology and very close to having it on the shelf. We are monitoring [the North American market] and when it is needed, we shall have it.”
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medium and heavy duty truck applications accounted for nearly 1.2 billion tyres sold in 2004, of which 857 million (72%) were replacement tyres. Although the world tyre market is essentially a replacement market in terms of volume and value, and the vehicle makers buy only one-quarter of road tyres, this segment of the market is significant as it drives technical development and significantly influences the aftermarket.
