Q: Goodyear posted a record profit in 2015. What are your expectations for this year?
A: Goodyear’s results at the end of 2015 were excellent.We reached a record high of US$2 billion in operating profit and something we plan to replicate in 2016. This is due to the consistency of our operations. For the last four years the company has implemented a global strategy to obtain year-on-year growth. Goodyear was able to restructure its finances successfully, totally covering its debt and overcoming all previous hurdles. Our strategy is based on understanding the market to identify the main segments where we want to compete. We want to participate where customers value our brand, have an emotional attachment to our products and understand the technology and innovation that we integrate into our tires.
Q: What part has Mexico played in Goodyear’s overall success?
A: Mexico is as committed to this vision as any of our international branches. For the last three years we have seen double-digit growth in our Mexican operations, gaining a significant market share and developing well above the industry’s average. The Mexican vehicle park is unique in terms of diversity and complexity, so we have concentrated on identifying this market's main needs. Although Mexico’s vehicle park has an advanced average age, it is undergoing an important renovation fueled by the automotive industry’s development. The country was previously dominated by US brands but OEMs from all over the world have diversified the market. As a result, Mexico is one of the most demanding countries regarding StockKeeping units (SKU), and Goodyear alone has more than 800 tire types for the market. Our segmentation strategy plays a fundamental role in our broad offering, allowing us to identify different purchasing habits and drivers within our client segments to allocate SKUs affectively.
Q: How is Goodyear’s latest manufacturing project in Mexico advancing?
A: Proof of our success and belief in Mexico is our decision to open a new manufacturing plant in San Luis Potosi. We expect to start operations in 2017. Goodyear already has drones hovering over the new site, transmitting live images of its progress. Our main objective is to keep up the momentum. We are confident this plant’s production, using state-of-the-art technology, will lead to more opportunities in the aftermarket. It has a wider and more competitive portfolio and a stronger presence in the original equipment market. Eventually we hope our success will lead to a stronger engineering and R&D presence in the country. We have a long-term strategy that will not change because of transient complications.
Q: How is Goodyear targeting the upcoming operations of Audi and KIA?
A: We have a longstanding relationship with Audi, several of whose models already include our tires. Audi mainly employs our Dunlop brand. These tires are excellent for sports and performance vehicles, offering the best design and characteristics to satisfy this demanding segment. KIA, on the other hand, has a strong SUV segment and our Wrangler line offers a complete solution for them. We specifically design products for on-road use, including a popular line in Mexico intended for half on-road and half off-road use and another line intended for 70 percent offroad and 30 percent on-road use. The latter is particularly successful in northern Mexican markets and offer excellent driving conditions and durability.
As well as Audi and KIA, other OEMs are being drawn to Mexico, as is evident in BMW’s investment in San Luis Potosi. Plenty of product placement opportunities are materializing thanks to the growth of the Mexican automotive industry. We are contributing to development with a US$550 million investment that will generate over 1,000 new jobs in the region.
Q: How has Goodyear cultivated its human capital in the country?
A: We are already hiring people to manage our San Luis Potosi plant and are training 50 local technicians in the culture and mindset of the company. We plan to take these people to different Goodyear locations around the world so they can see their trade in action abroad. We gained the Great Place to Work certification in 2015, showing that our people are happy and that there is a shared feeling of success throughout the company. Everything comes down to people. Our clients, human capital and our associates are pivotal to our success so it is important to understand their concerns. Empathy drives our staff to go that extra mile.
Q: Regarding innovation, what new products and technology is Goodyear working on?
A: A joint project with Tesla, targeting a reduction in the noise that tires make when they vibrate against the pavement, was developed to take a complicated problem and solve it in the simplest way. Goodyear worked with sound specialists, recreating the same technology available in sound cabins to reduce noise to a minimum. The solution was to use a thick layer of the same material employed in sound cabins to achieve a 70 percent noise reduction. Tires are subject to high levels of pressure and temperatures leading us to develop a specific adhesive for the isolating material. The final obstacle was to automate the production of this component to produce thousands of units in a short period of time. The product was presented at a Goodyear event in Washington state to our North American clients and it is now being used by Tesla in its latest models. Certain Lincoln and Cadillac models may also employ this technology in the future. This project perfectly highlights the road the industry is taking and our innovations will always improve the driving experience.
Another product unveiled at our event was an all-season Wrangler tire for the truck segment, which combines all the benefits of an on-road product with off-road applications. As a result, one product can do what five of our previous models did. This makes our clients’ purchasing processes much simpler but also simplifies all activities for our distributors and our own manufacturing system.
Q: How has Goodyear’s technology development process permeated its sales and distribution efforts?
A: We have changed in our commercial processes and moved toward a more digital approach to help customers who may not know what kind of tire their vehicle needs. At the same time, we plan to implement our e-commerce platform, which has thrived in the US market as it supports the customer during the decision-making process.
We have merged our North and Latin American operations to create a single branch for all the Americas. This gives us more flexibility to tend to customers and helps with to integrate new projects in other regions. This approach will target the Hispanic population residing in North America. We expect Mexico will play a crucial role in future expansions.