The composition of compounds is one of the biggest secrets of the tire industry (Image: Continental)

Evaluating this development, Boris Mergell, head of material evaluation and processing car and truck tires from Continental, sees a clear trend towards ‘downsizing’ in the use of chemical products, with no end in sight. In his view the ‘green tire’ has already arrived in the trade. After all, natural rubber accounts for two-thirds of a car tire, with a good proportion of this renewable raw material obtained from rubber trees in Central America. Production is in the hands of smallholders, with international corporations owning just a few plantations, so revenues from the plantations remain largely with the producers themselves.

“Our modern car tires are highly specialised industrial products well able to handle the balancing act between renewable raw materials and essential chemical additives” Mergell comments. “Virtually every day we try out new materials and compounds in our labs in the hope of achieving further progress.” His aim in this context is to do without fossil raw materials as far as possible and use recycling materials instead. Natural and re-processed oils have both been used at Continental now for over ten years. “We are working very closely with our suppliers and with independent research institutes to find a substitute specifically for those tire ingredients that are based on mineral oil” he explains. To this end he is focusing on polymers made from biomass, process oils, different types of carbon black, mineral nano fillers and, in particular, recycling materials.. “We are currently developing a tire prototype which does without over 90% of the fossil raw materials.” For the structural supports in the tire Continental uses recycled steel. Recycling products or products based on renewable raw materials, such as rayon, are used to replace textile cord materials. One positive side effect is that tires using alternative structural supports are ten per cent lighter than conventional products and so reduce a car’s overall weight, resulting in lower fuel consumption.

By now almost all oils containing PAHs (polycyclic aromatic hydrocarbons) have completely disappeared from tyres. “Previously they were indispensable to ensure tires had a long service life; they were also needed to maintain the tyre’s characteristics in the wet at a very safe level” Mergell explains. “By now, though, we’ve been able to reduce these PAKs in all tires, so that we come in well below the strict limits valid from early 2010.” Not an easy task – one single tyre consists of around 15 different rubber compounds and each compound contains such oils. This meant that Mergell and his colleagues had to change each of the compounds, whilst maintaining the tyre’s driving characteristics at the same level. Explaining the aim of his ‘magic kitchen’, he reveals: “The secret is the way the different compounds in the tyre interact.” Each minor modification can lead to substantial variations in the overall picture. The wrong composition in the compound can already result in considerably poorer braking performance. “It is, after all, the tyre – and not the brakes – that stops the car” he states clearly. “If the composition of the tire results in a blow-out at the crucial moment, then the best brakes are no good.”

Continental’s ‘magic kitchen’ continues to look for solutions that will make tires safer and more environment-friendly. “Our objective here is to gain greater sustainability, both in terms of raw materials and also in production” Mergell explains. To do this, he wants to keep the use of fossil base materials as low as possible, dispense with potentially harmful compounds where possible, and make that industrial product – the tire – safer, more durable and more economical. For him, though, one thing is certain – in terms of tire colours, things still look black.

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Porsche approves winter tires specifically for Young and Old Classics in Rovaniemi (image: Porsche)

Well over 70 per cent of all Porsche sports cars ever built still exist today and are still driven actively in most cases – in both summer and winter. Indeed, even classic Porsche models more than 20 years old still offer the kind of performance today one would expect of a modern sports car. But the tires fitted when such old and new classics were still in production have no longer been available for years. Tire treads and rubber compounds have changed in an ongoing process of development, thus influencing the driving behaviour of such old Porsche models.

Conducting elaborate tests, Porsche’s engineers determine which of the tires available today harmonise best with the features of a classic Porsche. The highlight in this testing and approving process is an extensive test programme up north in the Polar Circle. Numerous Porsche models built in former years, among them the 911, 928, 964, 993 and 996, and then all the way to the first Boxsters, have been tested for this purpose on countless laps at the Arctic Driving Center in the Finnish town of Rovaniemi.

The criteria to be fulfilled by the tires tested in order to receive approval by Porsche are so strict that not all tires met the test requirements. The characteristics and features typical of an older air-cooled 911, for example, form an challenge not easy to overcome. Further tests for dry and wet handling on test routes free of snow round off the test programme as such. Information on which tires are recommended for which Porsche model is presented on Porsche’s website and is also available at all Porsche Centers.

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Continental will discontinue production of commercial tires in its plant hanover-Stöcken (Image: Continental)

“In the fourth quarter of 2008, the commercial vehicle original equipment tire business declined by 20% in Europe. This trend has accelerated dramatically in the first two months of the current year. The European commercial vehicle tire replacement market likewise plummeted by over 15% in the last quarter of 2008. The European original equipment business in the passenger tire sector declined by 20% in the fourth quarter of 2008 and by even more than 30% in the first two months of the current year. The passenger tire replacement market also shows a considerable weakening of demand,” said Dr. Hans-Joachim Nikolin, Continental Executive Board member in charge of the tire divisions. “Since the downturn set in last fall, we have managed to avoid taking trenchant measures by resorting to other instruments at our disposal – production flexibility and the reduction of surpluses on working time accounts, longer plant vacations, the capping of contracts for temporary workers and shorter working hours for core staff. Unfortunately, in the face of a stubborn slump in demand of this great magnitude, the short-term measures at our disposal are no longer sufficient.”

The project plans foresee discontinuation of commercial vehicle tire production at the plant in Hanover, Germany, with a capacity to date of 1.4 million units, as of December 31, 2009. Some 780 employees will be affected. Production at the plant in Puchov, Slovakia, will, moreover, be reduced by 20%. Together this will lower commercial vehicle tire production throughout Europe by a total of 27 percent.

In Clairoix, France, the central and local works councils were presented with a project to end tire production at the plant there, which has the highest production costs of any passenger tire factory in Europe. This action aims to reduce yearly PLT production capacity by 8 million units. 1,120 Clairoix employees would be affected. Production would be reduced in two steps and would not be completely discontinued before March 31, 2010.

“We have studied various options and concluded that the competitiveness of the tire divisions can be maintained only by closing the two plants with the highest costs – and these are the passenger tire plant in Clairoix and the commercial vehicle tire plant in Hanover,” says Dr. Nikolin. “It has not been easy for us to present these plans to those concerned. Regrettably, there is no alternative. We shall continue talks on this very difficult situation with the employee representatives at the plants in question and discuss the next steps to be taken. It goes without saying that we shall do everything to provide the employees affected far-reaching assistance.”

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As of October 1, 2008, Continental Executive Board chairman Dr. Karl-Thomas Neumann will head the Automotive group, consisting of the Chassis & Safety, Interior and Powertrain divisions. On the same day, deputy chairman Dr. Alan Hippe will take on the management of the Rubber group, made up of the Passenger and Light Truck Tires, Commercial Vehicle Tires and ContiTech. On Tuesday in Hannover, the Supervisory Board of the company took assenting note of this new task allocation as decided by the Executive Board. The Supervisory Board also extended Executive Board member Dr. Hans-Joachim Nikolin’s term of office until May 2014.

Dr. Alan Hippe will continue to hold the position of CFO and head the Passenger and Light Truck Tires division within the Rubber group. Heinz-Gerhard Wente will fill the position of Gerhard Lerch as head of the ContiTech division, who is retiring as planned. Wente will maintain his position as Executive Board member for HR and Director of Labor Relations for the company. The Commercial Vehicles Tires division in the Rubber group will continue to be headed by Dr. Hans-Joachim Nikolin, who is responsible for purchasing as well as quality and the environment in the corporation’s Executive Board.

There will also be no changes in the operative management of the divisions within the Automotive group, which is in the hands of Dr. Ralf Cramer (Chassis & Safety), Helmut Matschi (Interior) and Dr. Karl-Thomas Neumann (Powertrain).

"Following an elementary change in strategy, Continental developed two major company groups in the past 10 years, primarily through selective acquisitions, major investments and focused expenditures in research and development. These groups are concentrated on two very different business fields: Automotive and Rubber“, explains Executive Board chairman Dr. Neumann. "Following the acquisition of Siemens VDO, we created the three Automotive divisions in the summer of 2007 – already at that time with a common management for the coordination of cross-divisional tasks. The future Automotive group was thus called to life. We are now taking the next logical steps, creating not only a strong Rubber group as a counterpart but, at the same time, setting up very clear management and responsibility structures for both groups."

"Under the roof of Continental, two company groups have basically achieved positions that are much stronger and more stable, than the initial position of the "classical" Continental at the beginning of the nineties – with regards to sales and margins, production capacities and market position," stressed vice chairman of the Executive Board Dr. Hippe. "With this move, we are providing both company groups with more freedom so they can react to the respective trends and options in their various business fields with much greater sovereignty. At the same time, the corporation attains the flexibility it needs to respond quickly and decisively to the wide range of future trends and possible options, especially in view of the tough economic environment and the critical situation on the financial markets."

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This, he said, is the result of the determination and innovative thinking exhibited by thousands of Goodyear associates around the world that helped turn the company around and created positive business momentum.

“Our company’s product, brand and customer mix has become considerably richer. We are more focused on the premium segments of the global tire markets, which have relatively inelastic pricing dynamics,” Keegan said.

“Our ability to generate top-line growth is underpinned by our product leadership strategy. We focus our industry-leading new product engine on increasing our mix of high-value-added tires. The introduction of impactful new products to our portfolio globally raised the bar again in 2007.”

In addition, Keegan said the company’s total debt and legacy obligations, which peaked at more than $12 billion in 2006, are expected to fall to about half that in 2008. Goodyear has made significant improvements in its fixed cost structure, eliminating more than 25 million units of global high-cost tire production capacity since 2004.

“We remain diligent in our planning relative to economic conditions. However, the improvements we have made in our go-to-market model, in our cost structure and in our balance sheet give me confidence that Goodyear is well positioned to continue to progress,” he said.

Among the company’s 2007 accomplishments noted by Keegan were:

• Record revenue from continuing operations of $19.6 billion, 5 percent above 2006;
• An 8 percent increase in revenue per tire, driven by improved pricing and a richer product mix;
• A strike-adjusted 24 percent increase in segment operating income;
• Strong growth in the company’s emerging market tire businesses;
• A total debt balance that was $2.5 billion lower than at then endof 2006;
• Growth at twice the industry rate for the Goodyear brand in North America;
• The highest operating income for North American Tire since 2000 after adjusting for strike impact, and
• Significant progress against the company’s cost-savings targets.

Keegan said he is pleased with the company’s progress. “We continue to drive initiatives that will accelerate the pace of change at Goodyear. We are now able to quickly adapt to the changing dynamics of our industry and look forward to capitalizing on the changes our markets will present,” he added.

“Our associates are clearly delivering. We still have challenges ahead of us in an uncertain economy, but there is no question that we are on the right path. We know it, and our peers know it.”

Keegan called Fortune magazine’s recent recognition of Goodyear as the world’s most admired motor vehicle parts company a “huge accomplishment” for associates.

“The world now has begun to recognize that something special is happening at Goodyear. This recognition by our industry peers is a source of pride for each of us,” he said.

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“The continuing unprecedented upward spiral of energy and raw material costs makes this action necessary,” said Asahiko “Duke” Nishiyama, Vice Chairman and President of BFNT.  “This unrelenting escalation of costs is simply not a situation that can be managed through the enhanced efficiencies and increased productivity that we are continually implementing at all levels of our company.  As a result, we have no choice but to implement this price increase.”

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