The Slovenia Times

Thierry Villard, Goodyear Dunlop Sava Tires



Sava Tires changed its name to Goodyear Dunlop Sava Tires on 1 July 2011. What was the reason behind the change and what impact, if any, has there been?
There were a couple of reasons for changing it. One was to ensure the Goodyear Dunlop organisation in Europe was harmonised when it came to naming. Slovenia was an exception in not having Goodyear Dunlop in its name. The second reason was that our previous company name wasn't reflecting the reality. We now mainly produce and sell Goodyear and Dunlop brands, not only Sava tyres. But because of our name, Sava Tires, many people didn't realise that we are a company with a complete portfolio of premium brands, value brands, budget brands. There is an issue of company recognition: we wanted to reinforce that element in the minds of end users, associates and customers.
It is too early to know the outcome of the name change. But the good thing is that all the media are actually using the full name. It went very quickly. Another good thing is that we have had very positive feedback from the associates on the change - they report a sense of pride and belonging.

What segments of business are driving sales at Goodyear Dunlop Sava Tires?
At the FDI awards I gave a speech and made a joke - "winter was coming". The biggest change is winter in that winter tyres are getting more and more important. Slovenia is very advanced compared to other European markets when it comes to winter tyres. But this year in Romania, Serbia and the Czech Republic they decided to implement rules similar to those in Slovenia and this has given the industry a real boost. And now that more and more people are concerned about safety on the road, more and more people buy more and more winter tyres.
The winter segment in Central & South-East Europe has increased; it now presents over half of our business. We also see categories like ultra high performance tyres growing.

In what geographic areas does the Goodyear group operate?
We have four regions: North and Latin America; Europe, Middle East and Africa (EMEA) and Asia Pacific. Asia is booming - specifically China, Vietnam, Thailand. Latin America is also growing. And EMEA has always been a significant contributor to Goodyear.

Overall the Goodyear group registered a 22 percent increase in sales ($6.1 billion) in the third quarter of 2011 compared to the same period in 2010. What are the reasons behind the improvement in sales?
Two things. First of all the nature of the comparison. The tyre industry was very affected by the crisis at the end of 2008 and in 2009. Although in 2010 we had entered the recovery phase, it is still a time when sales weren't at their strongest. That said, looking at the Goodyear global third quarter results for 2011 there was a record in terms of sales - the results were outstanding; the best third quarter we've ever had.
The reason for that is that the market has now finally recovered fully but also our strategy of focusing on targeted segments. Right now there is very positive momentum.

Did the company have to adjust its business model to cope with the crisis?
If I really look at what happened in pre-crisis and post-crisis times, there are two aspects: the manufacturing part and the business part of it. If I look at the latter: we made a conscious decision that despite the crisis and our knowledge that business would go down, we would keep on investing. That was a bit dangerous because the car industry went down by 40 percent, and that of course had a direct impact on us. And we didn't know when business would pick up. Nonetheless, we steadily but not massively invested - increasing our investments in advertising, people... During the year and a half that finished mid 2010, our position on the market improved. And then after the crisis we were much stronger than before.
On the manufacturing side we adjusted production. The original equipment market was down, but people still drove cars and bought tyres. The replacement market was not too bad, but we had to adjust production. We slightly adjusted arrangements with our contractors and made sure we were making the most out of our workforce. That means that we now operate 355 days a year, 24 hours a day.

How important is Goodyear Dunlop Tires Central & South-East Europe, to which Goodyear Dunlop Sava Tires belongs, within the whole group and why?
When it comes to the dimension of Europe, Middle East and Africa, we are one of the group's top three contributors in Europe. In our part of the world we still enjoy business growth. Our geographic position is such that we can learn from the rest of Europe. Here we're a complex mosaic of 13 countries. Slovenia is the home base - 13 different countries, cultures, origins but part of the same community.
Altogether, Goodyear has invested over EUR 180m into Goodyear Dunlop Sava Tires over the 13 years of its presence in Slovenia. What would you say are the biggest returns on this investment?
We have practically doubled our productivity in that time - if we used to produce 3.7 million tyres per year, we now produce 7.5 million tyres a year. We are now producing more high quality tyres than 10 years ago.
These investments have also really changed the products that are produced here. It used to be small tyres for small cars, more budget brands. But now we have moved to to high performance and ultra high performance tyres, truck tyres - growth areas.
We also improved safety at work and our environment friendliness. We don't use solvents in the production of tires any more. By managing waste, we have reduced the amount of waste by 85 percent since 1998. We have also decreased the rate of work accidents by 95 percent since 1998. And it all comes down to successful and constant campaigns.

In 2012, Goodyear Dunlop Sava Tires is to invest EUR 6m in the production of retreaded truck tires. What are the reasons for this?
Basically, we believe that retreaded truck tyres are very important in the overall portfolio of our products. Increasingly the truck business is moving towards fleets - they expect us to provide tyres and also solutions and services, they're relying on us to manage tyres.
Retreading is basically prolonging the life of a tire. The quality and the performance are the same, whereas costs are optimized. The investment in new equipment and new truck tire retread capacity in Slovenia is part of the company's growth strategy. In recent years, Goodyear Dunlop has steadily expanded its mold cure product portfolio. These products are manufactured in Wittlich (Germany), Wolverhampton (UK), Riom (France) and from 2012 also in Goodyear Dunlop Sava Tires. The decision to invest in Slovenia was helped by the fact that the factory here is very reputable in the Goodyear group.
The expansion means that by 2015, 70 new jobs should be created. Once we're up to full speed there should 70 people working full-time, 100,000 tyres per year.

How do you expect your industry to develop in the future? What are the biggest challenges?
A game changer is the introduction of labelling of tyres. From November next year there will be a new regulation on this - each new tyre will have to have a label which will give it a rating. Three criteria will be measured - the wet grip (safety), rolling resistance (fuel efficiency) and noise. So we have 270 test drivers in Luxembourg testing all our tyres to judge our ratings. Testing process is strictly formalised, but each company will be doing its own testing which, of course, will be audited from outside.
The effects of the introduction of labelling will be interesting to see - it's difficult to predict the consequences. I'm confident to say we have very good performance, but it'll be interesting to see whether labelling changes the choices customers make. Maybe they'll change from budget segment to premium segment, for example. Even the specialised media will have to incorporate these elements into their tests.
That's not just a challenge but a game changer.

What are Goodyear Dunlop Sava Tires' plans and projects for 2012?
Retreading truck tires is one, there will be an official opening in April. Then, as usual, there are plenty of new products. We also have lots of work to do preparing for the introduction of labelling - explaining the new regulations to both associates and clients, for instance.


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