The Goodyear Tire & Rubber Company

1144 East Market Street
Akron, Ohio 44316-0001
U.S.A.
Telephone: (330) 796-2121
Fax: (330) 796-2222
Web site: http://www.goodyear.com

Public Company
Incorporated: 1898
Employees: 84,786
Sales: $18.37 billion (2004)
Stock Exchanges: New York Midwest Pacific
Ticker Symbol: GT
NAIC: 326211 Tire Manufacturing (Except Retreading); 325212 Synthetic Rubber Manufacturing; 326212 Tire Retreading; 326220 Rubber and Plastics Hoses and Belting Manufacturing; 326299 All Other Rubber Product Manufacturing; 811111General Automotive Repair

The Goodyear Tire & Rubber Company ranks third among the world's tire manufacturers, trailing only Bridgestone Corporation and Compagnie Générale des Établissements Michelin. Nearly 90 percent of Goodyear's revenues are generated via the development, manufacturing, marketing, and distribution of tires for most applications. The firm's tire brands include Goodyear, Dunlop, Kelly, Fulda, Lee, Sava, and Debica; the Dunlop brand is offered by Goodyear through an alliance with the Japanese firm Sumitomo Rubber Industries, Ltd. Goodyear also manufactures and sells other rubber products, including belts and hoses, and synthetic rubber chemicals for the transportation industry and various other applications, and these activities account for the remaining revenue. The company is also one of the world's largest operators of commercial truck service and tire retreading centers, and runs a network of more than 1,700 tire and auto service centers that sell and install tires and provide automotive repair services. On the manufacturing side, Goodyear operates more than 90 plants, of which 30 are in the United States, the balance being in 27 other countries. The company's marketing reach extends to 185 countries, with about 54 percent of revenues generated outside the United States.

After Founding in Late 19th Century, Goodyear Quickly Became Household Name

Without the discovery by U.S. inventor Charles Goodyear of vulcanization (the process by which extreme heat renders rubber flexible and strong) the modern rubber industry would not exist. Goodyear had nothing to do with the company that bears his name. He died insolvent in 1860, 38 years before Frank A. Seiberling founded Goodyear in Akron, Ohio, destined to be the world's first rubber concern to post $1 billion in sales. It reigned as the world's largest tire maker for seven decades.

Bicycle and carriage tires were the company's major products until the start of automobile tire production in 1901. Seiberling's 1899 application to make carriage tires under Consolidated Tire Company's patent was refused, so he started manufacturing a similar tire without a license, claiming it was monopolistic for Consolidated to grant patent licenses selectively. The ensuing legal battle meant that Goodyear's first- and second-year profits from the sale of carriage tires were held in escrow until the court decided, in Goodyear's favor, in 1902.

Goodyear introduced its straight-side tire under the Wingfoot trademark adopted in 1900, with a full-scale national magazine advertising campaign in 1905. The tire was quickly detachable from its rim, and this popular tire made Goodyear a household name.

Seiberling followed David Hill to the presidency in 1906, with Paul W. Litchfield, George M. Stadelman, and Frank Seiberling's brother Charles Seiberling composing the formative management team. In 1907 Goodyear opened its Detroit shop, providing 1,200 tires to equip Henry Ford's new Model T. By 1909 auto tire production jumped to 36,000, and Goodyear's sales reached $4.25 million, double that of the previous year. By 1910 Goodyear provided one-third of all original tires on U.S. cars. In 1909 Goodyear started production of airplane tires.

In 1910 Litchfield acquired a method for bonding rubber over fabric from North British Rubber Company in Edinburgh, Scotland. Goodyear's rubberized fabric, soon used for planes, including the Wright brothers', also formed the shell of early dirigibles, the production of which commenced in 1910.

By 1916 Goodyear had grown to become the world's largest tire company. It adopted a longstanding company slogan that year: "More people ride on Goodyear tires than on any other kind."

Goodyear's tire production rose from 250 per day in 1916 to nearly 4,000 per day by the end of World War I. The company made 1,000 balloons and 60 airships during the war, as well as 715,000 gas masks and some 4.75 million other military supply parts, such as tire valves. It also provided many of the tires used on aircraft. Wages rose, and both the company and its employees ended the war years in prosperity. Sales had jumped from $110 million in 1916–17 to $172 million in 1918–19, and to $223 million in 1920.

Nearing Bankruptcy in Early 1920s

Only two days after the November 1918 armistice, the government canceled its contracts and decontrolled prices. The economy swelled as industry rushed to meet postwar demand, but sales fell in late 1920 as unemployment and bankruptcy soared. Goodyear felt the squeeze as early as 1918, when it made its first attempt to recapitalize by a direct sale of stock to customers and employees.

As the recession deepened, Goodyear was forced to turn to bankers, a position Frank Seiberling in particular was loathe to assume. In 1920, nonetheless, the company accepted temporary refinancing of $18 million from a banking syndicate headed by Goldman, Sachs & Co. of New York and A.G. Becker of Chicago. The effort was not sufficient, and bankruptcy loomed imminent as the book value of its common stock, at $75 million in early 1920, was reduced to zero. By 1921 sales had fallen to $105 million with a $5 million loss.

In early 1921 the New York law firm of Cravath, Henderson, Liffingwell & De Gersdorff connected Goodyear with an investment bank, Dillon, Read, & Co., that agreed to manage Goodyear's refinancing and reorganization. Of the original officers, only Litchfield and Stadelman remained with the company. Frank Seiberling left and soon thereafter incorporated Seiberling Rubber Company, later acquired by Firestone. President E.G. Wilmer and a new management team were brought in. Wilmer focused on creating financial vigor at Goodyear, making few changes, if any, in the production and sales realms. One month after his appointment, in June 1921, he had reduced debt from $66 million to $26.5 million. Of 469 creditor claims in 1921, all but seven were settled. Sales picked up to $123 million in 1923, from $103.5 million in 1921. In 1923 Stadelman moved into the presidency, Wilmer assumed the board chairmanship, and Litchfield moved into the first vice presidency. Wilmer would resign from Goodyear to head Dodge Brothers, the forerunner of the Dodge Motor Company, in 1926.

The world's largest tire producer since 1916, Goodyear became the world's largest rubber producer by 1926. By 1928 the company operated in 145 countries and sales reached $250 million. Stadelman did not live to see the company reach that point, as he died in January 1926. Litchfield assumed the presidency, commencing a 30-year tenure as chief executive officer. He spent his first year resolving litigation begun in 1922 by Goodyear common stockholders to increase their power and improve the position of common and preferred stock. The battle was concluded in 1927, on terms satisfactory to the stockholders.

Goodyear had produced all of the significant U.S. dirigibles since 1911, and it was commissioned in 1928 to build two huge dirigibles for the U.S. Navy. The enormous Goodyear airdock, then the world's largest building without internal supports, was erected to accommodate the project. Despite Litchfield's personal interest in the field of lighter-than-air craft, the industry came to an end in 1937 with the crash of the Hindenburg. Goodyear's famous fleet of smaller, nonrigid blimps continued to enjoy recognition at outdoor events since they were first floated as a friendly company trademark in the 1930s.

Goodyear was the defendant in one of the most famous antitrust cases of all time beginning in 1933 when the Federal Trade Commission (FTC) charged that its cost-plus-6-percent purchasing contract with Sears, Roebuck and Co. discriminated against independent dealers in violation of the Clayton Act, a U.S. antitrust law. The FTC issued a cease-and-desist order in March 1936, and Goodyear appealed to the courts. Later that year, however, the Clayton Act was stringently amended, in large part because of the Goodyear case. In light of the stricter law, Goodyear voluntarily terminated its Sears contract. The federal Circuit Court of Appeals planned to drop the case, but Goodyear wanted its name cleared and the commission wanted a precedent set for other cases, so the court was pushed to make a firm decision. In 1939 it came out for Goodyear, relieving any threat of future damage claims by dealers. Goodyear's one-time loyal buyer, Sears, became a serious competitor as it took its business to manufacturers selling only to mass distributors.

Company Perspectives:

Goodyear is a truly global organization and the bearer of a universally recognized brand name. With worldwide production and technological resources, it offers customers unparalleled international experience and the capacity to respond to the particular needs of local markets. The Goodyear name stands for unquestioned quality and diversity in the tire and rubber products business.

Prior to the 1930s Goodyear's labor conflicts had been limited. In 1913 some Goodyear workers joined 15,000 other rubber workers in a strike against Akron's other rubber companies organized by the Industrial Workers of the World (IWW). The strike was terminated after 48 days by worker vote, but it did mark the beginning of employee-initiated gains in Akron. The following year Goodyear instituted the eight-hour work day and a paid vacation plan for workers of five to nine years' tenure. A number of employee benefit programs were established, including an in-factory hospital, a worker-oriented company newspaper called Wingfoot Clan, and athletic leagues that attracted many a sports-minded employee. In 1915 Litchfield donated an amount equal to his first 15 years' salary, about $100,000, to the factory workers to be used at their discretion. In later decades this fund provided scholarships to children of Goodyear employees or retirees.

Labor Strife Marking 1930s

In 1919 under Litchfield's direction, Goodyear formed the industrial assembly, a representative body of 60 employees that voiced worker interests to management. The assembly existed for 16 years, until its place was challenged by newly organized chapters of the American Federation of Labor (AFL). Coleman Claherty, a major force in the AFL, began organizing in Akron in 1933 and, within the year, won 20,000 members throughout the city, 1,000 of whom formed Goodyear's Local 2. The first international convention of the United Rubber Workers (URW) was held in September 1935.

In 1935 the local union chapters demanded that the companies recognize them as bargaining representatives for all employees. The companies refused, and the unions threatened to strike. At Goodyear a companywide vote carried out by the industrial assembly voted down a strike 11,516 to 891. The unions threatened to strike based solely on member vote, and the federal government resolved tensions by establishing the Perkins agreement, which essentially required management to consult the unions on all wage and scheduling issues.

Goodyear had established a six-hour work day in 1932 to lessen the effects of the Great Depression among workers, by reducing layoffs and distributing work as evenly as possible among remaining employees. When national price controls were removed in 1935, however, Goodyear reestablished the eight-hour work day to increase productivity, decrease its prices, and make its products more competitive. The industrial assembly requested a return to the six-hour shift, and when this was denied it appealed to the board of directors. Local 2, encouraged by the industrial assembly's tenacity, appealed to the secretary of labor, who ruled in January 1936 that Goodyear was unjustified in its reversion to the eight-hour shift because it had voluntarily established a shorter day. The government also charged Goodyear with discriminating between industrial assembly and union workers. At the time, union membership was at 10 percent.

Goodyear returned to the six-hour day as suggested, but layoffs became necessary as tire sales decreased, and the union struck in February 1936. Goodyear's strikers were supported by union sympathizers from other rubber companies and by Ohio and West Virginia coal miners from John L. Lewis's Committee for Industrial Organization (CIO). Within two days, thousands were picketing Goodyear's three major Akron plants. More than 1,000 employees, including Litchfield, moved into the factories to maintain as much production as possible. The union strategy was to break Goodyear, the largest rubber factory, so that the other companies would be more compliant. After 34 days the strike was settled by direct negotiations.

With a three-month stock of goods, Goodyear did not suffer financially from the strike, but the show of union muscle upped URW membership throughout Akron and increased Goodyear union members to 5,000. The Wagner Act, or National Labor Relations Act, was affirmed by the U.S. Supreme Court in April 1937. The industrial assembly was categorized as a company union and had to be disbanded. Workers supported the move to URW representation by a ratio of more than two to one.

Sitdowns and interworker violence frequently disrupted production after the 1935 strike, culminating in a May 1938 sitdown that attracted picketers even though none were formally requested. Police were summoned to disperse the demonstrators, and in an ensuing riot 100 people were injured. The company and union negotiated three days later and sitdowns decreased. Goodyear had decreased employees in Akron from 58,316 in 1929 to 33,285 in 1939. In 1941, after three years of cooperation, Goodyear signed its first formal contract with Local 2.

Despite labor and litigation difficulties during the 1930s, Goodyear continued its expansion. An Alabama plant and two textile mills were built in 1929, followed by another textile mill in 1933. In 1935 the company acquired a bankrupted company, Kelly-Springfield Tire Company. Another plant was acquired in Akron in 1936, and a Vermont factory was purchased to centralize shoe sole-and-heel production.

Key Dates:

1898:

Frank A. Seiberling founds The Goodyear Tire & Rubber Company in Akron, Ohio, naming it after Charles Goodyear, discoverer of the vulcanization process; the firm initially focuses on bicycle and carriage tires.

1901:

Production of automobile tires begins.

1910:

Company ventures outside United States for the first time, establishing a plant in Canada.

1916:

Goodyear becomes the largest tire company in the world.

1921:

After approaching bankruptcy, Goodyear is refinanced and reorganized.

1926:

Goodyear becomes the world's largest rubber company.

1935:

Kelly-Springfield Tire Company is acquired.

1951:

Revenues exceed the $1 billion mark.

1977:

Goodyear introduces its Tiempo radial, its most successful tire yet.

1986:

Company thwarts a takeover bid by Sir James Goldsmith, then restructures by selling off most of its nontire assets.

1990:

Goodyear suffers its first net loss since the Great Depression.

1991:

First outsider is selected to lead Goodyear: Stanley C. Gault; Aquatred radial debuts.

1999:

Goodyear cements a broad alliance with Sumitomo Rubber Industries, Ltd.

2002:

Company reports a record net loss of $1.25 billion, bringing the firm close to bankruptcy.

2004:

Assurance tire is introduced; Goodyear returns to profitability after three straights years in the red.

Goodyear's foreign expansion, begun in 1910 with its first of two Canadian plants, continued during the 1930s. In addition to its London and Australian plants, operative since 1912, Goodyear had distributors located throughout northern Europe, Russia, Central and South America, and the Caribbean. In 1931 a tire plant was opened just outside Buenos Aires, Argentina. The sixth foreign factory went up in Bogor, on Java in Indonesia in 1935, and the seventh was built in 1938 in Sao Paolo, Brazil. A Swedish plant was opened in 1939. Rubber plantations were established during the 1930s in Indonesia, Costa Rica, and the Philippines. Goodyear Foreign Operations was created to manage the company's 18 foreign subsidiaries, seven factories, seven plantations, 37 branches, 28 depots, and hundreds of distributors located outside of the United States.

Goodyear patented its first synthetic rubber, Chemigum, in 1927. It was first mass produced in 1935, and tires were made of it in 1937. In 1934 the company introduced Pliolite, a compound that cemented rubber to metal, and Pliofilm, a packaging material. Other popular Goodyear products were rubber floor tiles; many new models of tires; Airfoam, a cushioning material for seats and mattresses; and Neolite, a synthetic heel-and-sole material.

Return to Military Contracting During World War II

Goodyear began producing 200,000 gas masks a month for the U.S. Army after Adolf Hitler's April 1939 invasion of Poland. The same year, Goodyear Aircraft Corporation (GAC) was established, and the Goodyear airdock, unused since the demise of the giant airships, housed wartime airplane and parts production, as well as the construction of 132 blimps for coastal submarine defense. In 1941 Goodyear joined other manufacturers to produce parts for 100 B-26 bombers a month. In 1943 some of GAC's 32,000 employees worked on the plane that dropped A-bombs on Hiroshima and Nagasaki in 1945, a B-29 Superfortress. GAC also produced 4,008 Vought Corsair FG1 fighter planes, beginning in 1943.

In 1940 Edwin J. Thomas, who began as Litchfield's secretary and assistant in the 1920s, ascended to the presidency as Litchfield continued as chairman of the board. The company took on management of a government-owned factory producing propellant charges for 600 types of artillery shells in 1940. In 1941 the U.S. government required each of the "big four" rubber producers—Goodyear, General Tire, Firestone, and Goodrich—to construct plants that would produce 400,000 tons a year of GRS, or government rubber, a synthetic compound including styrene and butadiene. Goodyear supervised the construction of three synthetic rubber plants for the government. Two of the plants became owned and operated by the company. Goodyear sales increased 52 percent over 1940.

Goodyear also produced the top-secret phantom fleet, used to confuse Nazi reconnaissance before the D-Day invasion of Normandy. The "fleet" was made of rubberized material, from which Goodyear constructed life-sized inflatable replicas of amphibious invasion craft, PT boats, tanks, combat vehicles, and heavy artillery. These impostors were inflated and deployed in one coastal English base, then rapidly deflated and moved by night to another. To Axis surveillance, the apparent serial establishment and abandonment of fighting bases was inexplicable and may have contributed to their unstable coastal defense.

Extraordinary Growth Following World War II

When the war concluded, the government canceled $432 million in Goodyear contracts. GAC released almost 27,000 employees, reducing its payroll to 2,000 by 1946. Demobilization increased demand for consumer tires, and sales increased to 25 million in 1946–47. Goodyear established factories in Colombia and Venezuela in 1945, in Cuba in 1946, and in South Africa in 1947. A Japanese-occupied factory in Indonesia was regained in 1945, as well as a rubber plantation in 1949. In its 50th year, 1948, Goodyear reached a peacetime sales record of $705 million. It employed 72,000 workers worldwide and was poised to expand its international presence.

In its first 50 years, Goodyear total sales had been $9 billion; in the decade from 1949 to 1958, sales would top $11.5 billion. In 1951 Goodyear became the first rubber company to exceed $1 billion in sales in one year. Goodyear's World War II production record garnered it several government contracts associated with the Korean War in 1950. A subsidiary, Goodyear Atomic Corp., was founded in 1952 when the government selected the company to operate a $1.2 billion atomic plant under construction in Pike County, Ohio. The facility opened in 1954.

In 1954 Goodyear acquired its first new plantation in 20 years in Belem, Brazil. The following year it acquired two government-owned rubber factories it had operated during the war. That same year, at Goodyear's Gadsden, Alabama, plant, an $11.5 million investment elevated it to the largest tire-making facility in the United States. In 1957 it also built a 7,200-acre tire testing site with 18.5 miles of multisurface roads.

Rubber consumption after World War II was double that of prewar production. Much of the increase was due to new rubber products such as foam rubber, film, and plastics, and growth was fueled by newly developing synthetic rubbers such as polyisoprene, introduced by Goodyear in 1955 and called Natsyn, for commercial purposes. In 1960 Goodyear built a $20 million synthetic rubber plant in Beaumont, Texas; its annual production of 40,000 tons of Natsyn equaled the annual generation of 15,000 acres of rubber trees.

In 1958 Thomas became chairman of the board, and Litchfield moved to honorary chairman. Russell DeYoung became Goodyear's ninth president; his first full-time Goodyear position had been that of a tire inspector. DeYoung appointed Robert H. Lane as public relations director in 1958. Lane was largely responsible for the makeover of Goodyear's public profile from a somewhat stodgy, though quality, tire maker, to a contemporary innovator. The key to this image update was Goodyear's reentry into racing. Once it overcame Firestone's domination of the field, Goodyear was able to equip winning cars in the Daytona 500 and other popular U.S. and European races. Lane also clearly defined the role of the Goodyear blimp as a corporate goodwill ambassador, capitalizing on the company's historic association with airships.

Foreign operations were consolidated in February 1957 under Goodyear International Corporation (GIC). In 1959 GIC initiated its European expansion program with construction of a plant in Amiens, France. Tire plants were built in 1965 at Cisterna di Latina, Italy, and in 1967 in Phillipsburg, Germany, giving Goodyear production sites in Europe's three major markets within ten years.

In the United States, Goodyear's expansion was partly by acquisition. In 1959 the company added a $3 million aeronautics research and development laboratory in Litchfield Park, Arizona, to supplement GAC's activities. The subsidiary received a $65 million contract in 1958 to produce Subroc, an antisubmarine missile. Goodyear would continue to derive much of its business from U.S. military and space program contracts, including production of equipment for several of the Apollo moon missions. In 1961 the company bought Geneva Metal Wheel Company, a maker of specialty wheels, and in 1964 acquired Motor Wheel Corporation, the world's largest maker of styled auto wheels. That same year, it was the first rubber corporation to exceed $2 billion in annual sales. Its profits were in excess of $100 million, with foreign subsidiaries contributing more than one-third.

In 1966, two years after Victor Holt assumed the presidency, Goodyear opened its tenth U.S. tire plant, in Danville, Virginia. This was followed in 1967 by a $73 million facility at its 593acre site in Union City, Tennessee. Goodyear's sales doubled during the 1960s, topping $3 billion in 1969—Goodyear was the first rubber company to hit that mark. Net income rose from $71 million to $155 million.

1970s: Achieving Position As the World's Leading Radial Tire Producer

Goodyear's biggest challenge in the 1970s was overhauling its factories to produce radial tires. The radial, with its excellent reinforcement system and extra belt of steel, was introduced by France's Michelin in 1948, and by 1972 it equipped 8 percent of U.S. cars. Recognizing the superiority of the radial, Goodyear introduced a transitional fiberglass reinforced tire in 1967, and by 1972, 50 percent of U.S. cars rode on them. When Charles J. Pilliod assumed the presidency in 1972, he insisted that Goodyear bear the expense of adapting to full radial technology. The radial tire equipped 45 percent of U.S. cars by 1976, and Goodyear was the world's largest radial producer. In 1977, with a media blitz extolling its all-season tread, Goodyear introduced its Tiempo radial, the company's most successful tire to that time.

Goodyear's 75th anniversary year, 1973, was marred by the debilitating Middle East oil crisis. In 1974, Pilliod became chairman and chief executive officer, John H. Gerstenmaier assumed the presidency, and Goodyear, prompted by the government, formed a joint project to stimulate domestic propagation of guayale, a native North American bush that provided 50 percent of U.S. rubber until 1910. As oil prices declined, however, the project slowed. In 1975 Mark Donohue, a well-known car racer, was killed when a tire blew out during prerace preparations. In 1984 his estate was awarded a $9.6 million settlement from Goodyear, one of the largest wrongful death payments in history.

In 1976 Goodyear suffered its longest strike ever when URW workers walked out on Goodyear, Goodrich, Uniroyal, and Firestone after talks at Firestone, the target company, failed. Goodyear's 22,000 strikers and their cohorts at the other companies returned to work some 130 days later, having obtained an agreement that wages and benefits would be increased 36 percent over the following three years.

In 1979 Goodyear fought hard and succeeded in avoiding the "neutrality" clause accepted by the other three rubber companies, which guaranteed that companies would not interfere with URW organizing. This was motivated by its desire to create a nonunion shop at its newly built Lawton, Oklahoma, facility. Pilliod's new labor relations policies required individual workers, rather than supervisors, to be responsible for quality control. The new policies also provided regular and ongoing communications between management and laborers as well as worker involvement in problem solving. The factory was considered 50 percent more efficient than older facilities, and, by 1983, factory worker turnover was down to less than one-third of 1 percent.

In 1977 the Securities and Exchange Commission (SEC) accused Goodyear of maintaining a clandestine fund of $1.5 million to make foreign and domestic political contributions and government and labor bribes. The SEC charged that the company had made $500,000 in dubious payments since 1970 in 20 foreign countries. Goodyear agreed, without admitting guilt, to a permanent court injunction against violations of federal securities laws, providing a report of its activities in the countries in question. Two years prior, in 1975, Goodyear said it made political contributions of at least $242,000 between 1964 and 1972.

Robert E. Mercer assumed the presidency in 1978, when Gerstenmaier retired. That year Goodyear tire production was terminated in Akron, but the company began building Goodyear Technical Center, a $750 million research and design complex located on 3,000 acres in Akron. By 1980 despite national and global recession, Goodyear had record earnings of $264.8 million and had reduced debt to its lowest level in 17 years. By 1984 it supplied one-third of the U.S. tire market and one-fifth of the world tire market. In 1983 Pilliod retired, Mercer became chief executive officer, and Tom H. Barrett was voted president.

Briefly Focusing on Diversification in the 1980s

Having won the ten-year battle to remain leader of the tire market, Goodyear entered the 1980s planning to scale some other peaks. Its diversification goal was to reduce tire revenues to one-half of corporate earnings and generate the other half through its GAC subsidiary and Celeron Corp., a Louisiana oil and gas concern purchased in 1983. GAC had expanded at a compound annual rate of 17 percent from 1973 to 1983, providing a 20 percent return on investment. In 1983 its annual sales were $617 million, despite a questionable $50 million investment in the production of centrifuges to enrich uranium for nuclear power plants. Celeron, although its sales slipped the year after it was purchased, began construction of the then promising $750 million All American Pipeline, a 1,200-mile tube used to transport 300,000 barrels per day of offshore California crude oil to Texas refineries.

The diversification came to an abrupt end in 1986, when takeover specialist Sir James Goldsmith made a bid for Goodyear. The company was able to beat off this takeover, but only by selling most of its nontire concerns, including GAC, which went to Loral Company for $588 million, and parts of Celeron, which went to Exxon Corporation for $650 million. Barrett became chief executive officer in 1988 and remained president. In 1989 the company divested its South African operations, which it had maintained despite the social protest against apartheid during the 1980s.

1990s Rebound, Backed by Aquatread and Global Expansion

In 1990 Goodyear took its first loss since 1932 and surrendered its position as the world's largest tire maker to Michelin, when the French company bought out Goodrich's tire business, which had been merged with Uniroyal's. Firestone and General, weakened by Goodyear's dominance in the radial market, were absorbed, respectively, by Japan's Bridgestone and Germany's Continental AG, forcing upon Goodyear competition of its own size. Its All American Pipeline, prevented from operating at full capacity by environmental restrictions, continued to produce losses; the company's $3.3 billion long-term debt, largely incurred by the Goldsmith battle, was also a weakness. Analysts pointed to Goodyear's sluggish internal efficiency as a major problem. For the first time since 1921, Goodyear went outside company ranks to choose a chairman and chief executive officer, as Stanley C. Gault succeeded Barrett in June 1991. Gault had been chairman and chief executive of Rubbermaid, Incorporated, while serving on Goodyear's board.

Between 1989 and 1991, Goodyear eliminated 12,000 jobs, or 10 percent of its workforce, with more than one-half of that coming from the salaried sector. In combination with the $1.4 billion investment in modernization and consolidation of factories, these cuts added up to an estimated savings of $250 million annually. Yet Goodyear remained committed to its annual research and development budget of more than $300 million a year, confident in this as a source of quality tires, such as 1990's Eagle GA and Eagle GT + 4, successful luxury car models. By restructuring its U.S. marketing tactics, the company regained its lost market share and was holding its own in the tougher international market. Goodyear was also able by 1992 to reduce its long-term debt to a much healthier $1.47 billion.

More important, however, were the new tires rolling out of the company's research and development department. In 1991 alone four new Goodyear tires for the replacement market were introduced, the flagship of which was the Aquatread, an all-season passenger tire specially designed to provide better traction on rain-slickened roads. The tire proved to be a huge and immediate success. More troubling was Gault's 1992 decision to sell, once again, Goodyear-brand tires at Sears, more than half a century after it had stopped doing so. The following year the company began to sell its name-brand tires through Wal-Mart Stores and the Discount Tire chain. These moves angered Goodyear dealers, especially because some of their new competitors undercut their prices on Goodyear tires.

From 1993 to 1995, Goodyear enjoyed healthy profits, which increased from $387.8 million in 1993 to $567 million in 1994 to $611 million in 1995, and sales that increased from $11.64 billion in 1993 to $12.29 billion in 1994 to $13.17 billion in 1995. Some of this growth was fueled by global expansion through acquisitions and joint ventures. In 1993 the company entered into a joint venture in India with Ceat Ltd. to form South Asia Tyres Private Limited and build a $150 million tire plant in India. The following year Goodyear purchased a 60 percent stake in Gold Lion (subsequently renamed Goodyear Qingdao Engineered Elastomers Company Ltd.), an automotive hose factory based in Qingdao, China, as well as a 75 percent stake in Dalian International Nordic Tire Co. (later known as Goodyear Dalian Tire Company Ltd.) based in Dalian, China.

In 1996 the Egyptian-born Samir F. Gibara, who had been president and chief operating officer, replaced Gault as chairman and CEO. That year, Goodyear acquired majority control of TC Debica, the leading passenger tire maker in Poland; the company planned to take advantage of Debica's central location and lowerwage environment as it expanded in Europe. This acquisition also meant that Goodyear now had manufacturing facilities in four of the world's most important developing areas: Eastern Europe, India, China, and Latin America. Late in 1996, Goodyear reentered South Africa with the $121 million purchase of 60 percent of Contred Ltd., a unit of Anglovaal Industries Ltd. and a maker of tires, power transmissions, and conveyor belts.

The company's global spending spree continued in 1997. Early that year Goodyear entered into a manufacturing agreement with Sumitomo Rubber Industries Ltd. of Japan, through which the companies would manufacture tires for each other in Asia and North America. Goodyear's presence in eastern Europe was bolstered in May 1997 when Goodyear signed agreements with the Sava Group, based in Kranj, Slovenia, to form two joint ventures through which Goodyear would acquire a 60 percent interest in Sava's tire business and a 75 percent interest in its engineered products business.

Goodyear was not idle at home either. In 1995 the company's retail tire presence was beefed up through the purchase of 860 Penske Auto Centers and more than 300 Montgomery Ward-operated auto centers. The following year Goodyear unveiled the Infinitred, the first passenger tire with a manufacturer's lifetime treadwear limited warranty. In the spring of 1997 Goodyear had to endure its first strike in more than 20 years, when 12,500 United Steelworkers of America members went out on strike. This proved to be a brief setback as a contract agreement (an unusually long six-year pact) was reached after only 18 days of picketing. In June of that year Goodyear's Kelly-Springfield Tire unit entered into a long-term supply agreement with Lincolnton, North Carolina-based J.H. Heafner Co., whereby Kelly-Springfield would make at least one million Winston tires annually to be sold through Heafner's network of tire distributors, one of the country's largest. Goodyear in July 1997 unveiled a line of "run-flat" tires called EMT ("extended mobility tire" or "empty"), which enabled a car to be driven between 50 and 200 miles at speeds up to 55 miles per hour on a deflated, even punctured, tire. Such tires also eliminated the need for a spare tire.

In early 1998 Goodyear finally offloaded its troubled and noncore Celeron unit and its All American Pipeline, selling the operations to Plains Resources for $420 million. In anticipation of this divestiture, Goodyear in the fourth quarter of 1996 had taken a $572.2 million charge, most of which was a write-down of Celeron assets. Continuing to invest overseas, Goodyear acquired full control of both Contred in South Africa and India's South Asia Tyres in 1998. The company that year also launched a new manufacturing system called Impact that by making greater use of automation was expected to improve uniformity, cut production times by 70 percent, use 15 percent less material, and slash labor costs by 35 percent. In another efficiency initiative, Goodyear was working to integrate its Kelly-Springfield operations, which had been run as an independent company based in Cumberland, Maryland, into the parent company's North American operations based in Akron. By mid-1999 this process was complete, and the Kelly-Springfield offices were shut down.

The key development of the late 1990s, however, was the broad alliance cemented in 1999 between Goodyear and Sumitomo Rubber. The complex deal centered around six joint ventures, the largest one consisting of 14 Goodyear and Sumitomo factories in Western Europe and selling Goodyear brand tires and tires under Sumitomo's Dunlop and Sumitomo brands. Initial revenues for this venture were $4 billion. Goodyear controlled 75 percent of this venture, which had initial revenues of $4 billion, and the company assumed the same percentage stake in a U.S. venture that took control of Sumitomo's two U.S. factories, in Huntsville, Alabama, and Buffalo, New York, and that had $800 million in sales. The two partners also combined their global purchasing and research and development operations into two joint ventures majority owned by Goodyear, and Sumitomo took majority ownership of two joint ventures in Japan. The deal also involved the two firms taking small stakes in each other and Goodyear paying Sumitomo nearly $1 billion for the latter's contributions to the ventures. The alliance was projected to yield annual cost savings of more than $300 million after three years. Simultaneous with the announcement of the Sumitomo deal, Goodyear revealed plans to cut more than 2,500 jobs worldwide and shut down its 70-year-old tire plant in Gadsden, Alabama, and a Kelly-Springfield plant in Freeport, Illinois, yielding another $100 million to $150 million in savings annually. Manufacturing was also to be consolidated at several plants in Asia and Latin America, where demand had fallen off in tandem with regional economic travails.

For Goodyear, the key to the Sumitomo deal was gaining much broader rights to market Dunlop brand tires, which Goodyear positioned as its midprice brand, between the premium Goodyear brand and the inexpensive Kelly. The deal also temporarily vaulted the company back into first place among global tire makers, surpassing Bridgestone and Michelin. In a clear blow, however, Goodyear suffered the ignominy of being booted out of the prestigious Dow Jones Industrial Average late in 1999 after 59 years on the index, as part of a periodic rejiggering of the Dow to better reflect the overall U.S. economy.

Early 2000s: Bouncing Back from Near Bankruptcy

The first years of the 21st century were dire ones at Goodyear. The company barely eked out a profit in 2000 as it struggled under the weight of high raw materials costs, a strong dollar, a heavy debt load (largely attributable to the Sumitomo deal), and slowing orders from automakers. These negatives more than offset the additional business that Goodyear had garnered in the wake of a huge tire recall Bridgestone/Firestone had been forced to initiate in August 2000. Goodyear responded in early 2001 with another restructuring plan, this one involving 7,200 job cuts and additional plant closings.

Further job cuts followed later in 2001 as Goodyear moved somewhat belatedly to restructure its enlarged overseas operations. In North America, the company sharply increased its prices to its large distributors, but this sparked a backlash as disgruntled distributors cut back on their tire orders. Business in the U.S. market was hurt further by the economic recession, and in this down climate American consumers increasingly elected to purchase cheaper tires made by companies using low-wage overseas labor. Continuing its program to exit from noncore businesses, the company sold its France-based specialty chemical business late in the year. Early in 2002 Goodyear reported a net loss of $203.6 million (later restated to $254.7 million) for 2001, its first red ink since 1992. Investors abandoned the company's stock: shares ended the year at $23.81, down from the high of $76.75 recorded in 1998. A further blow came in January when the company's credit rating was downgraded to "junk" status, reflecting the heavy debt load and the lack of earnings.

The crisis at Goodyear accelerated in 2002 as the company suffered a net loss of $1.11 billion (later restated to $1.25 billion), its largest annual loss ever. Substantially contributing to the loss was a fourth-quarter charge of $1.08 billion taken to write down deferred tax credits the company could not use while losing money in North America. At the beginning of 2003 Robert J. Keegan took over as president and CEO, succeeding Gibara, who remained chairman. Keegan had joined Goodyear in October 2000 as president and chief operating officer, having previously spent 28 years at Eastman Kodak Company, where he rose to president of the company's global consumer imaging business. Keegan added the chairmanship as well in July 2003. Early in the year, meanwhile, Goodyear shares fell below $4, the lowest level in at least four decades as the company grappled with a liquidity crisis that threatened bankruptcy. In April, however, Keegan succeeded in restructuring $2.9 billion in bank debt and stretching out the payments. Further breathing room came in September when the United Steelworkers ratified a new contract with Goodyear that entailed the slashing of labor costs by $1.15 billion over three years and 3,000 job cuts. In return, the company promised to keep open and invest in all but two of its U.S. factories and to limit imports from its factories in Brazil and Asia. Late in 2003 Goodyear closed its Dunlop tire plant in Huntsville, Alabama.

As the company struggled to recover, it suffered the further embarrassment of having to restate its earnings several times because of accounting irregularities. The restatements, eventually covering the years from 1997 to 2004, cut reported earnings by more than $280 million. In May 2004 Goodyear belatedly released its results for the previous year, and despite record revenues of $15.12 billion, the firm posted its third straight loss, $807.4 million. But by this time the company was in the midst of turning its fortunes around. Goodyear patched relations with its dealers, and in February 2004 introduced a new line of tires, dubbed Assurance, which proved to be hot sellers. The company also cut back on the number of tires it sold to automakers as original equipment and sought better deals from automakers on what had historically been a low-profitability business for tiremakers. Goodyear also improved its balance sheet through a further restructuring of its debt, substantially increasing cash flow. Through these and other measures, and with the return of its North American Tire unit to profitability, Goodyear returned to the black in 2004, recording net income of $114.8 million on record sales of $18.37 billion.

As part of its ongoing efforts to divest noncore businesses, Goodyear in July 2004 had announced its intention to sell its chemical products division. The company later changed course, concluding it made more sense to keep the business, and at the beginning of 2005 the division was integrated into the North American Tire unit. During 2005 Goodyear sold its Indonesia rubber plantations and its Wingtack adhesives resin business and reached an agreement to sell its farm tire operations to Titan International, Inc. for about $100 million. In September 2005 the company put its engineered products business up for sale. The unit, producer of rubber hoses, conveyor belts, air springs, and tracks for military vehicles, generated $1.47 billion in revenue in 2004.

In a hangover from its dark days of the near past, Goodyear in August 2005 received a so-called Wells Notice from the U.S. Securities and Exchange Commission indicating that the commission was ready to take either civil or administrative action against the firm because of the various accounting problems that had led to the restatements. In September the company announced that it was seeking to reduce expenses by up to $1 billion and planned to close additional plants and increase sourcing from low-wage Asian markets. In what was becoming a familiar lament at U.S. industrial concerns, Goodyear was grappling with paying the mounting pension and healthcare costs of current and former employees in the United States. It thus appeared that negotiations for a new labor agreement with the United Steelworkers were likely to center around plant closures, jobs cuts, and cuts to worker benefits. The union's contract was slated to expire in July 2006. In the meantime, Goodyear's turnaround continued apace as the firm reported net income of $142 million for the third quarter of 2005, the best quarterly result since 1998, and sales of $5.03 billion, the firm's highest quarterly sales ever.

Principal Subsidiaries

Allied Tire Sales, Inc.; Belt Concepts of America, Inc.; Celeron Corporation; Cosmoflex, Inc.; Dapper Tire Co., Inc.; Goodyear Dunlop Tires North America, Ltd. (75%); Goodyear Farms, Inc.; Goodyear International Corporation; The Goodyear Rubber Plantations Company; Goodyear-SRI Global Purchasing Company (80%); Goodyear-SRI Global Technology LLC (51%); Goodyear Western Hemisphere Corporation; The Kelly-Springfield Tire Corporation; Laurelwood Properties Inc.; Retreading L Inc.; Retreading L, Inc. of Oregon; Utica Converters Inc. (75%); Wheel Assemblies Inc.; Wingfoot Commercial Tire Systems LLC; Wingfoot Corporation; Abacom (Pty.) Ltd. (Botswana); Compania Anonima Goodyear de Venezuela; Compania Goodyear del Peru, S.A. (78%); Compania Goodyear, S.A. de C.V. (Mexico); Corporacion Industrial Mercurio S.A. de C.V. (Mexico); Dackia Partners AB (Sweden; 75%); Dunlop Airsprings (France; 75%); Dunlop GmbH & Co. KG (Germany; 75%); Dunlop Grund und Service Verwaltungs GmbH (Germany; 75%); Dunlop Tyres Limited (U.K.; 75%); Dunlop Versicherungsservice GmbH (Germany; 75%); Fit Remoulds (Ireland) Limited (75%); Fulda Reifen GmbH & Co. KG (Germany; 75%); GD Furstenwalde Vermogensverwaltungs GmbH (Germany; 75%); GHS Goodyear Handelssysteme GmbH (Germany; 75%); Goodyear Australia Pty Limited; Goodyear Aviation Japan, Ltd. (85%); Goodyear Belting Pty Limited (Australia); Goodyear Brokers Limited (Bermuda); Goodyear Canada Inc.; Goodyear Chemical Products SAS (France); Goodyear Dalian Tire Company Ltd. (China; 75%); Goodyear de Chile S.A.I.C.; Goodyear de Colombia S.A.; Goodyear do Brasil Productos de Borracha Ltda (Brazil); Goodyear Dunlop Financial Service GmbH (Germany; 75%); Goodyear Dunlop Tires Austria GmbH (75%); Goodyear Dunlop Tires Baltic A.S. (Estonia; 75%); Goodyear Dunlop Tires Belgium N.V. (75%); Goodyear Dunlop Tires Czech s.r.o. (Czech Republic; 75%); Goodyear Dunlop Tires Danmark A/S (Denmark; 75%); Goodyear Dunlop Tires Espana S.A. (Spain; 75%); Goodyear Dunlop Tires Europe B.V. (Netherlands; 75%); Goodyear Dunlop Tires Finance Europe B.V. (Netherlands; 75%); Goodyear Dunlop Tires Finland OY (75%); Goodyear Dunlop Tires France (75%); Goodyear Dunlop Tires Germany GmbH (75%); Goodyear Dunlop Tires Hellas S.A.I.C. (Greece; 75%); Goodyear Dunlop Tires Ireland Limited (75%); Goodyear Dunlop Tires Italia SRL (Italy; 75%); Goodyear Dunlop Tires Hungary Trading Ltd. (75%); Goodyear Dunlop Tires Nederland B.V. (Netherlands; 75%); Goodyear Dunlop Tires Norge A/S (Norway; 75%); Goodyear Dunlop Tires Polska Sp z.o.o. (Poland; 75%); Goodyear Dunlop Tires Portugal, Unipessoal, Lda. (75%); Goodyear Dunlop Tires Romania Srl (75%); Goodyear Dunlop Tires Slovakia s.r.o. (75%); Goodyear Dunlop Tires Slovenia d.o.o. (75%); Goodyear Dunlop Tires Suisse S.A. (Switzerland; 75%); Goodyear Dunlop Tires Sverige A.B. (Sweden; 75%); Goodyear Dunlop Tyres UK Ltd. (75%); Goodyear Earthmover Pty Ltd (Australia); Goodyear Engineered Products Europe d.o.o. (Slovenia); Goodyear Finance Holding S.A. (Luxembourg); Goodyear France Aviation Products S.A.; Goodyear GmbH & Co. KG (Germany; 75%); Goodyear India Limited (74%); Goodyear Industrial Rubber Products Ltd. (U.K.); Goodyear Italiana S.p.A. (Italy; 75%); Goodyear Jamaica Limited (60%); Goodyear Korea Company; Goodyear Lastikleri Turk Anonim Sirketi (Turkey; 74.61%); Goodyear Luxembourg Tires S.A. (75%); Goodyear Malaysia Berhad (51%); Goodyear Marketing & Sales Snd. Bhd. (Malaysia; 51%); Goodyear Maroc S.A. (Morocco; 55%); Goodyear Middle East FZE (Dubai); Goodyear Nederland B.V. (Netherlands); Goodyear New Zealand, Ltd.; Goodyear Orient Company (Private) Limited (Singapore); Goodyear Philippines, Inc. (88.54%); Goodyear Productos Industriales S. De R.L. De C.V. (Mexico); Goodyear Productos Industriales, C.A. (Venezuela); Goodyear Qingdao Engineered Elastomers Company Ltd. (China; 60%); Goodyear Russia LLC; Goodyear Sales Company Limited (Taiwan; 75.5%); Goodyear S.A. (France); Goodyear S.A. (Luxembourg); Goodyear Servicios Comerciales S. De R.L. De C.V. (Mexico); Goodyear Servicios Y Asistencia Tecnica S. De R.L. De C.V. (Mexico); Goodyear Singapore Pte Limited; Goodyear Solid Woven Belting (Pty) Limited (South Africa); Goodyear South Africa (Proprietary) Limited; Goodyear South Asia Tyres Private Limited (India; 99.4%); Goodyear SRI Global Purchasing Yugen Kaisha & Co. Ltd (Japan; 80%); Goodyear Taiwan Limited (75.5%); Goodyear (Thailand) Public Company Limited (66.8%); Goodyear Tyres Pty Ltd (Australia); Goodyear Tyre and Rubber Holdings (Pty.) Ltd (South Africa); Goodyear Wingfoot KK (Japan); Gran Industria de Neumaticos Centroamericana, S.A. (Guatemala; 79%); Hi-Q Automotive (Pty.) Ltd. (South Africa); KDIS Distribution (France; 75%); Kelly-Springfield Puerto Rico, Inc.; Kelly-Springfield Tyre Co. (Australia) Pty. Ltd.; Magister Limited (Mauritius); Multimarkenmanagement GmbH & Co KG (Germany; 75%); Neumaticos Goodyear S.R.L. (Argentina); Nip-pon Giant Tire Co., Ltd. (Japan; 65%); Pneu Holding (France; 75%); Property Leasing S.A. (Luxembourg); P.T. Goodyear Indonesia Tbk (85%); Rubber & Associated Manufacturing (Pty) Ltd. (South Africa); RVM Reifen Vertriebsmanagement GmbH (Germany); Sava Tires, d.o.o. (Slovenia; 75%); S.A. Vulco Belgium N.V. (75%); Servicios Y Montjes Eagle, S. de R.L. (Mexico); South Pacific Tyres (Australia; 50.01%); South Pacific Tyres New Zealand Limited (50.01%); SP Brand Holding GEIE (Belgium; 75%); Three Way Tyres (Botswana); Tire Company Debica S.A. (Poland; 59.87%); Tredcor Export Services (Pty) Ltd. (South Africa); Tredcor Southern Zimbabwe (Pvt.) Limited (60%); Tredcor (Zambia) Limited; Trentyre Limited (Mozambique); Trentyre Holdings (Pty) Ltd (South Africa); Trentyre (Pty.) Ltd. (South Africa; 92%); Trentyre North Zimbabwe (Pvt.) Limited (51%); Tyre Services (Botswana); Vulco Development (France; 62.2%); Vulco France; Wingfoot de Chihuahua, S. de R.L. de C.V. (Mexico); 4 Fleet Group GmbH (Germany; 75%).

Principal Operating Units

North American Tire; European Union Tire; Eastern Europe, Middle East & Africa Tire; Latin America Tire; Asia/Pacific Tire; Engineered Products.

Principal Competitors

Bridgestone Corporation; Compagnie Compagnie Générale des Établissements Michelin; Continental AG; Cooper Tire & Rubber Company; Pirelli & C. S.p.A.; Toyo Tire & Rubber Co., Ltd.; The Yokohama Rubber Company, Limited; Kumho Tire Co., Inc.; Hankook Tire Co., Ltd.

Further Reading

Aeppel, Timothy, "Deflated: How Goodyear Blew Its Chance to Capitalize on a Rival's Woes," Wall Street Journal, February 19, 2003, p. A1.

――――, "Goodyear, Expecting Loss for Year, May Snub Car Makers," Wall Street Journal, February 8, 2002, p. B2.

――――, "Goodyear Is Told It Could Be Hit with SEC Case," Wall Street Journal, August 17, 2005, p. A6.

――――, "Goodyear Says Keegan to Succeed Gibara As Chief Executive Officer," Wall Street Journal, October 2, 2002, p. A10.

――――, "Goodyear Tire to Restate Results for Past Five Years," Wall Street Journal, October 23, 2003, p. A6.

――――, "Goodyear to Restate 1997–2003 Profits," Wall Street Journal, April 13, 2004, p. A3.

Allen, Hugh, The House of Goodyear: A Story of Rubber and of Modern Business, Cleveland: Corday & Gross, 1943, reprinted, Arno Press, 1976, 417 p.

Byrne, Harlan S., "Gaining Traction," Barron's, June 7, 1999, pp. 17, 19.

Cimperman, Jennifer Scott, "After 59 Years on the Dow, Goodyear Gets Bounced," Cleveland Plain Dealer, October 27, 1999, p. 1A.

――――, "Goodyear Plans 7,200 Job Cuts," Cleveland Plain Dealer, February 15, 2001, p. 1C.

Donlon, J.P., "A New Spin for Goodyear," Chief Executive, December 1995, pp. 34-35, 38-40.

Fahey, Jonathan, "Blowout!," Forbes, March 3, 2003, p. 40.

Gerdel, Thomas W., "Goodyear Riding on Assurances: New Line of Tires Is Fueling Firm's Turnaround Bid," Cleveland Plain Dealer, September 22, 2004, p. C1.

――――, "Goodyear's Bumpy Ride: CEO Gibara Deals with Competition, Global Uncertainty," Cleveland Plain Dealer, March 24, 2002, p. G1.

Labich, Kenneth, "The King of Tires Is Discontented," Fortune, May 28, 1984.

Love, Steve, and David Giffels, Wheels of Fortune: The Story of Rubber in Akron, edited by Debbie Van Tassel, Akron, Ohio: University of Akron Press, 1999, 359 p.

Lubove, Seth, "The Last Bastion," Forbes, February 14, 1994, pp. 56, 58.

Magnet, Myron, "The Marvels of High Margins," Fortune, May 2, 1994, pp. 73-74.

McNulty, Mike, "Goodyear Plans to Make Major Cost Cuts," Automotive News, October 17, 2005, p. 8.

Narisetti, Raju, "For Two Tire Makers, a Flat-Out Pitch for Safer Wheels," Wall Street Journal, July 3, 1997, p. B4.

Neely, William, Tire Wars: Racing with Goodyear, Tucson, Ariz.: Aztex Corp., 1993, 192 p.

O'Reilly, Maurice, The Goodyear Story, Elmsford, N.Y.: Benjamin Company, 1983, 223 p.

Rodengen, Jeffrey L., The Legend of Goodyear: The First 100 Years, Ft. Lauderdale, Fla.: Write Stuff Syndicate, 1997, 251 p.

Schiller, Zachary, "After a Year of Spinning Its Wheels, Goodyear Gets a Retread," Business Week, March 26, 1990.

――――, "And Fix That Flat Before You Go, Stanley," Business Week, January 16, 1995, p. 35.

――――, "Goodyear May Be Getting Some Traction at Last," Business Week, October 7, 1991, p. 38.

――――, "Stan Gault's Designated Driver," Business Week, April 8, 1996, pp. 128, 130.

Taylor, Alex, III, "Goodyear Wants to Be No. 1 Again," Fortune, April 27, 1998, pp. 130-32, 134.

White, Joseph B., "Goodyear Moves to Cut Capacity, Jobs: U.S. Tire-Making Factory Will Close as Alliance with Sumitomo Is Set," Wall Street Journal, February 4, 1999, p. A3.

                                             —Elaine Belsito

                                  —update: David E. Salamie

The Goodyear Tire & Rubber Company

1144 East Market Street
Akron, Ohio 44316-0001
U.S.A.
(330) 796-2121
Fax: (330) 796-2222

Public Company
Incorporated: 1898
Employees: 91,310
Sales: $13.11 billion (1996)
Stock Exchanges: New York Midwest Pacific
SICs: 2819 Industrial Inorganic Chemicals, Not Elsewhere Classified; 2821 Plastics Materials, Nonvulcanizable Elastomers & Synthetic Resins; 2822 Synthetic Rubber (Vulcanizable Elastomers); 2891 Adhesives & Sealants; 2899 Chemicals & Chemical Preparations; 3011 Tires & Inner Tubes; 3021 Rubber & Plastics Footwear; 3052 Rubber & Plastics Hose & Belting; 3069 Fabricated Rubber Products, Not Elsewhere Classified; 5531 Auto & Home Supply Stores

The Goodyear Tire & Rubber Company (Goodyear) is a major manufacturer, distributor, and seller of tires worldwide and holds the top position in tires in North America. It manufactures and sells other rubber products, including belts and hoses, and synthetic rubber chemicals for the transportation industry and a number of industrial and consumer markets. Goodyear operates 80 plants, of which 31 are in the United States, the balance being in 27 other countries. The company also provides auto repair and other services at retail and commercial outlets. Goodyear’s Celeron subsidiaries maintain a 1,225-mile crude oil pipeline system, stretching from the California coast to central Texas.

After Founding in Late 19th Century, Goodyear Quickly Became Household Name

Without the discovery by U.S. inventor Charles Goodyear of vulcanization—the process by which extreme heat renders rubber flexible and strong—the modern rubber industry would not exist. Goodyear had nothing to do with the company that bears his name. He died insolvent in 1860, 38 years before Frank A. Seiberling founded Goodyear in Akron, Ohio, destined to be the world’s first rubber concern to post $1 billion in sales. It reigned as the world’s largest tire maker for seven decades.

Bicycle and carriage tires were the company’s major products until the start of automobile tire production in 1901. Seiberling’s 1899 application to make carriage tires under Consolidated Tire Company’s patent was refused, so he started manufacturing a similar tire without a license, claiming it was monopolistic for Consolidated to grant patent licenses selectively. The ensuing legal battle meant that Goodyear’s first- and second-year profits from the sale of carriage tires were held in escrow until the court decided, in Goodyear’s favor, in 1902.

Goodyear introduced its straight-side tire under the Wing-foot trademark adopted in 1900, with a full-scale national magazine advertising campaign in 1905. The tire was quickly detachable from its rim, and this popular tire made Goodyear a household name.

Seiberling followed David Hill to the presidency in 1906, with Paul W. Litchfield, George M. Stadelman, and Frank Seiberling’s brother Charles Seiberling composing the formative management team. In 1907 Goodyear opened its Detroit shop, providing 1,200 tires to equip Henry Ford’s new Model T. By 1909 auto tire production jumped to 36,000, and Goodyear’s sales reached $4.25 million, double that of the previous year. By 1910 Goodyear provided one-third of all original tires on U.S. cars. In 1909 Goodyear started production of airplane tires.

In 1910 Litchfield acquired a method for bonding rubber over fabric from North British Rubber Company in Edinburgh, Scotland. Goodyear’s rubberized fabric, soon used for planes, including the Wright brothers’, also formed the shell of early dirigibles, the production of which commenced in 1910.

Goodyear’s tire production rose from 250 per day in 1916 to nearly 4,000 per day by the end of World War I. The company made 1,000 balloons and 60 airships during the war, as well as 715,000 gas masks and some 4.75 million other military supply parts, such as tire valves. It also provided many of the tires used on aircraft. Wages rose, and both the company and its employees ended the war years in prosperity. Sales had jumped from $110 million in 1916-1917 to $172 million in 1918-1919, and to $223 million in 1920.

Neared Bankruptcy in Early 1920s

Only two days after the November 1918 armistice, the government canceled its contracts and decontrolled prices. The economy swelled as industry rushed to meet postwar demand, but sales fell in late 1920 as unemployment and bankruptcy soared. Goodyear felt the squeeze as early as 1918, when it made its first attempt to recapitalize by a direct sale of stock to customers and employees.

As the recession deepened, Goodyear was forced to turn to bankers, a position Frank Seiberling in particular was loathe to assume. In 1920, nonetheless, the company accepted temporary refinancing of $18 million from a banking syndicate headed by Goldman, Sachs & Co. of New York and A.G. Becker of Chicago. The effort was not sufficient, and bankruptcy loomed imminent as the book value of its common stock, at $75 million in early 1920, was reduced to zero. By 1921 sales had fallen to $105 million with a $5 million loss.

In early 1921 the New York law firm of Cravath, Henderson, Liffingwell & De Gersdorff connected Goodyear with an investment bank, Dillon, Read, & Co., that agreed to manage Goodyear’s refinancing and reorganization. Of the original officers, only Litchfield and Stadelman remained with the company. Frank Seiberling left and soon thereafter incorporated Seiberling Rubber Company, later acquired by Firestone. President E. G. Wilmer and a new management team were brought in. Wilmer focused on creating financial vigor at Goodyear, making few changes, if any, in the production and sales realms. One month after his appointment, in June 1921, he had reduced debt from $66 million to $26.5 million. Of 469 creditor claims in 1921, all but seven were settled. Sales picked up to $123 million in 1923, from $103.5 million in 1921. In 1923 Stadelman moved into the presidency, Wilmer assumed the board chairmanship, and Litchfield moved into the first vice-presidency. Wilmer would resign from Goodyear to head up Dodge Brothers, the forerunner of the Dodge Motor Company, in 1926.

The world’s largest tire producer since 1916, Goodyear became the world’s largest rubber producer by 1926. By 1928 the company operated in 145 countries and sales reached $250 million. Stadelman did not live to see the company reach that point, as he died in January 1926. Litchfield assumed the presidency, commencing a 30-year tenure as chief executive officer. He spent his first year resolving litigation begun in 1922 by Goodyear common stockholders to increase their power and improve the position of common and preferred stock. The battle was concluded in 1927, on terms satisfactory to the stockholders.

Goodyear had produced all of the significant U.S. dirigibles since 1911, and it was commissioned in 1928 to build two huge dirigibles for the U.S. Navy. The enormous Goodyear airdock, then the world’s largest building without internal supports, was erected to accommodate the project. Despite Litchfield’s personal interest in the field of lighter-than-air craft, the industry came to an end in 1937 with the crash of the Hindenburg. Goodyear’s famous fleet of smaller, nonrigid blimps continued to enjoy recognition at outdoor events since they were first floated as a friendly company trademark in the 1930s.

Goodyear was the defendant in one of the most famous antitrust cases of all time beginning in 1933 when the Federal Trade Commission (FTC) charged that its cost-plus-six-percent purchasing contract with Sears discriminated against independent dealers in violation of the Clayton Act, a U.S. antitrust law. The FTC issued a cease-and-desist order March 1936, and Goodyear appealed to the courts. Later that year, however, the Clayton Act was stringently amended, in large part due to the Goodyear case. In light of the stricter law, Goodyear voluntarily terminated its Sears contract. The federal Circuit Court of Appeals planned to drop the case, but Goodyear wanted its name cleared and the commission wanted a precedent set for other cases, so the court was pushed to make a firm decision. In 1939 it came out for Goodyear, relieving any threat of future damage claims by dealers. Goodyear’s one-time loyal buyer, Sears, became a serious competitor as it took its business to manufacturers selling only to mass distributors.

Prior to the 1930s Goodyear’s labor conflicts had been limited. In 1913 some Goodyear workers joined 15,000 other rubber workers in a strike against Akron’s other rubber companies organized by the Industrial Workers of the World (IWW). The strike was terminated after 48 days by worker vote, but it did mark the beginning of employee-initiated gains in Akron. The following year Goodyear instituted the eight-hour work day and a paid vacation plan for workers of five to nine years’ tenure. A number of employee benefit programs were established, including an in-factory hospital, a worker-oriented company newspaper called Wingfoot Clan, and athletic leagues that attracted many a sports-minded employee. In 1915 Litchfield donated an amount equal to his first 15 years’ salary, about $100,000, to the factory workers to be used at their discretion. In the early 1990s the fund provided scholarships to children of Goodyear employees or retirees.

Company Perspectives:

Leadership in our markets and industry is our goal for the 21st century. We intend to make Goodyear No. 1 or No. 2 in every market we serve and to be the low-cost producer among the three major global tire and rubber companies.

My vision by the end of the year 2000 has Goodyear ranked by all measures as the best tire and rubber company in the world. (Samir F. Gibara, Goodyear chairman, chief executive officer, and president)

Labor Strife Marked 1930s

In 1919 under Litchfield’s direction, Goodyear formed the industrial assembly, a representative body of 60 employees that voiced worker interests to management. The assembly existed for 16 years, until its place was challenged by newly organized chapters of the American Federation of Labor (AFL). Coleman Claherty, a major force in the AFL, began organizing in Akron in 1933 and, within the year, won 20,000 members throughout the city, 1,000 of whom formed Goodyear’s Local 2. The first international convention of the United Rubber Workers (URW) was held in September 1935.

In 1935 the local union chapters demanded that the companies recognize them as bargaining representatives for all employees. The companies refused, and the unions threatened to strike. At Goodyear a companywide vote carried out by the industrial assembly voted down a strike 11,516 to 891. The unions threatened to strike based solely on member vote, and the federal government resolved tensions by establishing the Perkins agreement, which essentially required management to consult the unions on all wage and scheduling issues.

Goodyear had established a six-hour work day in 1932 to lessen the effects of the Great Depression among workers, by reducing layoffs and distributing work as evenly as possible among remaining employees. When national price controls were removed in 1935, however, Goodyear reestablished the eight-hour work day to increase productivity, decrease its prices, and make its products more competitive. The industrial assembly requested a return to the six-hour shift, and when this was denied it appealed to the board of directors. Local 2, encouraged by the industrial assembly’s tenacity, appealed to the secretary of labor, who ruled in January 1936 that Goodyear was unjustified in its reversion to the eight-hour shift because it had voluntarily established a shorter day. The government also charged Goodyear with discriminating between industrial assembly and union workers. At the time, union membership was at ten percent.

Goodyear returned to the six-hour day as suggested, but layoffs became necessary as tire sales decreased, and the union struck in February 1936. Goodyear’s strikers were supported by union sympathizers from other rubber companies and by Ohio and West Virginia coal miners from John L. Lewis’s Committee for Industrial Organization (CIO). Within two days, thousands were picketing Goodyear’s three major Akron plants. More than 1,000 employees, including Litchfield, moved into the factories to maintain as much production as possible. The union strategy was to break Goodyear, the largest rubber factory, so that the other companies would be more compliant. After 34 days the strike was settled by direct negotiations.

With a three-month stock of goods, Goodyear did not suffer financially from the strike, but the show of union muscle upped URW membership throughout Akron and increased Goodyear union members to 5,000. The Wagner Act, or National Labor Relations Act, was affirmed by the U.S. Supreme Court in April 1937. The industrial assembly was categorized as a company union and had to be disbanded. Workers supported the move to URW representation by a ratio of more than two to one.

Sitdowns and interworker violence frequently disrupted production after the 1935 strike, culminating in a May 1938 sitdown that attracted picketers even though none were formally requested. Police were summoned to disperse the demonstrators, and in an ensuing riot 100 people were injured. The company and union negotiated three days later and sitdowns decreased. Goodyear had decreased employees in Akron from 58,316 in 1929 to 33,285 in 1939. In 1941, after three years of cooperation, Goodyear signed its first formal contract with Local 2.

Despite labor and litigation difficulties during the 1930s, Goodyear continued its expansion. An Alabama plant and two textile mills were built in 1929, followed by another textile mill in 1933. In 1935 the company acquired a bankrupted company, Kelly-Springfield Tire..Another plant was acquired in Akron in 1936, and a Vermont factory was purchased to centralize shoe sole-and-heel production.

Goodyear’s foreign expansion, begun in 1910 with its first of two Canadian plants, continued during the 1930s. In addition to its London and Australian plants, operative since 1912, Goodyear had distributors located throughout northern Europe, Russia, Central and South America, and the Caribbean. In 1931 a tire plant was opened just outside Buenos Aires, Argentina. The sixth foreign factory went up in Bogor, on Java in Indonesia in 1935, and the seventh was built in 1938 in Sao Paolo, Brazil. A Swedish plant was opened in 1939. Rubber plantations were established during the 1930s in Indonesia, Costa Rica, and the Philippines. Goodyear Foreign Operations was created to manage the company’s 18 foreign subsidiaries, seven factories, seven plantations, 37 branches, 28 depots, and hundreds of distributors located outside of the United States.

Goodyear patented its first synthetic rubber, Chemigum, in 1927. It was first mass produced in 1935, and tires were made of it in 1937. In 1934 the company introduced Pliolite, a compound that cemented rubber to metal, and Pliofilm, a packaging material. Other popular Goodyear products were rubber floor tiles; many new models of tires; Airfoam, a cushioning material for seats and mattresses; and Neolite, a synthetic heel-and-sole material.

Returned to Military Contracting During World War II

Goodyear began producing 200,000 gas masks a month for the U.S. Army after Adolf Hitler’s April 1939 invasion of Poland. The same year, Goodyear Aircraft (GAC) was established, and the Goodyear airdock, unused since the demise of the giant airships, housed wartime airplane and parts production, as well as the construction of 132 blimps for coastal submarine defense. In 1941 Goodyear joined other manufacturers to produce parts for 100 B-26 bombers a month. In 1943 some of GAC’s 32,000 employees worked on the plane that dropped A-bombs on Hiroshima and Nagasaki in 1945, a B-29 Superfortress. GAC also produced 4,008 Vought Corsair FG1 fighter planes, beginning in 1943.

In 1940 Edwin J. Thomas, who began as Litchfield’s secretary and assistant in the 1920s, ascended to the presidency as Litchfield continued as chairman of the board. The company took on management of a government-owned factory producing propellant charges for 600 types of artillery shells in 1940. In 1941 the U.S. government required each of the “big four” rubber producers—Goodyear, General Tire, Firestone, and Goodrich—to construct plants that would produce 400,000 tons a year of GRS, or government rubber, a synthetic compound including styrene and butadiene. Goodyear supervised the construction of three synthetic rubber plants for the government. Two of the plants became owned and operated by the company. Goodyear sales increased 52 percent over 1940.

Goodyear also produced the top-secret phantom fleet, used to confuse Nazi reconnaissance before the D-Day invasion of Normandy. The “fleet” was made of rubberized material, from which Goodyear constructed life-sized inflatable replicas of amphibious invasion craft, PT boats, tanks, combat vehicles, and heavy artillery. These impostors were blown up and set in one coastal English base, then rapidly deflated and moved by night to another. To Axis surveillance, the apparent serial establishment and abandonment of fighting bases was inexplicable and may have contributed to their unstable coastal defense.

Extraordinary Growth Followed World War II

When the war concluded, the government canceled $432 million in Goodyear contracts. GAC released almost 27,000 employees, reducing its payroll to 2,000 by 1946. Demobilization increased demand for consumer tires, and sales increased to 25 million in 1946-1947. Goodyear established factories in Colombia and Venezuela in 1945, in Cuba in 1946, and in South Africa in 1947. A Japanese-occupied factory in Indonesia was regained in 1945, as well as a rubber plantation in 1949. In its 50th year, 1948, Goodyear reached a peacetime sales record of $705 million. It employed 72,000 workers worldwide and was poised to expand its international presence.

In its first 50 years, Goodyear total sales had been $9 billion; in the decade from 1949 to 1958, sales would top $11.5 billion. In 1951 Goodyear became the first rubber company to exceed $1 billion in sales in one year. Goodyear’s World War II production record garnered it several government contracts associated with the Korean War in 1950. A subsidiary, Goodyear Atomic Corp., was founded in 1952 when the government selected the company to operate a $1.2 billion atomic plant under construction in Pike County, Ohio. The facility opened in 1954.

In 1954 Goodyear acquired its first new plantation in 20 years in Belem, Brazil. The following year it acquired two government-owned rubber factories it had operated during the war. That same year, at Goodyear’s Gadsden, Alabama plant, an $11.5 million investment elevated it to the largest tire-making facility in the United States. In 1957 it also built a 7,200-acre tire testing site with 18.5 miles of multisurface roads.

Rubber consumption after World War II was double that of prewar production. Much of the increase was due to new rubber products such as foam rubber, film, and plastics, and growth was fueled by newly developing synthetic rubbers such as polyisoprene, introduced by Goodyear in 1955 and called Natsyn, for commercial purposes. In 1960 Goodyear built a $20 million synthetic rubber plant in Beaumont, Texas; its annual production of 40,000 tons of Natsyn equaled the annual generation of 15,000 acres of rubber trees.

In 1958 Thomas became chairman of the board, and Litchfield moved to honorary chairman. Russell DeYoung became Goodyear’s ninth president; his first full-time Goodyear position had been that of a tire inspector. DeYoung appointed Robert H. Lane as public relations director in 1958. Lane was largely responsible for the makeover of Goodyear’s public profile from a somewhat stodgy, though quality, tire maker, to a contemporary innovator. The key to this image update was Goodyear’s re-entry into racing. Once it overcame Firestone’s domination of the field, Goodyear was able to equip winning cars in the Daytona 500 and other popular U.S. and European races. Lane also clearly defined the role of the Goodyear blimp as a corporate goodwill ambassador, capitalizing on the company’s historic association with airships.

Foreign operations were consolidated in February 1957 under Goodyear International Corporation (GIC). In 1959 GIC initiated its European expansion program with construction of a plant in Amiens, France. Tire plants were built in 1965 at Cisterna di Latina, Italy, and in 1967 in Phillipsburg, Germany, giving Goodyear production sites in Europe’s three major markets within ten years.

In the United States, Goodyear’s expansion was partly by acquisition. In 1959 the company added a $3 million aeronautics research and development laboratory in Litchfield Park, Arizona, to supplement GAC’s activities. The subsidiary received a $65 million contract in 1958 to produce Subroc, an antisubmarine missile. Goodyear would continue to derive much of its business from U.S. military and space program contracts, including production of equipment for several of the Apollo moon missions. In 1961 the company bought Geneva Metal Wheel Company, a maker of specialty wheels, and in 1964 acquired Motor Wheel Corporation, the world’s largest maker of styled auto wheels. That same year, it was the first rubber corporation to exceed $2 billion in annual sales. Its profits were in excess of $100 million, with foreign subsidiaries contributing more than one-third.

In 1966, two years after Victor Holt assumed the presidency, Goodyear opened its tenth U.S. tire plant, in Danville, Virginia. This was followed in 1967 by a $73 million facility at its 593-acre site in Union City, Tennessee. Goodyear’s sales doubled during the 1960s, topping $3 million in 1969. Net income rose from $71 million to $155 million. In 1969 it became the first rubber company to exceed $3 million in annual sales.

Became World’s Leading Radial Tire Producer in the 1970s

Goodyear’s biggest challenge in the 1970s was overhauling its factories to produce radial tires. The radial, with its excellent reinforcement system and extra belt of steel, was introduced by France’s Michelin in 1948, and by 1972 it equipped eight percent of U.S. cars. Recognizing the superiority of the radial, Goodyear introduced a transitional fiberglass reinforced tire in 1967, and by 1972, 50 percent of U.S. cars rode on them. When Charles J. Pilliod assumed the presidency in 1972, he insisted that Goodyear bear the expense of adapting to full radial technology. The radial tire equipped 45 percent of U.S. cars by 1976, and Goodyear was the world’s largest radial producer. In 1977, with a media blitz extolling its all-season tread, Goodyear introduced its Tiempo radial, the company’s most successful tire to that time.

Goodyear’s 75th anniversary year—1973—was marred by the debilitating Middle East oil crisis. In 1974, Pilliod became chairman and chief executive officer and John H. Gerstenmaier assumed the presidency, and Goodyear, prompted by the government, formed a joint project to stimulate domestic propagation of guáyale, a native North American bush that provided 50 percent of U.S. rubber until 1910. As oil prices declined, however, the project slowed. In 1975 Mark Donohue, a well-known car racer, was killed when a tire blew out during prerace preparations. In 1984 his estate was awarded a $9.6 million settlement from Goodyear, one of the largest wrongful death payments in history.

In 1976 Goodyear suffered its longest strike ever when URW workers walked out on Goodyear, Goodrich, Uniroyal, and Firestone after talks at Firestone, the target company, failed. Goodyear’s 22,000 strikers and their cohorts at the other companies returned to work some 130 days later, having obtained an agreement that wages and benefits would be increased 36 percent over the following three years.

In 1979 Goodyear fought hard and succeeded in avoiding the “neutrality” clause accepted by the other three rubber companies, which guaranteed that companies would not interfere with URW organizing. This was motivated by its desire to create a nonunion shop at its newly built Lawton, Oklahoma facility. Pilliod’s new labor relations policies required individual workers, rather than supervisors, to be responsible for quality control. The new policies also provided regular and ongoing communications between management and laborers as well as worker involvement in problem solving. The factory was considered 50 percent more efficient than older facilities, and, by 1983, factory worker turnover was down to less than one-third of one percent.

In 1977 the Securities and Exchange Commission (SEC) accused Goodyear of maintaining a clandestine fund of $1.5 million to make foreign and domestic political contributions and government and labor bribes. The SEC charged that the company had made $500,000 in dubious payments since 1970 in 20 foreign countries. Goodyear agreed, without admitting guilt, to a permanent court injunction against violations of federal securities laws, providing a report of its activities in the countries in question. Two years prior, in 1975, Goodyear said it made political contributions of at least $242,000 between 1964 and 1972.

Robert E. Mercer assumed the presidency in 1978, when Gerstenmaier retired. That year Goodyear tire production was terminated in Akron, but the company began building Goodyear Technical Center, a $750 million research and design complex located on 3,000 acres in Akron. By 1980 despite national and global recession, Goodyear had record earnings of $264.8 million and had reduced debt to its lowest level in 17 years. By 1984 it supplied one-third of the U.S. tire market and one-fifth of the world tire market. In 1983 Pilliod retired, Mercer became chief executive officer, and Tom H. Barrett was voted president.

Briefly Focused on Diversification in the 1980s

Having won the ten-year battle to remain leader of the tire market, Goodyear entered the 1980s planning to scale some other peaks. Its diversification goal was to reduce tire revenues to one-half of corporate earnings and generate the other half through its GAC subsidiary and Celeron, a Louisiana oil and gas concern purchased in 1983. GAC had expanded at a compound annual rate of 17 percent from 1973 to 1983, providing a 20 percent return on investment. In 1983 its annual sales were $617 million, despite a questionable $50 million investment in the production of centrifuges to enrich uranium for nuclear power plants. Celeron, although its sales slipped the year after it was purchased, began construction of the then-promising $750 million All-American Pipeline, a 1,200-mile tube used to transport 300,000 barrels per day of offshore California crude oil to Texas refineries.

The diversification came to an abrupt end in 1986, when takeover specialist Sir James Goldsmith made a bid for Goodyear. The company was able to beat off this takeover, but only by selling most of its nontire concerns, including GAC, which went to Loral Company for $588 million, and parts of Celeron, which went to Exxon for $650 million. Barrett became chief executive officer in 1988 and remained president. Hoyt M. Wells was voted president in 1991. In 1989 the company divested its South African operations, which it had maintained despite the social protest against apartheid during the 1980s.

Aquatread and Global Expansion Sparked 1990s Rebound

In 1990 Goodyear took its first loss since 1932 and surrendered its position as the world’s largest tire maker to Michelin, when the French company bought out Goodrich’s tire business, which had been merged with Uniroyal’s. Firestone and General, weakened by Goodyear’s dominance in the radial market, were absorbed, respectively, by Japan’s Bridgestone and Germany’s Continental, forcing upon Goodyear competition of its own size. Its All-American Pipeline, prevented from operating at full capacity by environmental restrictions, continued to produce losses; the company’s $3.3 billion long-term debt, largely incurred by the Goldsmith battle, was also a weakness. Analysts pointed to Goodyear’s sluggish internal efficiency as a major problem. For the first time since 1921, Goodyear went outside company ranks to choose a chairman and chief executive officer, as Stanley C. Gault succeeded Barrett in June 1991. Gault had been chairman and chief executive of Rubbermaid, Incorporated, while serving on Goodyear’s board.

Between 1989 and 1991, Goodyear eliminated 12,000 jobs, or ten percent of its work force, with more than one-half of that coming from the salaried sector. In combination with the $1.4 billion investment in modernization and consolidation of factories, these cuts added up to an estimated savings of $250 million annually. Yet Goodyear remained committed to its annual research and development budget of more than $300 million a year, confident in this as a source of quality tires, such as 1990’s Eagle GA and Eagle GT + 4, successful luxury car models. By restructuring its U.S. marketing tactics, the company regained its lost market share and was holding its own in the tougher international market. Goodyear was also able by 1992 to reduce its long-term debt to a much healthier $1.47 billion.

More important, however, were the new tires rolling out of the company’s research and development department. In 1991 alone four new Goodyear tires for the replacement market were introduced, the flagship of which was the Aquatread, an allseason passenger tire specially designed to provide better traction on rain-slickened roads. The tire proved to be a huge and immediate success. More troubling was Gault’s 1992 decision to sell, once again, Goodyear-brand tires at Sears, more than half a century after it had stopped doing so. The following year the company began to sell its name-brand tires through Wal-Mart Stores and the Discount Tire chain. These moves angered Goodyear dealers, especially since some of their new competitors undercut their prices on Goodyear tires.

From 1993 to 1995, Goodyear enjoyed healthy profits, which increased from $387.8 million in 1993 to $567 million in 1994 to $611 million in 1995, and sales that increased from $11.64 billion in 1993 to $12.29 billion in 1994 to $13.17 billion in 1995. Some of this growth was fueled by global expansion through acquisitions and joint ventures. In 1993 the company entered into a joint venture in India with Ceat Ltd. to form South Asia Tyres and build a $150 million tire plant in India. The following year Goodyear purchased a 60 percent stake in Gold Lion, an automotive hose factory based in Qingdao, China, as well as a 75 percent stake in Dalian International Nordic Tire Co. (later known as Goodyear Dalian) based in Dalian, China.

In 1996 the Egyptian-born Samir F. Gibara, who had been president and chief operating officer, replaced Gault as chairman and CEO. That year, Goodyear acquired majority control of TC Debica, the leading passenger tire maker in Poland; the company planned to take advantage of Debica’s central location and lower-wage environment as it expanded in Europe. This acquisition also meant that Goodyear now had manufacturing facilities in four of the world’s most important developing areas: eastern Europe, India, China, and Latin America. Late in 1996, Goodyear reentered South Africa with the $121 million purchase of 60 percent of Contred Ltd., a unit of Anglovaal Industries Ltd. and a maker of tires, power transmissions, and conveyor belts.

The company’s global spending spree continued in 1997. Early that year Goodyear entered into a manufacturing agreement with Sumitomo Rubber Industries Ltd. of Japan, through which the companies would manufacture tires for each other in Asia and North America. Goodyear’s presence in eastern Europe was bolstered in May 1997 when Goodyear signed agreements with the Sava Group, based in Kranj, Slovenia, to form two joint ventures through which Goodyear would acquire a 60 percent interest in Sava’s tire business and a 75 percent interest in its engineered products business.

Goodyear was not idle at home either. In 1995 the company’s retail tire presence was beefed up through the purchase of 860 Penske Auto Centers and more than 300 Montgomery Ward-operated auto centers. The following year Goodyear unveiled the Infinitred, the first passenger tire with a manufacturer’s lifetime treadwear limited warranty. In the spring of 1997 Goodyear had to endure its first strike in more than 20 years, when 12,500 United Steelworkers of America members went out on strike. This proved to be a brief setback as a contract agreement (an unusually long six-year contract) was reached after only 18 days of picketing. In June of that year Goodyear’s Kelly-Springfield Tire unit entered into a long-term supply agreement with Lincolnton, North Carolina-based J. H. Heafner Co., whereby Kelly-Springfield would make at least one million Winston tires annually to be sold through Heafner’s network of tire distributors, one of the country’s largest. Goodyear in July 1997 unveiled a line of “run-flat” tires called EMT (”extended mobility tire” or “empty”), which enabled a car to be driven between 50 and 200 miles at speeds up to 55 miles per hour on a deflated—even punctured—tire. Such tires also eliminated the need for a spare tire.

Gibara predicted that, by the early 21st century, 75 percent of Goodyear tires would feature EMT technology. Time would tell on that prediction (the tires’ higher price tags could prove to be a major obstacle to widespread acceptance), but the company neared the turn of the century continuing to develop innovative new products and with a much enhanced presence outside North America. Goodyear also appeared ready to divest itself of its noncore Celeron oil pipeline subsidiaries as it took a $572.2 million fourth-quarter 1996 charge, most of which was a writedown of Celeron assets in advance of a sell-off. Divesting of Celeron would likely make a very strong company that much stronger.

Principal Subsidiaries

All American Pipeline Company; Belt Concepts of America, Inc.; Brad Ragan, Inc.; Celeron Corporation; Cosmoflex, Inc.; The Kelly-Springfield Tire Corporation; Goodyear International Corporation; The Goodyear Rubber Plantations Company; Goodyear Western Hemisphere Corporation; Murphy’s Inc., Sales and Service; Wingfoot Corporation; Compania Anónima Goodyear de Venezuela; Compania Goodyear del Peru, S.A.; Compania Hulera Goodyear—Oxo, S.A. de C.V. (Mexico); Centred (Proprietary) Limited (South Africa); Corporación Industriales Mercurio, S.A. de C.V. (Mexico); Deutsche Goodyear Holdings GmbH (Germany); Deutsche Goodyear GmbH (Germany); Goodyear Australia Limited; Goodyear Canada Inc.; Goodyear Chemicals, Europe S.A. (France); Goodyear Dalian Ltd. (China); Goodyear de Chile S.A.I.C.; Goodyear de Colombia S.A.; Goodyear do Brasil Produtos de Borracha Ltda (Brazil); Goodyear Broker’s Limited (Bermuda); Goodyear Española S.A. (Spain); Goodyear Export, S.A. (Bermuda); Goodyear Export Sales Corporation (Barbados); Goodyear France (Pneumatiques) S.A.; Goodyear Finance Holding S.A. (Luxembourg); Goodyear Great Britain Limited (U.K.); Goodyear Hellas S.A.I.C. (Greece); Goodyear Holding Co. (Venezuela); Goodyear India Limited; Goodyear Italiana S.p.A. (Italy); Goodyear Jamaica Limited; Goodyear Lastikleri Turk Anonim Sirketi (Turkey); Goodyear Malaysia Berhad; Goodyear Maroc S.A. (Morocco); Goodyear (Nederland) B.V. (Netherlands); Goodyear New Zealand, Ltd.; The Goodyear Orient Company Pte Limited (Singapore); Goodyear Portuguesa, Limited (Portugal); Goodyear Philippines Inc.; Goodyear Qingdao Engineered Elastomers Company Ltd. (China); Goodyear S.A. (France); Goodyear S.A. (Luxembourg); Goodyear Singapore Pte Limited; Goodyear South Africa (Proprietary) Limited; Goodyear (Suisse), S.A. (Switzerland); Goodyear Taiwan Limited; Goodyear (Thailand) Limited; Goodyear Zimbabwe (Private) Limited; Gran Industria de Neumáticos Centroamericana, S.A. (Guatemala); Granford Manufacturing, Inc. (Canada); Gummiwerke Fulda GmbH (Germany); Neumáticos Goodyear S.A. (Argentina); Nippon Goodyear Kabushiki Kaisha (Japan); Philippine Rubber Project Company, Inc. (Philippines); P.T. Goodyear Indonesia; P.T. Goodyear Sumatra Plantations (Indonesia); S.A. Goodyear N.V. (Belgium); Svenska Goodyear Aktiebolag (Sweden); TC Debica S.A. (Poland); Tredcor (Proprietary) Limited (South Africa); Wingfoot Insurance Company Limited (Bermuda).

Further Reading

Allen, Hugh, The House of Goodyear: A Story of Rubber and of Modern Business, Cleveland: Corday & Gross, 1943, reprinted, Arno Press, 1976.

Donlon, J. P., “A New Spin for Goodyear,” Chief Executive, December 1995, pp. 34-35, 38-40.

Labich, Kenneth, “The King of Tires Is Discontented,” Fortune, May 28, 1984.

Lubove, Seth, “The Last Bastion,” Forbes, February 14,1994, pp. 56, 58.

Magnet, Myron, “The Marvels of High Margins,” Fortune, May 2, 1994, pp. 73-74.

Narisetti, Raju, “For Two Tire Makers, a Flat-Out Pitch for Safer Wheels,” Wall Street Journal, July 3, 1997, p. B4.

Neely, William, Tire Wars: Racing with Goodyear, Tucson, Arizona: Aztex Corp., 1993.

O’Reilly, Maurice, The. Goodyear Story, Elmsford, New York: The Benjamin Company, 1983.

Schiller, Zachary, “After a Year of Spinning Its Wheels, Goodyear Gets a Retread,” Business Week, March 26, 1990.

____, “And Fix That Flat Before You Go, Stanley,” Business Week, January 16, 1995, p. 35.

____, “Goodyear May Be Getting Some Traction at Last,” Business Week, October 7, 1991, p. 38.

____, “Stan Gault’s Designated Driver,” Business Week, April 8, 1996, pp. 128, 130.

—Elaine Belsito

—updated by David E. Salamie

The Goodyear Tire & Rubber Company

1144 East Market Street
Akron, Ohio 44316
U.S.A.
(216) 796-2121
Fax: (216) 796-1237

Public Company
Incorporated: 1898
Employees: 107,671
Sales: $11.27 billion
Stock Exchanges: New York Midwest Pacific

The Goodyear Tire & Rubber Company (Goodyear) is a major manufacturer, distributor, and seller of tires worldwide. It manufactures and sells other rubber products, and chemicals and plastics, to a number of industrial and consumer markets. It operates approximately 85 plants, of which about half are in the United States, the balance being in 25 other countries.

Without the discovery by U.S. inventor Charles Goodyear of vulcanization—the process by which extreme heat renders rubber flexible and strong—the modern rubber industry would not exist. Goodyear had nothing to do with the company that bears his name. He died insolvent in 1860, 38 years before Frank A. Seiberling founded Goodyear in Akron, Ohio, destined to be the world’s first rubber concern to post $1 million in sales. It reigned as the world’s largest tiremaker for seven decades.

Bicycle and carriage tires were the company’s major products until the start of automobile-tire production in 1901. Seiberling’s 1899 application to make carriage tires under Consolidated Tire Company’s patent was refused, so he started manufacturing a similar tire without a license, claiming it was monopolistic for Consolidated to grant patent licenses selectively. The ensuing legal battle meant that Goodyear’s fir stand second-year profits from the sale of carriage tires were held in escrow until the court decided, in Goodyear’s favor, in 1902.

Goodyear introduced its straight-side tire under the Wingfoot trademark adopted in 1900, with a full-scale national magazine advertising campaign in 1905. The tire was quickly detachable from its rim, and this popular tire made Goodyear a household name.

Seiberling followed David Hill to the presidency in 1906, with Paul W. Litchfield, George M. Stadelman, and Frank Seiberling’s brother Charles Seiberling composing the formative management team. In 1907 Goodyear opened its Detroit shop, providing 1,200 tires to equip Henry Ford’s new Model T. By 1909 auto tire production jumped to 36,000, and Good-year’s sales reached $4.25 million, double that of the previous year. By 1910 Goodyear provided one-third of all original tires on U.S. cars. In 1909 Goodyear started production of airplane tires.

In 1910 Litchfield acquired a method for bonding rubber over fabric from North British Rubber Company in Edinburgh, Scotland. Goodyear’s rubberized fabric, soon used for planes, including the Wright brothers’, also formed the shell of early dirigibles, the production of which commenced in 1910.

Goodyear’s tire production rose from 250 per day in 1916 to nearly 4,000 per day by the end of the World War I. The company made 1,000 balloons and 60 airships during the war, as well as 715,000 gas masks and some 4.75 million other military supply parts, such as tire valves. It also provided many of the tires used on aircraft. Wages rose, and both the company and its employees ended the war years in prosperity. Sales had jumped from $110 million in 1916-1917 to $172 million in 1918-1919, and to $223 million in 1920.

Only two days after the November 1918 armistice, the government cancelled its contracts and decontrolled prices. The economy swelled as industry rushed to meet postwar demand, but sales fell in late 1920 as unemployment and bankruptcy soared. Goodyear felt the squeeze as early as 1918, when it made its first attempt to recapitalize by a direct sale of stock to customers and employees.

As the recession deepened, Goodyear was forced to turn to bankers, a position Frank Seiberling in particular was loathe to assume. In 1920, nonetheless, the company accepted temporary refinancing of $18 million from a banking syndicate headed by Goldman, Sachs & Co. of New York, and A.G. Becker of Chicago. The effort was not sufficient, and bankruptcy loomed imminent as the book value of its common stock, at $75 million in early 1920, was reduced to zero. By 1921 sales had fallen to $105 million with a $5 million loss.

In early 1921 the New York law firm of Cravath, Henderson, Liffing well & De Gersdorff connected Goodyear with an investment bank, Dillon, Read, & Co., that agreed to manage Goodyear’s refinancing and reorganization. of the original officers, only Litchfield and Stadelman remained with the company. Frank Seiberling left to soon incorporate Seiberling Rubber Company, later acquired by Firestone. President E. G. Wilmer and a new management team were brought in. Wilmer focused on creating financial vigor at Goodyear, making few changes, if any, in the production and sales realms. One month after his appointment, in June 1921, he had reduced debt from $66 million to $26.5 million. of 469 creditor claims in 1921, all but 7 were settled. Sales picked up to $123 million in 1923, from $103.5 million in 1921. In 1923 Stadelman moved into the presidency, Wilmer to board chairmanship, and Litchfield to the first vice presidency. Wilmer would resign from Goodyear to head up Dodge Brothers, the forerunner of the Dodge Motor Company, in 1926.

The world’s largest tire producer since 1916, Goodyear became the world’s largest rubber producer by 1926. By 1928 the company operated in 145 countries, and sales reached $250 million. Stadelman did not live to see the company reach that point, as he died in January 1926. Litchfield assumed the presidency, commencing a 30-year tenure as chief executive officer. He spent his first year resolving litigation begun in 1922 by Goodyear common stock holders to increase their power and improve the position of common and preferred stock. The battle was concluded in 1927, on terms satisfactory to the stock holders.

Goodyear had produced all the significant U.S. dirigibles since 1911, and was commissioned in 1928 to build two huge dirigibles for the U.S. Navy. The enormous Goodyear airdock, then the world’s largest building without internal supports, was erected to accommodate the project. Despite Litchfield’s personal interest in the field of lighter-than-air craft, the industry came to an end in 1937 with the crash of the Hinden-burg. Goodyear’s famous fleet of smaller, nonrigid blimps continued to enjoy recognition at outdoor events since they were first floated as a friendly company trademark in the 1930s.

Goodyear was the defendant in one of the most famous antitrust cases of all time beginning in 1933 when the Federal Trade Commission (FTC) charged that its cost-plus-6% purchasing contract with Sears discriminated against independent dealers in violation of the Clayton Act, a U.S. antitrust law. The FTC issued a cease-and-desist order March 1936, and Goodyear appealed to the courts, but later that year the Clayton Act was stringently amended, in large part due to the Goodyear case. In light of the stricter law, Goodyear voluntarily terminated its Sears contract. The federal Circuit Court of Appeals planned to drop the case, but Goodyear wanted its name cleared, and the commission wanted a precedent set for other cases, so the court was pushed to make a firm decision. In 1939 it came out for Goodyear, relieving any threat of future damage claims by dealers. Goodyear’s one-time loyal buyer, Sears, became a serious competitor as it took its business to manufacturers selling only to mass distributors.

Prior to the 1930s Goodyear’s labor conflicts had been limited. In 1913 some Goodyear workers joined 15,000 other rubber workers in a strike against Akron’s other rubber companies organized by the Industrial Workers of the World (IWW). The strike was terminated after 48 days by worker vote, but it did mark the beginning of employee-initiated gains in Akron. The following year Goodyear instituted the eight-hour work day and a paid vacation plan for workers of five to nine years’ tenure. A number of employee benefit programs were established, including an in-factory hospital, a worker-oriented company newspaper called Wingfoot Clan, and athletic leagues that attracted many a sports-minded employee. In 1915 Litchfield donated an amount equal to his first 15 years’ salary, about $100,000, to the factory workers to be used at their discretion. In the early 1990s the fund provided scholarships to children of Goodyear employees or retirees.

In 1919 under Litchfield’s direction, Goodyear formed the industrial assembly, a representative body of 60 employees that voiced worker interests to management. The assembly existed for 16 years, until its place was challenged by newly organized chapters of the American Federation of Labor (AFL). Coleman Claherty, a major force in the AFL, began organizing in Akron in 1933, and within the year won 20,000 members throughout the city, 1,000 of whom formed Goodyear’s Local 2. The first international convention of the United Rubber Workers (URW) was held in September 1935.

In 1935 the local union chapters demanded that the companies recognize them as bargaining representatives for all employees. The companies refused, and the unions threatened to strike. At Goodyear a company-wide vote carried out by the industrial assembly voted down a strike 11,516 to 891. The unions threatened to strike based solely on member vote, and the federal government resolved tensions by establishing the Perkins agreement, which essentially required management to consult the unions on all wage and scheduling issues.

Goodyear had established a six-hour work day in 1932 to lessen the effects of the Great Depression among workers, by reducing layoffs and distributing work as evenly as possible among remaining employees. When national price controls were removed in 1935, however, Goodyear re-established the eight-hour work day to increase productivity, decrease its prices, and make its products more competitive. The industrial assembly requested a return to the six-hour shift, and when this was denied it appealed to the board of directors. Local 2, encouraged by the industrial assembly’s tenacity, appealed to the secretary of labor, who ruled in January 1936 that Goodyear was unjustified in its reversion to the eight-hour shift because it had voluntarily established a shorter day. The government also charged Goodyear with discriminating between industrial assembly and union workers. At the time, union membership was at 10%.

Goodyear returned to the six-hour day as suggested, but layoffs became necessary as tire sales decreased, and the union struck in February 1936. Goodyear’s strikers were supported by union sympathizers from other rubber companies and by Ohio and West Virginia coal miners from John L. Lewis’s Committee for Industrial Organization (CIO). Within two days, thousands were picketing Goodyear’s three major Akron plants. More than 1,000 employees, including Litchfield, moved into the factories to maintain as much production as possible. The union strategy was to break Goodyear, the largest rubber factory, so that the other companies would be more compliant. After 34 days the strike was settled by direct negotiations.

With a three-month stock of goods, Goodyear did not suffer financially from the strike, but the show of union muscle upped URW membership throughout Akron, and increased Goodyear union members to 5,000. The Wagner Act, or National Labor Relations Act, was affirmed by the U.S. Supreme Court in April 1937. The industrial assembly was categorized as a company union, and had to be disbanded. Workers supported the move to URW representation by a ratio of more than two to one.

Sitdowns and inter-worker violence frequently disrupted production after the 1935 strike, culminating in a May 1938 sitdown that attracted picketers although none were formally requested. Police were summoned to disperse the demonstrators, and in an ensuing riot 100 people were injured. The company and union negotiated three days later and sitdowns decreased. Goodyear had decreased employees in Akron from 58,316 in 1929 to 33,285 in 1939. In 1941 after three years of cooperation, Goodyear signed its first formal contract with Local 2.

Despite labor and litigation difficulties during the 1930s, Goodyear continued its expansion. An Alabama plant and two textile mills were built in 1929, followed by another textile mill in 1933. In 1935 the company acquired a bankrupted company, Kelly-Springfield Tire. Another plant was acquired in Akron in 1936, and a Vermont factory was purchased to centralize shoe sole-and-heel production.

Goodyear’s foreign expansion, begun in 1910 with its first of two Canadian plants, continued during the 1930s. In addition to its London and Australian plants, operative since 1912, Goodyear had distributors located throughout northern Europe, Russia, Central and South America, and the Caribbean. In 1931 a tire plant was opened just outside Buenos Aires, Argentina. The sixth foreign factory went up in Bogor, on Java in Indonesia in 1935, and the seventh in 1938 in Sao Paolo, Brazil. A Swedish plant was opened in 1939. Rubber plantations were established during the 1930s in Indonesia, Costa Rica, and the Philippines. Goodyear Foreign Operations was created to manage the company’s 18 foreign subsidiaries, 7 factories, 7 plantations, 37 branches, 28 depots, and hundreds of distributors located outside of the United States.

Goodyear patented its first synthetic rubber—Chemigum— in 1927. It was first mass produced in 1935, and tires were made of it in 1937. In 1934 the company introduced Pliolite, a compound that cemented rubber to metal, and Pliofilm, a packaging material. Other popular Goodyear products were rubber floor tiles; many new models of tires; Airfoam, a cushioning material for seats and matresses; and Neolite, a synthetic heel-and-sole material.

Goodyear began producing 200,000 gas masks a month for the U.S. Army after Adolf Hitler’s April 1939 invasion of Poland. The same year, Goodyear Aircraft (GAC) was established, and the Goodyear airdock, unused since the demise of the giant airships, housed war-time airplane and parts production, as well as the construction of 132 blimps for coastal submarine defense. In 1941 Goodyear joined other manufacturers to produce parts for 100 B-26 bombers a month. In 1943 some of GAC’s 32,000 employees worked on the plane that dropped A-bombs on Hiroshima and Nagasaki in 1945, a B-29 Superfortress. GAC also produced 4,008 Vought Corsair FGl fighter planes, beginning in 1943.

In 1940 Edwin J. Thomas, who began as Litchfield’s secretary and assistant in the 1920s, ascended to the presidency as Litchfield continued as chairman of the board. The company took on management of a government-owned factory producing propellant charges for 600 types of artillery shells in 1940. In 1941 the U.S. government required each of the “big four” rubber producers—Goodyear, General Tire, Firestone, and Goodrich—to construct plants that would produce 400,000 tons a year of GRS, or goverment rubber, a synthetic compound including styrene and butadiene. Goodyear supervised the construction of three synthetic rubber plants for the government. Two of the plants became owned and operated by the company. Goodyear sales increased 52% over 1940.

Goodyear also produced the top-secret phantom fleet, used to confuse Nazi reconnaissance before the D-Day invasion of Normandy. The “fleet” was made of rubberized material, from which Goodyear constructed life-size inflatable replicas of amphibious invasion craft, PT boats, tanks, combat vehicles, and heavy artillery. These imposters were blown up and set in one coastal English base, then rapidly deflated and moved by night to another. To Axis surveillance, the apparent serial establishment and abandonment of fighting bases was inexplicable, and may have contributed to their unstable coastal defense.

When the war concluded, the government cancelled $432 million in Goodyear contracts. GAC released almost 27,000 employees, reducing its payroll to 2,000 by 1946. Demobilization increased demand for consumer tires, and sales increased to 25 million in 1946-1947. Goodyear established factories in Colombia and Venezuela in 1945, in Cuba in 1946, and in South Africa in 1947. A Japanese-occupied factory in Indonesia was regained in 1945, and a rubber plantation in 1949. In its 50th year, 1948, Goodyear reached a peacetime sales record of $705 million. It employed 72,000 workers worldwide and was poised to expand its international presence.

In its first 50 years, Goodyear total sales had been $9 billion; in the decade from 1949 to 1958, they would top $11.5 billion. In 1951 Goodyear became the first rubber company to exceed $1 billion in sales in one year. Goodyear’s World War II production record garnered it several government contracts associated with the Korean War in 1950. A subsidiary, Goodyear Atomic Corp., was founded in 1952 when the government selected the company to operate a $1.2 billion atomic plant under construction in Pike County, Ohio. The facility opened in 1954.

In 1954 Goodyear acquired its first new plantation in 20 years in Belem, Brazil. In 1955 it acquired two government-owned rubber factories it had operated during the war. In 1955 at Goodyear’s Gadsden, Alabama, plant, an $11.5 million investment elevated it to the largest tire-making facility in the United States. In 1957 it also built a 7,200-acre tire testing site with 18.5 miles of multisurface roads.

Rubber consumption after World War II was double prewar production. Much of the increase was due to new rubber products such as foam rubber, film, and plastics, and growth was fueled by newly developing synthetic rubbers such as polyisoprene, introduced by Goodyear in 1955 and called Natsyn, for commercial purposes. In 1960 Goodyear built a $20 million synthetic rubber plant in Beaumont, Texas; its annual production of 40,000 tons of Natsyn equaled the annual generation of 15,000 acres of rubber trees.

In 1958 Thomas became chairman of the board, and Litchfield honorary chairman. Russell De\bung became Goodyear’s ninth president; his first full-time Goodyear position had been that of a tire inspector. De Young appointed Robert H. Lane as public relations director in 1958. Lane was largely responsible for the makeover of Goodyear’s public profile from a somewhat stodgy, though quality, tire maker, to a contemporary innovator. The key to this image update was Goodyear’s reentry into racing. Once it overcame Firestone’s domination of the field, Goodyear was able to equip winning cars in the Daytona 500 and other popular U.S. and European races. Lane also clearly defined the role of the Goodyear blimp as a corporate goodwill ambassador, capitalizing on the company’s historic association with airships.

Foreign operations were consolidated in February 1957 under Goodyear International Corporation (GIC). In 1959 GIC initiated its European expansion program with construction of a plant in Amiens, France. Tire plants were built in 1965 at Cisterna di Latina, Italy, and in 1967 in Phillipsburg, Germany, giving Goodyear production sites in Europe’s three major markets within ten years.

In the United States, Goodyear’s expansion was partly by acquisition. In 1959 the company added a $3 million aeronautics research and development laboratory in Litchfield Park, Arizona, to supplement GAC’s activities. The subsidiary received a $65 million contract in 1958 to produce Subroc, an antisubmarine missile. Goodyear would continue to derive much of its business from U.S. military and space program contracts, including production of equipment for several of the Apollo moon missions. In 1961 the company bought Geneva Metal Wheel Company, a maker of specialty wheels, and in 1964 acquired Motor Wheel Corporation, the world’s largest maker of styled auto wheels. That same year, it was the first rubber corporation to exceed $2 billion in annual sales. Its profits were in excess of $100 million, with foreign subsidiaries contributing more than one-third.

In 1966, two years after Victor Holt assumed the presidency, Goodyear opened its tenth U.S. tire plant, in Danville, Virginia. This was followed in 1967 by a $73 million facility at its 593-acre site in Union City, Tennessee. Goodyear’s sales doubled during the 1960s, topping $3 million in 1969. Net income rose from $71 million to $155 million. In 1969 it became the first rubber company to exceed $3 million in annual sales.

Goodyear’s biggest challenge in the 1970s was overhauling its factories to produce radial tires. The radial, with its excellent reinforcement system and extra belt of steel, was introduced by France’s Michelin in 1948, and by 1972 it equipped 8% of U.S. cars. Recognizing the superiority of the radial, Goodyear introduced a transitional fiberglass reinforced tire in 1967, and by 1972, 50% of U.S. cars rode on them. When Charles J. Pilliod assumed the presidency in 1972, he insisted that Goodyear bear the expense of adapting to full radial technology. The radial tire equipped 45% of U.S. cars by 1976, and Goodyear was the world’s largest radial producer. In 1977 with a media blitz extolling its all-season tread, Goodyear introduced its Tiempo radial, the company’s most successful tire to that time.

Goodyear’s 75th anniversary year—1973—was marred by the debilitating Middle East oil crisis. In 1974, Pilliod became chairman and chief executive officer and John H. Gersten-maier assumed the presidency, and Goodyear, prompted by the government, formed a joint project to stimulate domestic propagation of guayale, a native North American bush that provided 50% of U.S. rubber until 1910. As oil prices declined, however, the project slowed. In 1975 Mark Donohue, a well-known car racer, was killed when a tire blew out during pre-race preparations. In 1984 his estate was awarded a $9.6 million settlement from Goodyear, one of the largest wrongful-death payments in history.

In 1976 Goodyear suffered its longest strike ever when URW workers walked out on Goodyear, Goodrich, Uniroyal, and Firestone after talks at Firestone, the target company, failed. Goodyear’s 22,000 strikers and their cohorts at the other companies returned to work some 130 days later having obtained an agreement that wages and benefits would be increased 36% over the following three years.

In 1979 Goodyear fought hard and succeeded in avoiding the “neutrality” clause accepted by the other three rubber companies, which guaranteed that companies would not interfere with URW organizing. This was motivated by its desire to create a nonunion shop at its newly built Lawton, Oklahoma, facility. Pilliod’s new labor relations policies required individual workers, rather than supervisors, to be responsible for quality control. The new policies also provided regular and ongoing communications between management and laborers, and worker involvement in problem solving. The factory was considered 50% more efficient than older facilities, and by 1983, factory worker turnover was down to less one-third of 1%.

In 1977 the Securities and Exchange Commission (SEC) accused Goodyear of maintaining a clandestine fund of $1.5 million to make foreign and domestic political contributions and government and labor bribes. The SEC charged that the company had made $500,000 in dubious payments since 1970 in 20 foreign countries. Goodyear agreed, without admitting guilt, to a permanent court injunction against violations of federal securities laws, providing a report of its activities in the countries in question. Two years prior, in 1975, Goodyear said it made political contributions of at least $242,000 between 1964 and 1972.

Robert E. Mercer assumed the presidency in 1978, when Gerstenmaier retired. That year Goodyear tire production was terminated in Akron, but the company began building Goodyear Technical Center, a $750 million research and design complex located on 3,000 acres in Akron. By 1980 despite national and global recession, Goodyear had record earnings of $264.8 million and had reduced debt to its lowest level in 17 years. By 1984 it supplied one-third of the U.S. tire market, and one-fifth of the world tire market. In 1983 Pilliod retired, Mercer became chief executive officer, and Tom H. Barrett was voted president.

Having won the ten-year battle to remain leader of the tire market, Goodyear entered the 1980s planning to scale some other peaks. Its diversification goal was to reduce tire revenues to one-half of corporate earnings and generate the other half through its G AC subsidiary and Celeron, a Louisiana oil and gas concern purchased in 1983. GAC had expanded at a compound annual rate of 17% from 1973 to 1983, providing a 20% return on investment. In 1983 its annual sales were $617 million, despite a questionable $50 million investment in the production of centrifuges to enrich uranium for nuclear power-plants. Celeron, although its sales slipped the year after it was purchased, began construction of the then-promising $750 million All-American Pipeline, a 1,200-mile tube used to transport 300,000 barrels per day of off-shore California crude oil to Texas refineries.

The diversification came to an abrupt end in 1986, when takeover specialist Sir James Goldsmith made a bid for Goodyear. The company was able to beat off this takeover, but only by selling most of its nontire concerns, including GAC, which went to Loral Company for $588 million, and parts of Celeron, which went to Exxon for $650 million. Barrett became chief executive officer in 1988 and remained president. Hoyt M. Wells was voted president in 1991. In 1989 the company divested its South African operations, which it had maintained despite the social protest against apartheid during the 1980s.

In 1990 Goodyear took its first loss since 1932, and surrendered its position as the world’s largest tire maker to Michelin, when the French company bought out Goodrich’s tire business, which had been merged with Uniroyal’s. Firestone and General, weakened by Goodyear’s dominance in the radial market, were absorbed, respectively, by Japan’s Bridgestone and Germany’s Continental, forcing upon Goodyear competition of its own size. Its All-American Pipeline, prevented from operating at full capacity by environmental restrictions, continued to produce losses; the company’s $3.3 billion long-term debt, largely incurred by the Goldsmith battle, was also a weakness. Analysts pointed to Goodyear’s sluggish internal efficiency as a major problem. For the first time since 1921, Goodyear went outside company ranks to choose a chairman and chief executive officer, as Stanley C. Gault succeeded Barrett in June 1991. Gault had been chairman and chief executive of Rubbermaid, Incorporated, while serving on Goodyear’s board.

Between 1989 and 1991, Goodyear eliminated 12,000 jobs—10% of its work force—with more than one-half of that coming from the salaried sector. In combination with the $1.4 billion investment in modernization and consolidation of factories, these cuts added up to an estimated savings of $250 million annually. Yet Goodyear remained committed to its annual research and development budget of more than $300 million a year, confident in this as a source of quality tires, such as 199O’s Eagle GA and Eagle GT+4, successful luxury car models. By restructuring its U.S. marketing tactics, the company regained its lost market share and was holding its own in the tougher international market. While still somewhat vulnerable to takeover because of its relatively low stock price, Goodyear entered the 1990s with its major capital outlays completed and anticipating rising profits.

Principal Subsidiaries

Celeron Corp.; Goodyear Aerospace Corp.; Hose Couplings Manufacturing Inc.; Kelly-Springfield Tire Co.; Lee Tire & Rubber Co.; Ohio Poly Corp.; Reneer Films Corp.

Further Reading

O’Reilly, Maurice, The Goodyear Story, Elmsford, New York, The Benjamin Company, 1983; Labich, Kenneth, “The King of Tires is Discontented,” Fortune, May 28, 1984; Schiller, Zachary, “After a Year of Spinning its Wheels, Goodyear Gets a Retread,” Business Week, March 26, 1990.

—Elaine Belsito