"Tire volumes are dropping a lot more than miles driven," Darren Wells, Goodyear Tire & Rubber Co.'s executive vice president and CFO, said during last week's JP Morgan High Yield Conference in Miami, Fla. "We're seeing the impact in every market where we do business."
Goodyear is responding "very aggressively by managing our business for cash. Whether you look at marketing, production or cost structure... these are areas where we need to display a lot of flexibility."
The Akron, Ohio-based tiremaker is taking a three-pronged approach to managing its cost structure, he explained:
1. Product leadership. "This is the continuation of a long journey that begain in 2003 and 2004."
2. Distribution. "Our dealers continue to be very passionate about the company and our products." Part of building Goodyear's dealer channel "is providing the right products and the right marketing behind those products."
3. Supply chain management. "We see ourselves as being able to run the business at inventory levels that are lower, optimizing our warehousing system." This strategy also involves "building tires when they're needed rather than when it's just convenient to build them."
Maintaining strong liquidity will be another priority, said Wells. "We have good, strong liquidity, which puts us in a good position."
The impact of the recession "is reality. It's what we have to face. We're going to protect the company's balance sheet and cash while continuing to drive down its cost structure."
