Corporate History: Goodyear Tire & Rubber

Akron, for many years, was known as the "Rubber City." No place on earth had a higher concentration of tire manufacturers. That has all changed. You might find this short history of Goodyear to be of some interest.

In 1898 Frank and Charles Seiberling founded a tire and rubber company in Akron, Ohio, and named it after Charles Goodyear (inventor of the vulcanization process, 1839). The debut of the Quick Detachable tire and the Universal Rim (1903) made Goodyear the world's largest tire maker by 1916.

The responsibility for the adoption of the Wingfoot symbol (figure to left), known today in every civilized country on earth, rests to a great extent with Frank Seiberling, the founder and for many years president of The Goodyear Tire & Rubber Company. In the old Seiberling home in Akron, on a newel post of the stairway there stood a statue of the famous god of mythology known to the ancient Romans as Mercury, and to the Greeks as Hermes.

Looking back, the founding of The Goodyear Tire & Rubber Company in 1898 seems especially remarkable, for the beginning was anything but auspicious. The 38-year-old founder, Frank Seiberling, purchased the company's first plant with a $3,500 down payment - using money he borrowed from a brother-in-law. The rubber and cotton that were the lifeblood of the industry had to be transported from halfway around the world, to a landlocked town that had only limited rail transportation. Even the man the company's name memorialized, Charles Goodyear, had died penniless 30 years earlier despite his discovery of vulcanization after a long and courageous search.

Yet the timing couldn't have been better. The bicycle craze of the 1890s was booming. The horseless carriage, some ventured to call it the automobile, was a wide-open challenge. Even the depression of 1893 was beginning to fade. So on August 29, 1898, Goodyear was incorporated with a capital stock of $100,000.

Goodyear began manufacturing in Canada in 1910, and over the next two decades it expanded into Argentina, Australia, and the Dutch East Indies. The company established its own rubber plantations in Sumatra (now part of Indonesia) in 1916.

Financial woes led to reorganization in 1921, and investment bankers forced the Seiberlings out. Succeeding caretaker management, Paul Litchfield began three decades as CEO in 1926, a time in which Goodyear had emerged to become the world's largest rubber company.

Goodyear blimps served as floating billboards nationwide by the 1930s. During that decade Goodyear opened company stores, acquired tire maker Kelly-Springfield (1935), and began producing tires made from synthetic rubber (1937). After WWII Goodyear was an innovative leader in technologies such as polyester tire cord (1962) and the bias-belted tire (1967).

By 1980 Goodyear had introduced radial tire brands such as the all-weather Tiempo, the Eagle, and the Arriva, as it led the US market.

Thwarting British financier Sir James Goldsmith's takeover attempt in 1986, CEO Robert Mercer raised $1.7 billion by selling the company's non-tire businesses (Motor Wheel, Goodyear Aerospace) and by borrowing heavily.

Recession, overcapacity, and price-cutting in 1990 led to hard times for tire makers. After suffering through 1990, its first money-losing year since the Depression, Goodyear lured Stanley Gault out of retirement. He ceased marketing tires exclusively through Goodyear's dealer network by selling tires through Wal-Mart, Kmart, and Sears. Gault also cut costs through layoffs, plant closures, and spending reductions and returned Goodyear to profitability in 1991.

The company increased its presence in the US retail market in 1995 when it began selling tires through 860 Penske Auto Centers and 300 Montgomery Ward auto centers. President Samir Gibara succeeded chairman Gault as CEO in 1996. That year Goodyear bought Poland's leading tire maker, T C Debica, and a 60% stake in South African tire maker Contred (acquiring the rest in 1998).

In 1997 Goodyear formed an alliance with Kobe, Japan-based Sumitomo Rubber Industries, under which the companies agreed to make and market tires for one another in Asia and North America. The next year Goodyear sold its Celeron Oil subsidiary, which operated the All American Pipeline, and acquired the remaining 26% stake in tire distributor Brad Ragan (commercial and retail outlets in the US) for $20.7 million.

The company acquired Sumitomo Rubber Industries' North American and European Dunlop tire businesses in 1999. The acquisition returned Goodyear to its #1 position in the tire-making industry. However, the company recorded drastically low profits that year because it had cut tire production and was unable to meet supplier demands.

To improve profitability, Goodyear increased tire prices in 2000 and began consolidating its manufacturing operations. Goodyear also announced plans to combine its commercial tire service centers with those of Treadco through a joint venture named Wingfoot Commercial Tire Systems. Despite record sales in 2000, the company's profits hit some hard road, prompting Goodyear to lay off 10% of its workforce and implement other cost-cutting efforts.

Early in 2001 the company announced that it would close its Mexican tire plant. The same year the company agreed to replace Firestone Wilderness AT tires with Goodyear tires for Ford owners as part of Ford's big Firestone tire recall.

Early in 2002 Goodyear announced that its recent job cuts and manufacturing consolidation resulted in an $85 million decrease in annual operating costs. Later in the year the tire maker became embroiled in an age discrimination lawsuit claiming unfair job evaluations for the company's older employees. Blaming a slow US economy, Goodyear announced plans to cut 450 jobs at its Union City, Tennessee, manufacturing plant.

Although Goodyear once owned about 10% of its Sumitomo Rubber Industries, it sold more than 20 million shares of its Japanese counterpart stock back to the tire maker in 2003; Goodyear now owns just over 1% of Sumitomo. Later in the year as the company was embroiled in a lengthy debate with the United Steelworkers union it was announced that the Huntsville, Alabama, tire manufacturing plant would be closed. Goodyear also announced that it would cut 500 nonunion salaried employees in North America. Later that same year it was announced that Goodyear was chosen by Volvo to be the truck manufacturer's primary tire supplier in North America; Goodyear has a similar contract with Mac Truck.

Qantas Airways announced in early 2004 that it has chosen Goodyear to provide tires for the Australia-based company's Jetstar Airways. Later in the year Goodyear acquired the shares of Slovenia-based Sava Tires it did not already own, and the company's Goodyear Dunlop Tires Europe unit purchased the Sweden-based Dackia retail tire stores. The company announced more job cuts in the non-tire sector in 2004, affecting Goodyear's engineered products and chemical units.

Goodyear sold its farm tire business to Titan International for $100 million in 2005. Later that year the company sold its Wingtack adhesive resin business to Sartomer Company Inc. (a subsidiary of France's TOTAL S.A.) for about $65 million.

Corporate timeline here. Photo Credit: The Goodyear Company