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Auto companies
try to dodge the ditch By Ethan Epstein
he ailing global auto industry still has no healthy Mehta called the “Nike model,” produce tires under Goodyear
prognosis. While American giant GM has declared specifications. Goodyear is now sourcing a billion dollars worth of
bankruptcy, a fate that Ford only narrowly avoided, materials and tires out of China.
the once-mighty Chrysler While Goodyear has enjoyed success
has been forced into a in China, Mehta did warn of trouble signs
merger with Fiat. Even the poster child on the horizon: for one, the United States
of success, Japanese automaker Toyota, Senate is considering a bill to sharply limit
has posted the first loss of its 59 year the number of Chinese tires that can be im-
history. ported into that country. He also expressed
It was under these dark clouds that the trepidation over the possibility of RMB ap-
Global Supply Chain Council organized a preciation, which would decimate the cost
workgroup of top auto industry executives savings that sourcing in China has brought
from top tire, auto supply, and car manu- to Goodyear. On a positive note, however,
facturing companies at a quiet Shanghai Mehta noted Goodyear’s Asian operations
lunch spot in late June.
Manoj Mehta, the general manager
remained healthy, primarily due to domes-
Goodyear is one company that has
for global sourcing for Goodyear
tic demand in the massive markets of China
moved aggressively in Asia. Manoj Mehta, and India.
the general manager for global sourcing for Goodyear and the Attendees from other segments of the auto industry also re-
featured speaker at the luncheon, reported that his company is ported informally on the fortunes of their respective companies. A
currently putting the finishing touches on a new plant north of representative from Delphi, the auto parts manufacturer, said that
Dalian. This is set to be the largest tire factory in the world for his company is in a strange position; the market for auto parts for
Goodyear, which controls roughly 20% of the world tire market, cheap, smaller cars has never been stronger. On the other hand,
selling around 200 million tires per year. the parts for luxury cars are hardly selling at all.
Mehta noted that the mantra of his company is to “earn busi- Unsurprisingly, many of the participants were interested in hear-
ness, not expect it” – something Goodyear has been doing with ing from GM China’s representative, who assured the crowd that,
evident success since it stepped up its presence in China in 2005. despite the troubles of its American parent, GM China “has not
As of today, Goodyear can source every component needed to been affected and stands on its own.” The Global Supply Chain
produce tires directly from China: from raw materials to machin- Council is planning on hosting more auto sourcing work groups in
ery. Indeed, Goodyear can even source fully completed tires from the months ahead, to give local leaders a chance to stay abreast
China. A number of Chinese companies, practicing under what of the ongoing issues in this troubled sector. JULY/AUGUST 2009 51
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