GM Dropping Firestone as Tire Supplier
General Motors is dropping Firestone Tire & Rubber as a supplier of tires for new GM cars and trucks, which account for about 20% of Firestone’s U.S. production, the companies said Sunday.
The unexpected setback comes as Firestone shareholders prepare to vote today on a $2.6-billion buyout offer from Bridgestone Corp. of Japan, although Firestone said the GM move would not affect the merger plans.
Firestone stated that it learned of GM’s planned phase-out on Friday. There was no immediate comment from Bridgestone.
John J. Nevin, chairman and chief executive of Firestone, said in a news release he was “surprised and disappointed” by GM’s move, but said Firestone was confident it would find other markets for its tires without hurting profits.
GM plans to reduce Firestone’s role as a supplier significantly during the second half of this year, and will eliminate the tire maker from its supply base over a period of up to two years, Firestone stated.
GM spokesman James Crellin said in a telephone interview in Detroit that the move was part of the auto maker’s “ongoing supplier-rationalization study”--a periodic review of suppliers’ capacity and future needs--and indicated that it was not linked to the impending buyout by Bridgestone.
“We’ve got four other tire suppliers: General Tire, Goodyear, Michelin and Uniroyal-Goodrich,” Crellin said. “There are no plans to look for another supplier at this time. We will be informing the other four tire suppliers of the availability of increased business.”
Crellin declined to say how long the phase-out would take and that it was GM’s policy not to discuss the amount of business it does with any suppliers.
GM’s biggest tire supplier is Uniroyal-Goodrich, which supplies about 34% of its tires, according to estimates by the trade publication Modern Tire Dealer. Goodyear is second at 22.5%, Firestone is third with 20%, General Tire was fourth at 17.5% and Michelin was fifth at 4.5%, according to the publication.
Chicago-based Firestone is the nation’s second-largest tire maker after Goodyear Tire & Rubber Co., with tires accounting for nearly 70% of its $4.2 billion in annual sales.
