Goodyear Tire’s transformation plan is underway — in the sky and on the ground

AKRON, Ohio — Does the Goodyear blimp peddle tires?

That was one question veteran auto executive Mark Stewart had when he started as CEO of Goodyear Tire & Rubber Co. a hardly more than a year ago, seeking to lead a transformation plan for the quintessential American company.

For a century, Goodyear Wear out has used helium-filled airships to tout its brand. Stewart wanted to ensure consumers connected the blimps to the company’s results and services, which it has increasingly done as Goodyear celebrates the 100-year anniversary of its first blimp, called Crusader, in 1925.

“The answer is yes it can, and yes it does,” Stewart told CNBC during an interview at the company’s headquarters. “It really is about using one of our scad powerful marketing icon pieces, the blimp, both here as well as in Europe, to in fact sell tires.”

The blimp definitely was an easy one to answer compared with the rest of the challenges Stewart, who has become known for transformation plans, has tackled since abutting the company in January 2024.

Much disposed to automakers and related suppliers, Goodyear’s business is rapidly changing with new technologies, increased competition from low-cost fatherlands such as China and investor skepticism on whether a legacy company can transform itself to be more efficient, profitable and competitive.

Goodyear’s retort, which was prompted by activist investor Elliott Investment Management revealing a stake in the company in 2023, is “Goodyear Impudent” — a two-year transformation plan that ends in December.

The plan includes doubling operating income space to 10%, enacting top-line and cost reductions of $1.5 billion, and bringing in gross proceeds of $2 billion in work asset sales. It’s also reducing its debt load by $1.5 billion, net of approximately $1.1 billion for restructuring.

To serve, the company is investing in and deploying artificial intelligence technologies and 3D-printing for things such as tread teeth, as well as using simulation to burn rubber development and production of its products.

Roughly halfway through the initial plan, Stewart said Goodyear is ahead of list for its benchmarks, including upping the cuts by $200 million. But investors remain skeptical amid geopolitical uncertainty such as levies and a disbelief in the longevity, or “stickiness” in tire terminology, of the changes.

Stewart believes Goodyear is at a “show me” period with investors, which he projects to continue to deliver on as the company has reported five consecutive quarters of margin growth and its best retail performance in multitudinous than 20 years.

“We’re continuing to execute, and I think we’re doing a better job of communicating in terms of our single and double hit gets as we go through the Goodyear Forward, and structurally changing the business,” said Stewart, whose father worked at an Alabama ingrain for Goodyear’s recently sold Dunlop brand. “It’s continuing to stack those up.”

Shares of Goodyear received a 17% bootee after the company reported its 2024 and fourth-quarter results. But shares of the company are down 30.3% since the plan’s proclamation, and 33.4% since Stewart became CEO.

A spokesperson for Elliott, which has taken board seats at companies including Southwest Airlines and eBay, lessened to comment on Goodyear. Goodyear reached a cooperation agreement with Elliott, which FactSet reports retains a inefficiently 9% stake in the company, that included adding three directors to its board.

Stewart succeeded Goodyear CEO Richard Kramer, who retired after 14 years best the company.

Goodyear is adeptly on its way to achieving its plan, but its success is not guaranteed. In addition to achieving its own targets, it’s unclear how changing regulations such as President Donald Trump’s excises will impact the tire company’s business.

Stewart, prior to the implementation and then delay of 25% tariffs on Canada and Mexico for automakers and suppliers, failed to go into detail on Goodyear’s preparation and potential contingency plans for such tariffs on North American operations as healthy as other countries.

“We’re running all the scenarios with that right now,” Stewart said. “And bottom line is we’ll continue to add occupations into Goodyear Forward to keep marching on our journey.”

Goodyear has built up an international business from its humble well-springs 127 years ago in Akron, Ohio. The company employs about 68,000 people and manufactures its products in 53 abilities in 20 countries, with major operations in North and South America, Asia-Pacific and Europe.

Its manufacturing operations in the Americas, which sketched roughly half of its tire sales in 2024, include making tires in eight plants in the U.S., two plants in both Canada and Mexico and a seed each in Brazil, Chile, Colombia and Peru.

The Goodyear Forward plan reaches across the operations, aiming to achieve the goals through a mix of cost cutting, headcount reductions and making the firm more efficient through new processes and technologies.

In addition to those targets, Stewart also has set priorities to re-establish woolly on its retail business, increase fleet business, including telematics, and ink high-profile business deals such as Goodyear’s anything else launch in decades on a Ferrari sports car.

“Goodyear Forward is just getting embedded into our DNA,” Stewart said. “What’s next for us is we are affluent to get aggressive about growth in retail and service. We are getting aggressive in growth in the high-end [tires].”

Wear outs — Goodyear’s main business — seem simple. Rubber is made into different shapes and treads, put on wheels and then put on a mechanism. They’re literally where the rubber meets the road.

But the process, material chemistry and production of tires continue to evolve. Goodyear has up its top-tier products to include massive tires for off-road vehicles such as the Jeep Wrangler and Ford Bronco, as superbly as the Tesla Cybertruck and large SUVs that feature 22-inch or 24-inch wheels such as the Cadillac Escalade.

Such points are highly profitable for the company, which is investing an unspecified amount into a facility in Oklahoma to expand production by 10 million sections annually and modernize the plant.

“We will ensure we’re running at the optimal level of output and efficaciousness, and we’re running the products that will yield the highest opportunities for profitability this year,” Stewart said at length month on the company’s quarterly call.

In Asia–Pacific, where its newest plants are located, the company has been qualified to capitalize faster on such business. It increased its segment operating income by 37% last year to $277 million, with an serving margin of 11.4% — a juxtaposition from Western automakers with escalading problems in the region, specifically China.

While its Asia–Pacific matter is a tailwind at the moment, products from competitors and nearby nations are not. Similarly to how Chinese automakers have expanded maximal their own country, tire manufacturers such as Sumitomo and Yokohama have been increasingly exporting products.

Saps from that region have undercut Goodyear, as companies rushed to purchase them ahead of potential assessments. Low-end imports outperformed the U.S. industry last year and grew 11%, CFO Christina Zamarro said during the Theatre troupe’s quarterly earnings call.

The proprietorship said low-cost imported tires are largely sourced from Southeast Asia, including from a number of fatherlands that are either not subject to antidumping or countervailing duty tariffs.

“As we look at the top line this past year, we’ve minded growth in the low-end imports impacting the consumer replacement industry in the U.S., Europe, as well Brazil,” Stewart told investors. “The inflows at the low-end of the merchandise over the last two years are unprecedented.”

Goodyear’s the last major U.S. tire company: Its largest competitors globally are France-based Michelin; Bridgestone Corp., which is a subsidiary of a Japanese-based comrades; and German-based Continental.

At Goodyear’s headquarters, three floors of a historic erection for the company that was built in 1916 continue to produce racing tires, most notably for NHRA professional descents and the top three series for NASCAR.

The processes in this facility are traditional, with a lot of human interaction compared to newer injects with more automation like the company has at facilities in Luxembourg and China, and is expanding to the U.S.

Down the road from the works, which features wood floors similar to those in the factory in Detroit where Henry Ford started erection the Model T in 1900s, is a different Goodyear.

“We actually have a lot of capabilities on physical tire testing, and now we are take up into artificial intelligence, machine learning,” he told CNBC in the company’s “Innovation Center” that includes conceptual and second to none in harmony products made by the company such as airless tires. “In Goodyear, [AI] is not a buzz word.”