Goodyear -- the second-largest employer
The Goodyear blimp has yet to touch down in Luxembourg, but the US tire manufacturer has had its influences on the country anyway. The company, with a payroll of 3,660 employees, has become one of the duchy's most important private employers, trailing only Arbed the giant steel company.
Not only has the Akron, Ohio, based company decided to manufacture tires in the duchy, but it also uses this location, some five miles outside of Luxembourg City, to do research and development for all of its European tire operations. Thus, the duchy is assured of some steady jobs no matter how grim the market is for tires.
In fact, in the past two years the market for tires in Europe has been poor. Heavy competition has cut profits and even dropped some manufacturers out of the business.
In Akron, a spokesman for Goodyear says the company is quite pleased with its Luxembourg operations. "Luxembourg is very important to us and a good country to be established in," says Trevor Hoskins, a spokesman for the company.
The Colmar-Berg plant sells 70 to 80 percent of its tires to the Benelux (Belgium- Netherlands-Luxembourg) countries and the rest to Germany and France. Included in its production are tires for tractors, airplanes, giant earth-moving equipment, automobiles, and trucks. Some 10,000 tires a day came off its vulcanization lines last year. This number is expected to drop to 9,000 tires a day in 1980.
However, the company will expand its production of heavier tires -- thus producing a higher tonnage of tires this year than last year. The plant is integrated, making its own tire fabric, steel cord, and tire molds.
If the general manager, Felix Daleiden, has his way, the company also will expand its production of radial truck tires next year. However, Mr. Daleiden's request for funds to expand the production line is still pending at Goodyear headquarters in Akron as the US tiremaker rations its cash. Because of the auto slump in the US, the difficult times in Brazil and Europe, Goodyear Tire & Rubber has had its financial problems.
The soft market for tires, combined with too much production in Europe, has taken its toll on Goodyear, Luxembourg. In 1978 the plant had a loss of about $ 360,000 and in 1979 reported a "small profit." "We're not astisfied," says Lucien Scheuren, the financial manager, who adds, "but not many people have made money in tires in Europe over the last few years." In fact, Firestone and Metzler, two other tire manufacturers, closed their plants in Europe. Pricing, he concedes, remains very competitive at the moment.
To sell the extra radial truck tires, Goodyear will have to complete with Michelin, which already has a large share of the truck tire market. "Michelin," agrees Mr. Scheuren, "has a well-established, loyal customer base." But, he claims, "Goodyear's tires are as good, if not better, than Michelin's." Goodyear's plan is to centralize its truck-tire production in Luxembourg and the United Kingdom -- two of its best European production facilities.
Another factor that has made producing tires difficult has been the high cost squeeze in the industry. Petroleum prices have soared, but prices for tires have not risen to compensate for the rise because of Luxembourg and Belgian government price controls. At the same time labor costs remain high. Mr. Daleiden says the labor unions in Luxembourg "are the highest paid in Europe." But, he quickly adds, the result has been an era of labor peace.
The labor unions, he notes, are "informed about managements' goals and are cooperative." Three union representatives sit on the company's board of directors.
Mr. Daleiden is not among the duchy's most optimistic businessmen. He is expecting inflation of the country to grow at a 10 percent rate compared with the 5.5 to 6 percent forecast by the government. Oil prices will be the critical factor, rising at least 10-15 percent.
Since the workers have cost-of-living increases tied to the inflation rate, cost pressures will continue. At the same time, he expects Europe to experience a "mild recession." Goodyear will have as good a year in 1980 as 1979 on a volume and tonnage basis.
Goodyear built its first tire in the duchy in 1951. In 1969 the company modernized and expanded on a piece of land that was formerly owned by the grand ducal family. In fact, the grand duke's country home sits on a hill over- looking the Goodyear plant.
The first expansion was the addition of a fabric mill to provide nylon, rayon , and other material for the tires. In 1970 a tire mold factory was built and in 1971 a wire plant was added which manufacturers the steel cord for the radical tires. Still later a research center was contructed which performs testing on the new tire designs originating from the designers' desks at the plant.