Goodyear Case

The U.S. Tire Industry Gets Run Over

Group C: Kristina Miller, Brian Muhammad, Cheryl Palmer

Professor Salinas

Upper Iowa University

International Finance BA463

18 February 2013

The U.S. Tire Industry Gets Run Over

The Goodyear Tire & Rubber Company was founded in 1898, on the banks of the Little Cuyahoga River in East Akron, Ohio. Frank A. Seiberling was 38 when he founded the company. He purchased the first plant with a down payment of $3,500, money that he borrowed from his brother-in-law Lucius C. Miles (Historic, 2010). All of the rubber and cotton that was used in the industry was transported halfway around the world to an area that only had limited rail transportation. The company was named after Charles Goodyear, who had discovered vulcanization in 1839 after a long search (Historic, 2010). Charles Goodyear had died penniless 30 years before Goodyear was founded.

This was a good time for the start of the company. Bicycles and horseless carriages were becoming popular. The depression of 1893 was fading. With a capital stock of $100,000, Goodyear was incorporated on August 29, 1898 (Historic, 2010). David E. Hill purchased $30,000 of the stock and became the first president.

Production History

Production at Goodyear began on November 21, 1898, with 13 employees (Historic, 2010). The product line consisted on bicycle and carriage tires, horseshoe pads, and poker chips. In 1899, the automobile tires were added to the product line. The first payroll that was processed was for $217.86. This was a wage of 13 to 25 cents an hour for a 10-hour day. Sales amounted to $8,246 after the first month. Sales for the first full year of operation totaled $508,597, which generated profit of $34,621(Historic, 2010). In 1900, Goodyear exhibited solid tires at an Auto Show in New York.

The first advertisement was in the Saturday Evening Post in 1901 with a winged-foot trademark. The winged-foot trademark was chosen by Seiberling,...