The Goodyear Tire & Rubber Company Business report FY2006

Business Highlights

Annual Tire Unit Sales Mix
The worldwide tire unit sales in the replacement and OE markets during the period indicated were as follows.

(In million of tires) 2006 2005 2004 2003
North American Replacement tire units 61.6 71.2 70.8 68.6
OE 29.3 30.7 31.7 32.6
European Union Replacement tire units 46.0 46.0 43.9 43.9
OE 17.5 18.3 18.9 18.4
Eastern Europe
Replacement tire units 16.4 15.8 15.4 14.8
OE 3.6 3.9 3.5 3.1
Latin America Replacement tire units 14.9 15.0 15.0 14.2
OE 6.3 5.4 4.6 4.5
Asia pacific Replacement tire units 13.1 13.9 14.5 9.1
OE 6.3 6.2 5.0 4.3
Total Replacement tire units 152.0 162.0 159.6 150.6
OE 63.0 64.4 63.7 62.9
Total 215.0 226.4 223.3 213.5

Worldwide replacement unit sales in 2006 decreased from 2005 due primarily to an overall decline in the consumer replacement market as well as strategic share reduction in the lower value segment in North American Tire. OE unit sales in 2006 decreased from 2005 due primarily to North American Tire, driven by lower vehicle production, and European Union Tire due to the Company's selective fitment strategy and a weak OE consumer market, offset by increased unit sales in Latin American Tire due to increased market share. The USW strike also decreased units by 2.8 million.
With the 2007 Ford Shelby Mustang GT500, the Company again gets the honors. The vehicle is equipped with Goodyear Eagle F1 Supercar tires -- in size P255/45R18 in the front and P285/40R18 in the rear. The ultra-high performance Mustang, with limited numbers of the car appearing this summer, generates more than 450 horsepower. The project developed from a collaboration between performance car legend Carroll Shelby and Ford's Special Vehicle Team (SVT). Goodyear engineers worked with the SVT designers to develop the tires needed for the car. Goodyear's Eagle F1 Supercar tire features an ultra-performance tread compound, which helps provide exceptional dry traction and cornering grip. (From a press release by the company on 15.Jun)

To maintain global competitiveness, the Company has implemented rationalization actions over the pas several years for the purpose of reducing excess and high-cost manufacturing capacity and to reduce associate headcount.

<Plant closure>
North American Tire:
- Tyler, Texas (in the first quarter of 2008): Tire manufacturing facility
- Valleyfield, Quebec (second quarter of 2007): Tire manufacturing facility

European Union Tire:
-Washington, UK (2006): Passenger tire facility

Eastern Europe Tire
- Casablanca, Morocco (first quarter of 2007): Tire manufacturing business

Asia Pacific Tire:
-Upper Hutt, New Zealand (2006): Passenger tire facility

In September 2006, the Company has agreed to sell its global tire fabric operations to Hyosung Corporation, pending government and regulatory approvals. The transaction is also subject to certain closing conditions. The Company and its affiliates will receive approximately $80 million for their tire fabric manufacturing plants and assets, which include operations in Decatur, Alabama; Utica, New York; Americana, Brazil; and Colmar-Berg, Luxembourg, subject to post-closing adjustments. The facilities, which employ about 1,000 people, produce and treat fabric that is used in Goodyear's tires. In addition, Goodyear and Hyosung would, upon closing, sign a multi- year supply agreement. Goodyear anticipates purchases of approximately $350 million to $400 million in the first year. (From a press release by the company on Set. 7, 2006)


R&D Expenditure

At the year end (In millions US$) 2006 2005 2004 2003
R&D expenditure 329 365 364 339

New product development
In a dramatic move to lower trucking fleets' and owner-operators' total operating costs, the  Company introduced a new fuel-efficient commercial tire technology and three new tires for long-haul trucks at the Great American Trucking Show. The company's new Fuel Max Technology is focused on trucking's fuel and tire costs. The line includes new steer, drive and trailer tires and retreads for a complete "cradle-to-grave" tire system for trucking fleets and owner- operators. An 18-wheeler outfitted with tires featuring Fuel Max Technology could achieve up to 4 percent improved fuel economy. (From a press release by the company on Aug.24)

Investment Activities

Capital Expenditure
in millions US$ FY2006 FY2005 FY2004
North American Tire




European Union Tire 133 126 103
Eastern Europe, Middle East and Africa Tire  58 51 56
Latin American Tire  67 72 65
Asia Pacific Tire
70 70 66
Total Tires 576 556 466
Engineered Products 34 33 30
Total Segment Capital Expenditures 610 589 496
Corporate 61 45 33
Total 671 634 529