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Goodyear CEO explains venture into sustainable tires

Yahoo Finance's Brian Sozzi discusses Goodyear's push into sustainable tires with The Goodyear Tire & Rubber Company CEO Rich Kramer.

Video transcript

BRIAN SOZZI: All right. Joining me now is Goodyear chairman and CEO Rich Kramer. Rich, always good to see you. You're not coming to us from the blimp, right? Just be sure.

RICH KRAMER: I wish I was, but I'm coming to you from CES.

BRIAN SOZZI: OK. All right. You're at CES, and you're bringing some really interesting technology. I can't say, I'm surprised. I know you're always working on some cool things a Goodyear. The sustainable tire, what is this?

RICH KRAMER: So Brian, you're right. And it's great to be with you, by the way. We did. We have two announcements here, one being a tire made out of 90% sustainable materials. And this is something we're really proud of relative to our goal of getting to zero greenhouse gas emissions down the road and helping the industry.

You know, Brian, what you know from the last time we talked we had a tire at 70% sustainable materials. Now, we're at 90% and we're proud of this. What we continue to do is really focus on taking more petro chems out of the tire, replacing them with biomaterials and other materials that will allow us to recycle the tire more. And we're doing that not giving up any performance and, in particular, around rolling resistance, which gives you better fuel mileage, whether you're in an ICE vehicle or you're getting range out of an EV vehicle.

So more sustainable, no takeaway of performance. And we're the first company to get to that 90% level.

BRIAN SOZZI: All right. So two ingredients-- I'll call them ingredients. I don't know what else to call them, Rich. I'll call two ingredients that stood out to me on this tire. You're using soybean oil and rice husk waste. Why those two elements in the tire? And you mean to tell me there a tire will not wear out faster because you're using those products?

RICH KRAMER: Well, you know, Brian, you're exactly correct. So, so those two materials-- really, really got to give credit to the team for coming up with this. One, both of those actually don't degrade performance at all. They actually increase it. In fact, as we look at soybean oil, it makes the tire more pliable in cold conditions, that gives it more grip.

And on rice husk ash, we use it as a place of petro-based silica. And what that does for us is actually improves rolling resistance on the tread. So this is a way of actually moving to those bio-based materials that I said and not giving up any performance and, in fact, in many cases, enhancing performance.

BRIAN SOZZI: Why is a product like this so important to a company like Goodyear and its future?

RICH KRAMER: Well, for us, I think, number one, it's the right thing to do as we think about the sustainability goals that we and our customers have. Secondly, it's what our customers are asking for. As you well know, we have scope one, scope two, scope three goals that we have to achieve. And bringing a sustainable tire to our customers helps them achieve those. That's really important to us.

And then when we add features like intelligence to it and our service proposition, we can bring a whole different set of solutions to customers, as we think about the mobility trends that we see going forward around fleets, autonomous connected, and electric vehicles.

BRIAN SOZZI: How difficult is it to scale a product like this up?

RICH KRAMER: So Brian, it's actually a great question. And it is harder to scale because we're talking about a whole new complement of materials coming in, which means having to build a supply chain to be able to do that. And it's why having the right partners to collaborate with to get us those materials is so important. We're on the front end of that. But this is something that's going to continue to evolve.

But Brian, I want to tell you, this is not something that's just an idea that we have. While the 90% material is a demonstration tire, which, by the way, passes all department of transportation requirements, the 70% tire, the tire made out of 70% sustainable materials, you can actually go on our website and buy right now. So we're trying to bring this to life even as that supply chain matures to make sure that we're not just putting prototypes out but actually bringing this to market.

BRIAN SOZZI: When will I be able to-- when will I be able to see a 100% sustainable tire from a Goodyear? And what would be in that tire that's not in this one?

RICH KRAMER: So our goal is, by 2030, to have a tire made out of 100% sustainable materials. Again, I'm going to give hats off to my team for their ingenuity, for their tenacity to get us to 90% today. And I'll certainly Thank the collaboration we've had with our suppliers.

I would tell you that other 10% is going to come from, again, replacing certain of the materials that we have to make sure we can get the performance we want. And it's ultimately going to rely on the collaborations with some of our partners to come up with some of the inventions that we need to replace that last 10%. But I'm confident that we're going to get there. I'm 100% sure we're going to get there.

BRIAN SOZZI: I-- we focus a lot on jobs and reskilling the workforce at Yahoo Finance, Rich. And this seems like a real opportunity to upskill a lot of your workers. Would you agree with that?

RICH KRAMER: I would agree with that. And I would say, not only upskill, but I would say what we've seen is real purpose to those working on projects like this. So instead of just getting a tire, giving us a new size or maybe a different tire one of our customer might ask for, this is really working on a social problem and environmental problem that we have. So not only upskilling but giving our associates perfect purpose to solve a bigger problem is something that we've seen. The excitement internally is palpable.

BRIAN SOZZI: One big problem for manufacturers continues to be is inflation, Rich. Have you seen any peak in your business, any slowing growth rates, and anything that goes into a tire at this point?

RICH KRAMER: Well, I would tell you, as you well know, the markets, particularly in Europe, are still giving us a lot of headwinds. The markets have been down as we went into the last months of the year. And we've still seen those high costs around some transportation, around labor, and around energy, certainly in Europe.

But I would also say we're starting to see some of those raw material costs roll over. So as we get into the first half of 2023, we'll still see some of those headwinds coming. But Brian, I would tell you, as we look to the second half and as we look to some of those costs rolling over and we look to the economy perhaps picking up some more steam back then, we're pretty confident about the second half of the year.

BRIAN SOZZI: One of my friends, Rich, knew I was coming to talk to you, and they recently had a blowout in the tire. It wasn't a good year. So that's a good thing. But they spent four hours to get one tire. I mean, the pricing has gone up a lot. And the economy continues to slow. Do you see consumers balking a little bit, maybe pushing it to the limit on what tires-- you know, how far they should even have these tires left on the cars, given their financial standings and the pricing of some of these products?

RICH KRAMER: Well, Brian, I would tell you two things. You know, one of the things is that, given the retail outlets that we have and our partners out there, we look very closely at treadwear as we take tires off, as they get replaced. And I would tell you, we're not seeing treadwear going down to levels beyond what is normal. And that tells me that consumers are still in the mode of changing tires at a normal cycle. That's a really good thing.

And yes, tire pricing has gone up. But that's also because, as we said earlier, those input costs have gone up so dramatically. And the way that we deal with that, and I'll go back to one of the reasons that-- one of the benefits that we got from doing the Cooper Tire acquisition, is we have a whole lineup of tires at different price points for different segments that allow the consumer to meet the needs that they have. And I think that's actually one of the benefits that we got from that deal as well.

BRIAN SOZZI: Do you still-- do you think you have the opportunity to push through some more price here?

RICH KRAMER: You know, I think as we look at what our input costs are, it's something that we have to do and it's something that we'll continue to consider. So yes, I do think it's something that we're paying very close attention to.

BRIAN SOZZI: All right, let's leave it there. Rich Kramer, Goodyear Tire chairman and CEO, always good to see you. We'll talk to you soon. Enjoy the rest of the CES.

RICH KRAMER: Thank you, Brian. Take care.