Goodyear to charge rubber producers

Goodyear to charge rubber producers

BANGKOK (Dow Jones): Goodyear Tire and Rubber Co., the world's leading tire maker, recently sent a letter to its rubber suppliers indicating that they must assume responsibility for any damage caused by defective products made from low-quality raw material, Wate Thainugul, manager of the Thai Rubber Association, said on Thursday.

Goodyear sent the letter to inform all its rubber suppliers, including those in Thailand, Indonesia, Malaysia and Singapore, that it will charge a certain amount for any damage resulting from products manufactured from low quality natural rubber, Wate said. However, he declined to reveal the amount and conditions of the charge to be applied.

Goodyear's condition, however, is seen by rubber producers as a "unilateral measure," Wate said, adding that rubber producers have indicated that they are against such a measure.

"We already met and agreed that we won't accept (Goodyear's condition). We have sent Goodyear a letter to inform it of our stance of disagreeing with this measure," Wate said, referring to a recent meeting between Thailand, Indonesia, Malaysia and Singapore.

Wate said such a measure has never been applied to traditional transaction contracts and that no such measures have been implemented so far. He added that Goodyear said in the letter that it is imposing this additional requirement in a bid to help reduce the company's production costs.

Wate said rubber producers hope that Goodyear will understand their points. However, producers are still monitoring any reaction from Goodyear, Wate said.

An industry source said that U.S.-based Firestone/Bridgestone's recall of 6.5 million tires in August last year has indirectly encouraged Goodyear to impose such a measure. The source didn't elaborate, however.

Firestone/Bridgestone is a unit of Japan-based Bridgestone Corp.