All American Pipeline

In: Business and Management

Submitted By nizami
Words 6282
Pages 26
Harvard Business School

9-292-040
September 13, 1991

The All American Pipeline
In late 1984, The Goodyear Tire and Rubber Company faced the likely prospect that within several months it would receive some of the crucial permits it needed to begin construction on the All American Pipeline, which was projected to be the longest crude oil pipeline in the United States. Goodyear needed to place orders with pipe manufacturers immediately so it could begin construction as soon as the permits were granted, and meet the company's goal of starting operations in the first quarter of 1987. These orders would represent the first significant sum of money committed to the project, which was larger than any other in Goodyear's 86-year history. The pipeline was projected to cost as much as $2 billion, with pipe representing the project's single largest component.

The Goodyear Tire and Rubber Company
Goodyear was the largest tire producer in the world. In 1983 the company had revenues of $9.7 billion and net income of $305 million. See Exhibits 1 and 2 for Goodyear's income statements and balance sheets. Tires and related transportation products accounted for 75% of both revenue and assets and approximately 70% of operating income. Goodyear held 22% of the worldwide market in tires, followed by Michelin with 18%, and Firestone with 10%. However, Goodyear's market position varied widely geographically. In North America the company held the lead with a 29% share, followed by Firestone with 17%. In Europe, however, Goodyear's 14% share trailed far behind Michelin's 42%, and in Japan, Goodyear held only 1% of the market. In addition to tires and related transportation products, Goodyear manufactured a wide range of metal, rubber, plastic, chemical, and high technology products for the transportation, aerospace, defense, and nuclear energy industries, as well as several…...

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