Titan International (TWI) has no interest in buying a French tire factory with its lazy-assed union employees, particularly since it can pay workers in China and India less than one Euro an hour for massive productivity. Such was the take-home message of the letter Titan Chairman and CEO Maurice Taylor wrote to the French Minister of Industry. It makes for truly unusual reading on The Wall Street Journal’s “Corporate Intelligence” blog.
Since we can’t recall ever seeing a CEO so proudly point out the more questionable aspects of both unions and corporate America’s expansion goals, we had to ask: how well is that philosophy working for Titan?
Quite well, actually. Titan makes very expensive tires, mainly the kind used on tractors, bulldozers and other farm, mining and construction equipment. Taylor led a leveraged buyout of the company some thirteen years ago before taking it public in 2003. Partly through acquisitions, the company has doubled revenues in the past year, and it now has a market cap of $1.12 billion.
Taylor runs a very tight ship, usually posting some of the best profit margins in the business. Here’s how Titan’s operating margins stack up against Goodyear Tire & Rubber (GT) and Cooper Tire & Rubber Co. (CTB).
The company’s SG&A expenses are a tiny portion of sales, about 6.65%. That’s about on par with Cooper but half as much as Goodyear.
And lately, shareholders have had every reason to like Titan. Its share price is up some 36% in the past three months, as seen in a stock chart. The construction and agriculture sectors Titan services remain strong. (Although not so much in mining.) The vast majority of analysts that follow the shares recommend them.
Comments on the WSJ blog post show that Taylor is catching some flack for the lack of civility in his letter, although it looks like he’s getting at least as much praise for that. Cordiality, apparently, is not always a prerequisite for running a company well.
Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at firstname.lastname@example.org.
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