Goodyear's Deal

Like many another U.S. businessman, Goodyear Tire & Rubber Co.'s Chairman Paul W. Litchfield was eager to start producing in Europe's prized hard-currency markets. The Netherlands was out of the question, since Litchfield's arch rival, Goodrich, already had a plant there. So was Belgium, which has two tire plants of its own. With the doleful expression of a jilted suitor, Rubberman Litchfield turned his eyes to the tiny (pop. 300,000) Grand Duchy of Luxembourg.

Since liberation, Luxembourg's sturdy little economy--closely linked with Belgium and The Netherlands--had bounced back faster than many of its bigger neighbors. Its man-hour productivity was one of the highest on the continent (citizens could hardly remember the last bad strike); its currency, like Belgium's, was freely convertible into dollars. Because trade barriers in the Benelux nations are being broken down, Goodyear could produce in Luxembourg and still sell in Belgium and The Netherlands. The job was to convince Luxembourg that it needed a U.S.-owned tire plant.

Litchfield's men mustered some powerful arguments. Goodyear, they said, was after no new markets; it simply wanted to sell tires in Europe for local currencies instead of dollars--and thus help conserve scarce continental dollars. Furthermore, they argued, a Goodyear plant would be healthy for the Benelux economy, giving a new source of employment. And local revenues would increase still further when Goodyear's plant started buying such Benelux raw materials as rubber from the Belgian Congo and the former Netherlands East Indies, and rayon and cotton cord from Belgium and The Netherlands. Another potent argument was the undisclosed sum Goodyear offered for a 45-acre site 18 miles north of Luxembourg City, the duchy's capital. The land belonged to Grand Duchess Charlotte herself. Last fall she agreed to sell.

In Akron last week, Chairman Litchfield announced that work had begun on a $5,000,000 tire factory on the duchess' old land. When finished, it will turn out some 600 tires a day, provide jobs for 500 Luxembourg workers.

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