Last year, I introduced a weekly series called “CEO Gaffe of the Week.” Having come across more than a handful of questionable executive decisions when compiling my list of the worst CEOs of 2011, I thought it could be a learning experience for all of us if I pointed out apparent gaffes as they occur. Trusting your investments begins with trusting the leadership at the top — and with leaders like these on your side, sometimes you don’t need enemies!
This week, I’ll be putting the CEO of tire maker Titan International Inc (NYSE:TWI) , Maurice “The Grizz” Taylor, on the hot seat.
The dunce cap
Foot in mouth disease, not to be confused with foot-and-mouth disease, sure does appear to be going around lately. Just a few weeks ago I highlighted the normally commendable co-CEO of Whole Foods Market, Inc. (NASDAQ:WFM), John Mackey, who put his foot in his mouth twice in a matter of days regarding his true thoughts on Obamacare as well as global warming. If anything, John Mackey should have taught other CEOs that just because you’re thinking it, doesn’t mean you should say it!
Titan International’s CEO, Maurice Taylor, didn’t get that memo.
Roughly two weeks ago, according to a report from Reuters, the French government approached the cash-rich CEO of Titan International to gauge its interest in potentially purchasing The Goodyear Tire & Rubber Company (NASDAQ:GT)‘s Amiens Nord plant in France, which is facing a shutdown. Taylor, understanding that France’s rigid hiring and firing policies and smaller 35-hour work week put it at a distinct disadvantage to larger European competitors — and also place it at a distinct disadvantage to cheap emerging market labor in India and China – decided he would pass on the offer.
But, rather than just saying “No,” thoughts began to flow from Taylor’s brain, down his arms, and into his fingers, and formed a rather dismissive email, which he sent to French minister Amand Montebourg. Some of the email excerpts read as follows:
The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three and work for three. … I told this to the French union workers to their faces. They told me that’s the French way! … How stupid do you think we are? … Titan is going to buy a Chinese tire company or an Indian one, pay less than one euro per hour wage and ship all the tires France needs. You can keep the so-called workers.
Again, just because you think it, doesn’t mean you should say it!
To the corner, Mr. Taylor
You know, even I can admit to throwing out a French war joke or two in my day, but “The Grizz” appears to have overstepped his bounds, and his mouth, with his comments.
Montebourg was quick to respond to Taylor’s disparaging comments by pointing out that France ranks as a leading investment destination for businesses, outranking India and China last year, and noted that tire manufacturer Michelin , which is based in France, is 20 times as large and 35 times as profitable as Titan, to really drive home what Titan would be missing by not investing in France.
From a business perspective, tire companies globally are struggling from a demand perspective as European sales are at decade lows and China’s growth has slowed. From a cost perspective, however, rubber prices are considerably off their highs, which should ultimately help improve margins.