Goodrich Plans to Shed More Assets : Carson Plant Layoffs Part of $500-Million Divestiture Program
B. F. Goodrich said Tuesday that it will shed more than $500 million in assets--including the shutdown of polyvinyl chloride manufacturing at its Carson plant--a move that will produce a $365-million charge against second-quarter earnings.
The company, which had hoped that its big expansion into chemicals and plastics would be rewarded in the marketplace, was finally forced to reorganize its operations as the demand for PVC, a key ingredient in making plastic, leveled off in recent years and prices for caustic soda and some other chemicals took a beating, analysts and Goodrich officials agreed.
The Akron, Ohio-based company’s profits in the first quarter of 1985 fell 77% from the same period last year, while sales were off 6.7% from the same period last year.
$22-Million Operating Loss
The tire maker, which had net income of $60.6 million on revenue of $3.4 billion in the year ended Dec. 31, 1984, intends to jettison assets that generated nearly 25% of the company’s revenue in 1984 but also produced an operating loss of about $22 million during the same period.
Most of the divestment will occur in the polyvinyl chloride and intermediates business.
The Carson plant, located at 2104 E. 223rd St., currently employs 115 workers. A spokesman for Goodrich’s chemical group said 53 of the Carson plant’s workers will lose their jobs. Those remaining will stay on to operate the compound facility where the PVC resin is made into a finished product for a wide range of applications including building materials, business machine parts and appliance component wiring.
The company also will sell its Convent, La., chemical plant, which makes chlorine, caustic soda and ethylene dichloride, as well as cutting its tire manufacturing business by one-fourth. No details on the cutbacks in tire making were disclosed immediately.
In addition, the company will write down the estimated value of its Winfield, Ala.-based Continental Conveyor & Equipment in order to sell it.
By trimming its assets and de-emphasizing the commodities aspect of its operations, B. F. Goodrich should emerge a stronger but substantially smaller company, experts say.
“They didn’t have the resources to compete in tires and chemicals,” said Bill Cornish, vice president of Duff & Phelps Inc., an investment house in Chicago. “It’s a radical change they’ve made, but we feel it was a necessary move.”