Goodyear Weighs Closing Tire Plant

Goodyear Tire & Rubber Co. is considering closing an Alabama tire plant and laying off as many as 2,400 workers at other plants in 10 states as well as other options to meet its goal of saving $1.1 billion over the next three years, company officials said Monday.

A three-year contract approved last week by Goodyear employees gives the company the option to cut jobs if production and cost-cutting goals aren’t met. Those goals have not been determined.

“We’re not announcing closure of any plants today, but we obviously have the option to do so,” Chief Executive Robert Keegan said.

Goodyear executives said the company could cut as many as 15%, or 2,400, of the roughly 16,000 jobs at 14 plants in Ohio, Virginia, North Carolina, Illinois, Alabama, Nebraska, Wisconsin, New York, Kansas, Texas and Tennessee.

The contract also allows closure of the Dunlop tire facility in Huntsville, Ala., which employs about 1,300 people and is Goodyear’s most expensive plant to operate.

Jonathan Rich, president of the North American Tire division, said no decisions have been made about closures or layoffs. “When we make those decisions, we’ll let people know,” he said.

Cutting 500 workers from the payroll would save Goodyear about $40 million annually, Keegan said.

Steelworkers of America spokesman Wayne Ranick said it’s a positive that Goodyear agreed to protect at least 85% of its North American jobs.

Workers realize that sacrifices must be made to ensure a stable financial future for Goodyear, he said.

“There’s also going to be a lot of reductions in terms of management salaried positions,” Ranick said.

Goodyear eliminated about 700 salaried positions this year, the majority of them at its Akron headquarters.

The union and company executives praised their cooperation to develop production goals, including more efficient ways to make tires.

“We realize the challenges of global competition,” Ranick said. “A lot of times folks on the floor know as much as anybody, and often more than the supervisor on the floor.”

The contract, which Goodyear hopes will serve as a model for the rubber industry, also requires employees and retirees to pay more for health insurance and promises that Goodyear will refinance its debt.

Goodyear has promised to pay workers $1,000 each and retirees $500 each if the company does not follow through on the refinancing, executives said.

Rich said Goodyear appreciates workers’ sacrificing raises and agreeing to higher health insurance premiums and prescription co-payments.

Goodyear lost $236.9 million, or $1.35 a share, for the first half of the year. Goodyear’s turnaround plan includes reducing costs by $1 billion to $1.5 billion by the end of 2005 and possibly selling some of its non-tire businesses.

Goodyear shares fell 57 cents, or 7.1%, to $7.47 on the New York Stock Exchange.