Goodyear to Shutter Plants in Restructuring
Goodyear Tire & Rubber Co. said Friday that it would close an undisclosed number of plants as part of a sweeping restructuring aimed at improving its North American tire business and saving as much as $1 billion in the next three years.
The Akron, Ohio-based company, the world’s largest tire maker, did not say how many jobs would be affected, how many plants would be closed or their locations. But it did say it would focus the cuts on high-cost plants and increase sourcing from Asia as it seeks other ways to boost productivity while introducing new products.
Shares of Goodyear climbed 50 cents to $15.50.
Goodyear said it planned to cut high-cost capacity between 8% and 12%, generating annual savings of $100 million to $150 million.
The company also said it would record restructuring charges of $150 million to $250 million over the next three years. The company said it was targeting total cost cuts of $750 million to $1 billion by 2008.
“Our turnaround is on track and will continue to evolve,” Robert J. Keegan, Goodyear chairman and chief executive, said in New York, where he and other Goodyear leaders were having the company’s first investor meeting in 2 1/2 years.
“Today it’s clear our asset profitability in North America is not where it needs to be. Our goal is to have every factory earning an acceptable return,” said Jonathan Rich, president of Goodyear North American Tire.
He described a need to create high-margin products quickly and move some tire production to other countries.
“Today we import about 10% of our product needs and this will grow as we increase production of high-margin products in North America,” Rich said.
Rich said Goodyear would identify its underperforming product lines and fix or eliminate those that didn’t fit its strategy. Underperforming plants would be closed, he said.
Goodyear added that it was moving ahead with plans to sell noncore assets and reinvest the proceeds in the company. On Tuesday, Goodyear said it was mulling over the sale of its engineered products business to focus on its tire operations.
