Goodyear kicks off major restructuring plan in US, expects significant returns

American Goodyear Tire & Rubber (Goodyear) is closely following a plan to restructure its operations to reduce low-value/high-cost capacity in the US and bring about improved business competitiveness, similar to a reorganisation program in Germany that is expected to generate an improvement in operating earnings by about US$60-US$70 million by 2022 and simultaneously eliminates up to 1,100 jobs at two factories in the country.

The current plan would add to another announced in early July 2019 to “modernise and improve operations and efficiency” at Goodyear’s Fayetteville plant in North Carolina. The plan is valued at more than US$180 million and includes incentives valued at US$30 million from the state, to expand the firm’s production of high-value tyres with rim diameters of 17 inches and above.

Meanwhile, in Germany, Goodyear is working to upgrade plants in Hanau and Fulda under its Goodyear Dunlop Tires Germany subsidiary, increasing annual capacities there for tyres with rim diameters of 17 inches and larger by 2.5 million while reducing capacity for smaller, less profitable tyres. Goodyear has allocated about US$125 million for the factory restructuring, but expects pre-tax charges associated with this plan to be at least US$135 million.The plants in Hanau and Fulda each has a capacity of 21,000 passenger/light truck tyres a day, and currently employs a total of 2,800 workers.

Goodyear’s Chief Financial Officer Darren Wells declined to go into specifics about the US plan during the firm’s second-quarter financial results conference call with financial analysts, but said that company officials “feel good about the track record we have, delivering these kinds of initiatives and the savings associated with them.”