The Goodyear Tire & Rubber Company has recently approved the planned closure of Goodyear Dunlop Tires Germany GmbH’s tyre manufacturing facility in Philippsburg, Germany that produces passenger car and light truck tyres.
The move is part of the company’s strategy to reduce excess capacity in declining, less profitable segments of the tyre market in order to focus more on the growing demand for premium, large-rim diameter tyres.
“Our strategy aims to increase Goodyear’s presence in the highly-complex and larger-size tyre segment, where above average rates of growth are being seen,” said Jean-Claude Kihn,” president of Goodyear’s Europe, Middle East and Africa region. “Our customers want more of our premium tyres in 17-inch and larger-rim diameter sizes. These are in strong demand from our original equipment customers today and will enter the aftermarket in the years to come.”
Goodyear expects to be substantially complete with this rationalisation plan by the end of 2017 and estimates total pre-tax charges associated with this action to be between US$240 million and US$280 million. The company expects to record US$116 million of pre-tax charges in the third quarter of 2016 and approximately US$20 million of pre-tax charges in the fourth quarter of 2016 associated with this plan. The majority of the remaining charges will be recorded in 2017.
Once completed, this action is expected to improve Europe, Middle East and Africa’s segment operating income by approximately US$20 million in 2018 and US$30 million on an annualised basis thereafter.
The proposed plan, which would result in approximately 890 job reductions at the Philippsburg plant, is still subject to consultations and negotiations with employee unions.“The plan to close our plant in Philippsburg is a difficult choice and we’re very conscious of the social responsibility we have for our workers,” states Jürgen Titz, Goodyear Dunlop’s group managing director DACH. “It is, for us, a matter of concern to find socially sustainable solutions for all affected employees and to offer them further appropriate assistance.”