OSAKA, Japan—Toyo Tire & Rubber Co. Ltd., facing a net loss for the fourth time in six years, will try to cut costs by about $100 million the next two years by reducing employment, cutting wages, divesting unprofitable businesses and trimming back capital investments. Toyo's bottom line may fall as much as $50 million into the red for the year ending March 31, the company said, contrasting sharply with earlier earnings forecasts. Toyo also scaled back its sales forecast by 2 percent to about $2 billion.
Toyo expects the cost-cutting measures to help it return to the black by next year and increase pre-tax earnings to $45 million by fiscal 2001.
The cutbacks primarily will affect the company's domestic non-tire businesses, and therefore will have little if any effect on the activities of Toyo Tire (U.S.A.) Inc., said Earl Knoper, senior vice president, marketing, for the U.S. subsidiary.
``The tire division overall is profitable, and we [Toyo U.S.] have been charged with increasing our business dramatically,'' Mr. Knoper said.
Toyo intends to cut 1,500 jobs—representing 21 percent of its rank-and-file staff—by early 2002 through a freeze on new employment and an accelerated early retirement plan. Concurrently, Toyo has been negotiating wage cuts with its labor unions.
In addition, Toyo will restructure several activities, including seeking a partnership or other alliance for its automotive parts business and divesting its rubber coated textiles business. As a result, the company will restructure into three business units: one for tires, one for automotive parts and one for the remaining diversified activities.
Other cost reduction measures the company is planning include: cutting capital investments by about 75 percent each of the next two years; selling idle facilities; shrinking administrative management; withdrawing from motorsports; and reducing advertising.
These measures apply almost exclusively to the firm's Japanese activities, Mr. Knoper said. Toyo Tire (U.S.A.) will continue to use motorsports as part of its promotional thrust.