Goodyear plans to close its tire manufacturing plant in Tyler, Texas, as part of its previously announced strategy to stop supplying certain segments of the private label tire business.
The move comes as 15,000 United Steelworkers (USW) members remain on strike against 16 of the Akron-based tire maker's plants in the U.S. and Canada. No new formal contract talks have been scheduled between Goodyear and the USW.
The Tyler factory is one of eight U.S. tire plants the USW has been striking since Oct. 5. The Texas facility has estimated capacity of 25,000 passenger and light truck tires a day, according to the company.
Goodyear said the closing will eliminate about 1,100 jobs, save about $50 million a year after taxes and result in a restructuring charge of between $155 million and $165 million after tax.
The cash portion of the charges is estimated to be between $40 million and $50 million.
The closing will be timed to minimize the impact on Goodyear customers, said Jon Rich, president of Goodyear's North American Tire (NAT) unit.
The United Steelworkers union reacted strongly to Goodyear's announcement.
``How do you talk about saving American manufacturing and at the same time close another facility?'' asked Tom Conway, a USW vice president who is serving as union chairman in the negotiations with Goodyear, referring to a recent letter Mr. Rich sent to Goodyear employees. ``How can this company make claims that cheap imports are hurting them when the truth is they are intent on abandoning their markets and refusing to stand and fight for their market and the business?''
When the company announced in June it would cut back its private label tire business, it said that correlating capacity reductions in North America would be based on plant performance, capabilities, cost savings opportunity and the focus on serving customers for its NAT business.
The Tyler plant mainly manufactures small-diameter passenger tires, a segment Goodyear said is under pressure from low-cost imports. The company earlier announced it planned to reduce costs by more than $1 billion by 2008, including reduction in high-cost tire manufacturing capacity.
Goodyear said it remains committed to manufacturing in the U.S. but must stay on equal footing with its competitors to do so, according to Mr. Rich.
In an Oct. 20 letter to Goodyear employees, Mr. Rich said the company's goal is to obtain a fair contract for all stakeholders that enhances its competitive global position.
``The global nature of our competition is such that we must change to survive and prosper,'' he said. ``That's why I assure you that we will not agree to a deal that puts Goodyear at a cost or competitive disadvantage.''
A USW spokesman said the union has done more than its share to be fair, including taking concessions in the 2003 master contract negotiations that resulted in the closure of the company's Huntsville, Ala., tire plant.
``A contract that's fair to all its stakeholders? Hasn't everyone but our members benefited from the turnaround since 2003?'' he asked.
``Despite the innovations we brought to the table then and the sacrifices we made, the company is demanding more closures and more concessions,'' the spokesman said.
Mr. Rich said Goodyear is ``trying to save American manufacturing.''
``Industries such as textiles, steel and electronics-once staples of our economy-have all but vanished from our shores,'' he said.
``We refuse to give up on American manufacturing because we are committed to manufacturing successfully right here. We will not allow Goodyear to simply be a statistic-the latest once-great U.S. company that abandoned the American worker. We will not let that happen.''
The union spokesman said the USW was very involved in the most recent restructuring of the steel industry, which is currently quite healthy-not ``vanished from our shores.''
He also wondered how Mr. Rich can talk about saving American manufacturing when the company is looking to close plants and downsize domestic production.
Mr. Rich said it seemed ironic that the union members who are trying to defend American manufacturing are walking the picket line, while fellow Steelworkers are on the job at Goodyear's foreign competitors, trying to ``take our business from our customers.''
Mr. Rich noted layoffs and closures announced or completed this year at facilities run by competitors Bridgestone/Firestone, Continental Tire North America Inc. and Michelin North America Inc.-though he didn't mention the companies by name.
The USW spokesman said the plant closures listed notably omitted the 2003 Huntsville shutdown.
``Goodyear was the first to move to reduce domestic capacity,'' he said.