AKRON (May 15, 2015) — Goodyear's decision two years ago to exit the farm tire business in Europe will result in about $320 million in associated costs, vs. cost savings of about $75 million, the tire maker reported in its first quarter 10-Q filing with the Securities and Exchange Commission.
Goodyear said in the filing it is in the process of dismantling the Amiens, France, plant that was the primary center of agricultural tire production in Europe. Production ceased there in the first quarter of 2014. The company phased out all remaining farm tire production in Europe in the fourth quarter.
The Akron-based tire maker said additional costs related to the dismantling process and revised estimates for certain associate-related costs have pushed the expected total net charges to about $320 million — approximately $240 million after taxes and minority interest. Of this amount, roughly $290 million has been recorded through March 31, 2015.
The remaining charges are expected to be recognized in 2015, the firm said, with $100 million of the expected net charges relating to future cash payments, primarily for employee wages and benefits and plant dismantling.
Goodyear also said a group of about 800 employees who worked at the plant prior to its closings continue to pursue legal action against the company for lost wages and benefits. They are seeking claims totaling $115 million, Goodyear said, claiming they were “dismissed without prejudice.”
Goodyear said in the filing it released about 100 employees during the quarter and that about 100 remain at the plant but will be released under the terms of the rationalization plan.
The company originally put its farm tire business in Europea and the Middle East up for sale in 2009 and then decided in January 2013 to exit the business and close the Amiens plant after failing to obtain a qualified offer for the business.