AKRON (June 26, 2015) — Goodyear plans to revamp its manufacturing assets in Europe over the coming 18 months, a move that includes closing a retread and rubber mixing plant in England and cutting car tire production at a German plant.
Goodyear said the “rationalization” plans will result in up to 390 job losses and cost the company between $70 million and $80 million in associated charges in fiscal 2015 and 2016.
In a statement released on June 25, Goodyear said the decision was in response to “changing market conditions” and to help strengthen the company's long-term competitiveness of the company.
Once completed, however, the company expects the changes to yield about $30 million in annual operating income improvements.
Specifically, Goodyear plans to:
- Close its Wolverhampton, England, retreading and rubber mixing plant and transfer the production from there to other existing facilities in the company's Europe, Middle East and Africa (EMEA) business unit; and
- Phase out production of consumer tires at its Wittlich, Germany, plant and transfer this capacity to other EMEA plants.
Wittlich, originally a Dunlop Holdings plant that came to Goodyear via the global alliance with Sumitomo Rubber Industries Ltd., also makes truck tires and does retreading and has on site one of the firm's test tracks.
Truck tire retreading capacity was added in 2012, making it at that time one of just three corporate retreading venues in Europe. The others were in Riom, France, and Wolverhampton.
Goodyear said the job loss aspect of the plans “remain subject to consultation with relevant employee representative bodies.”
Goodyear said $55 million to $60 million of the expected costs likely will be cash charges related primarily to severance payments and contractual obligations, with $15 million to $20 million attributed to non-cash charges related to accelerated depreciation and other asset-related charges.
The company expects to record approximately $30 million of charges in the second quarter of 2015 and $10 million in the second half.
The proposed actions, said the company, are needed to face “challenging business environments, increased competition and currency headwinds.”
Last year, Goodyear phased out motorsports tire manufacturing in Birmingham, England, and transferred production of race car tires to its plant in Hanau, Germany — which produces ultra-high-performance tires and is the base of the main Dunlop European Technical center.
It also moved production of competition motorcycle tires to Montluçon, France, which makes both street and track two-wheeler tires.
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European Rubber Journal, a United Kingdom-based sister publication of Tire Business, contributed to this article.
