AKRONGoodyear plans to revamp its manufacturing assets in Europe over the coming 18 months, a move that includes cutting car tire production at a German plant and closing a retread and rubber-mixing plant in England.
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. Once completed, however, the company expects the changes to yield about $30 million in annual operating income improvements.
Specifically, Goodyear plans to:
c 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
c Phase out production of consumer tires at its Wittlich, Germany, plant and transfer this capacity to other EMEA plants.
Wittlichoriginally a Dunlop Holdings plant that became part of Goodyear's assets 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.
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 anticipated costs 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. In a statement released on June 25, Goodyear said the decision was in response to changing market conditions and to help strengthen the long-term competitiveness of the company.
The proposed actions, the company said, are needed to face challenging business environments, increased competition and currency headwinds. Goodyear last produced new tires at Wolverhampton in 2004.
Last year, Goodyear phased out motorsports tire manufacturing in Birmingham, England, and transferred production of race car tires to its plant in Hanau, Germanywhich 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.
European Rubber Journal, a United Kingdom-based sister publication of Tire Business, contributed to this article.