AKRON — Goodyear has approved plans to modernize tire plants in Hanau and Fulda, Germany, over the coming two to three years to increase their capacities for larger rim-diameter consumer tires.
The plan, disclosed March 19 in an 8K filing with the U.S. Securities and Exchange Commission, will result in the elimination of about 1,000 jobs at the two factories due to efficiency gains related to the use of newer equipment and new plant layouts.
The plan is subject to consultation with relevant employee representative bodies, Goodyear said. The plants, operated by Goodyear Dunlop Tires Germany G.m.b.H., employ about 2,800 hourly workers now — 1,300 in Hanau in western Germany and 1,500 in Fulda in central Germany.
Goodyear is budgeting roughly $125 million for the factory restructuring, which will expand production of tires with 17-inch and larger rim diameter tires by 2.5 million tires a year. At the same time, capacity for smaller tires will be reduced.
“We are constantly working to meet the rapidly changing needs of our customers, recognize customers and respond to them,” Jürgen Titz, CEO of Goodyear Dunlop Tires Germany, said.
Goodyear said in the 8K filing that it estimates pre-tax charges associated with this plan to be at least $135 million, of which approximately $125 million is expected to be cash charges primarily for associate-related costs and approximately $10 million for non-cash charges primarily related to asset write-offs and accelerated depreciation.
The company said it expects to record approximately $90 million of these charges in the first quarter of 2019 and to make cash payments of approximately $30 million in 2020 and $40 million in 2021.
Once completed, Goodyear said these actions should yield cost savings that could improve segment operating income for the Europe, Middle East and Africa's segment by $60 million to $70 million a year over three years beginning in 2020.
Both the Hanau and Fulda plants are rated at 21,000 passenger and light truck tires a day.
The Hanau plant originally was a Dunlop Holdings factory that Goodyear has operated since the formation of its global alliance with Sumitomo Rubber Industries Ltd. in 1999.
The Fulda plant was operated independently by Gummiwerke Fulda G.m.b.H from its founding in 1900 until 1966 when Goodyear acquired it.
Goodyear has three other tire factories in Germany: in Wittlich (truck tires); Fuerstenwalde (passenger/light truck tires); and Riesa (passenger tires).
It closed another passenger tire plant, in Philippsburg, in mid-2017, a move that affected 890 workers at the 50-year-old plant.