AKRON — Citing an "uncertain" near-term economic outlook and a "significantly weaker" industry backdrop, Goodyear is planning to trim its global salaried workforce by about 5%, or 500 jobs, by mid-year.
"Our fourth-quarter results fell short of our expectations given a significantly weaker industry backdrop, particularly in Europe," Richard Kramer, chairman, chief executive officer and president, said.
"While our businesses have performed at a high level through the volatility of the past several years, the uncertain near-term macroeconomic outlook and continuing impacts of inflation make these difficult actions necessary to position our business for future success."
Global replacement tire industry demand remained weak in the fourth quarter, Goodyear said, led by a 12% decline in the Europe/Middle East/Africa (EMEA) business areas.
When coupled with the impacts of inflation — including significant increases in energy costs — Goodyear said it expects the EMEA business unit to report a fourth-quarter segment operating loss of approximately $80 million, the first such negative result since the second quarter of 2020.
While raw material and certain other input costs have declined recently, the company said it is exploring ways to drive efficiencies to help offset inflation in other areas like wages and benefits.
This "rationalization and reorganization" initiative is expected to be completed during the first and second quarters with a portion in international businesses subject to required consultation with relevant stakeholders.
Earlier, Goodyear disclosed plans to reduce production at plants throughout Europe by about 10 days during the fourth quarter to address "softer demand" and prevent the build-up of excess inventory.
These actions are in addition to cost synergies related to the integration of Cooper Tire.
The company said it expects to record pre-tax charges associated with these actions of approximately $55 million, primarily relating to cash severance payments that are expected to be paid substantially during the first half of the year.
The actions will result in a quarterly run-rate benefit of approximately $15 million beginning in the second quarter. Savings in the first quarter are expected to be $5 million.
These actions are in addition to Goodyear's plans to close the Cooper Tire Melksham, England, tire plant and exit the TrenTyre retail operations in South Africa to support EMEA's overall competitiveness.
The company will report its fiscal 2022 financial results on Feb. 8 after the close of financial markets.
