AKRON-Goodyear plans to close a high-cost tire plant in England, cease bicycle tire production at a factory in Poland and make cuts at other business units as part of its three-year plan to reduce expenses globally.
The moves will eliminate about 1,500 jobs globally, or 2 percent of its work force.
Goodyear said it is meeting with union representatives in preparation to close the Goodyear Dunlop Tyres UK passenger tire facility in Washington, England, an action it said will save the firm about $20 million annually and result in charges of between $75 million and $85 million before taxes. It estimated the cash portion of the charge at between $35 million and $40 million.
The closure will eliminate about 12,000 tires a day from Goodyear´s overall production, a spokesman said.
The Washington facility, which employs about 650, is the only plant closing Goodyear is making at this point, he said. Goodyear acquired the 36-year-old factory from Sumitomo Rubber Industries Ltd. in 1999, the company´s largest facility in the United Kingdom.
Goodyear´s decision to ax the bicycle tire and inner tube operation at its Debica, Poland, factory, will cost 360 people their jobs. The firm also is taking cost-reduction actions in logistics, retail and administration at its European Union, Asia Pacific and Engineered Products business units, the official said.
When all these actions are completed, the company expects to save between $40 million and $50 million before taxes and take a charge of between $105 million and $115 million.
Of the charge, about $55 million before taxes will be recognized in the first and second quarters of 2006. The firm estimated the cash portion of the charges at between $60 million and $65 million.
John Murphy, an analyst with Merrill Lynch, said the moves are a step in the right direction. He said he didn´t expect the company to realize savings until the second half of this year.
In a three-year cost reduction plan unveiled Sept. 23, Goodyear said it intended to close some factories and source more production to Asia to slash high-cost manufacturing capacity by 8-12 percent.
Goodyear figures it can save about $100 million to $150 million annually by trimming factories, reducing its cost structure, increasing Asian sourcing, improving production, accelerating the introduction of consumer-driven new tires and generating capital to support further investment in the firm´s core tire business.
The company said it will continue to evaluate its business portfolio and anticipates selling off more non-core pieces and investing the proceeds in its core operation.
Goodyear placed its Engineered Products business on the market Sept. 21, and the unit is still on the selling block. After unloading its Wingtack adhesive resins business and its rubber plantation in Indonesia in 2005, it sold its North American farm tire business to Titan International Inc. on Dec. 28.