NASHVILLE, Tenn.-Bridgestone/Firestone said it may close its 37-year-old Oklahoma City plant by year-end, but both the tire maker and the United Steelworkers have pledged to negotiate the plan.
BFS has advised the union that it may close the plant on or about Dec. 31. Global market forces have made it "extremely difficult, if not impossible," to make the plant competitive once again, even with "significant" capital investments, the Nashville-based tire maker said in a statement April 28.
"In general, the tire industry in the United States is facing a number of serious economic issues," said Steve Brooks, vice president of manufacturing operations for BFS. "Significant among them is fierce competition from low-cost producing countries, which has made it very difficult for U.S.-based production facilities to manufacture tires at a profit."
The USW said it will begin talks with the tire maker as soon as possible. The union´s current contract with Bridgestone/Firestone prohibits plant closures, but the pact expires in July.
The Oklahoma City plant, BFS said, makes tires at the low end of the market, where competition is particularly intense. The plant began production in 1969 and produces radial passenger and light truck tires. The plant has a capacity of 43,500 units per day. That capacity makes Oklahoma City one of Bridgestone/Firestone´s largest plants in the U.S., along with non-union Wilson, N.C.
The facility employs more than 1,420 workers plus some contract and inactive workers for a total of about 1,600, a spokeswoman said. More than 1,200 are USW members.
The USW believes the site may be used for other tire production and intends "to explore every possible option," said Ron Hoover, USW executive vice president and head of the union´s Rubber/Plastic Industry Conference.
"We recognize that the long-term demand for the Oklahoma City product line is shrinking and that the competition of imports is vicious," Hoover said. "With the company´s plan to build a new aircraft tire facility in the U.S., I expect them to consider Oklahoma City as a location and to recognize that it has an experienced work force at Local 998."
Following the announcement, Bridgestone Corp. downgraded its first-half 2006 earnings forecast about 9 percent because of expected costs associated with the pending closing of the tire plant and a weakening yen.
The tire maker said it expects costs associated with closing the Oklahoma City plant to result in a loss of $170 million this year, $140 million of which will be booked during the first half. This loss will reduce net income in the first half by about $26.5 million.
Sales, on the other hand, are expected to grow this year more than previously forecast thanks to "robust" demand globally, the firm said. First-half sales are expected to hit $12.6 billion, 13.8 percent ahead of the 2005 performance and nearly 3 percent better than previously predicted.
Operating profit is expected to come in at $680 million, 10 percent better than forecast but 16.3 percent lower than the first-half 2005 performance.
Tokyo-based Bridgestone made the forecast adjustments in its first-quarter earnings release.