AKRON—Goodyear didn´t waste any time in naming a plant where it will reduce tire-building capacity in addition to its Tyler, Texas, facility.
The company announced Jan. 4 it will discontinue tire production at its Valleyfield, Quebec, plant, where it makes radial passenger and light truck tires. The plan is to turn the 43-year-old site into a materials mixing center by the end of the second quarter.
There are about 1,000 hourly and salaried employees in Valleyfield; the mixing center is expected to house about 200 people, Goodyear said. The estimated production capacity at the plant is 24,000 units per day.
The capacity and labor reduction at the Quebec facility is related to Goodyear´s global objective to reduce excess high-cost tire manufacturing capacity. Meeting that goal also was the impetus for the impending closure of the Tyler plant, which was announced in October.
Through master contract negotiations with the United Steelworkers, the closing in Tyler was pushed back to sometime in 2008 from mid-2007. However, the contract agreement also called for Goodyear to close or reduce tire capacity at a second plant to prove the company´s need to cut capacity and not just to close USW-represented facilities, the union said.
The company´s Valleyfield announcement came only a week after the master contract covering more than 12,000 workers at 12 U.S. tire and rubber product factories was ratified, ending an 86-day strike at those sites. About 400 workers at four Canadian plants — not including Valleyfield — approved separate contracts, putting them back to work as well.
An irony of the Valleyfield closure is that the production workers there are unionized, just not by the USW. More than 800 workers are represented by the Canadian labor union Syndicat Canadien des Communications, de l´Energie et du Papier. The workers were once with the United Rubber Workers-now part of the USW-but left in the mid-1980s.
The USW does represent a group of 60 or so technical and office workers in Valleyfield, a USW spokesman said. That local struck Goodyear in June 2000.
Jon Rich, president of Goodyear´s North American Tire business, said in the current global, competitive business environment, difficult choices like the Valleyfield reduction have to be made. But while it is a necessary step, it doesn´t reflect on the commitment or performance of the Valleyfield work force, he said.
The USW spokesman said the decision was "another example of Goodyear´s choosing not to invest enough in its North American plants." That was one of the primary reasons for the strike, he said, and while the USW did bargain for Goodyear to reduce capacity at a non-USW plant, it did not negotiate for it to be the Valleyfield site.
The tire production shutdown will slice the company´s high-cost manufacturing capacity by about 7 million units, according to Goodyear. Along with the 9 million units which will be eliminated when the Tyler facility closes, the total reductions under the tire maker´s cost savings plan has reached 21 million units, which exceeds the firm´s goal of cutting 15 million to 20 million units of high-cost capacity by 2008.
The Valleyfield reduction is expected to save $40 million annually. Combined with plant closures in Tyler — which is projected to save $50 million per year — New Zealand and the United Kingdom, Goodyear will save $125 million annually, falling into its goal range of $100 million to $150 million, the company said.
However, the discontinuation of tire operations also will result in total charges between $115 million and $120 million — between $165 and $170 million after taxes — for restructuring and accelerated depreciation, with between $40 million and $45 million in cash.