AKRON (April 27) — Goodyear plans to slash as much as $2 billion in annual costs by 2009, doubling the original estimate of cost cuts originally laid out in 2005.
Chairman and CEO Robert Keegan said in the tire maker´s first-quarter earnings statement that the firm is targeting a savings goal of $1.8 billion to $2 billion by 2009.
Two years ago, Goodyear planned to cut between $750 million and $1 billion in costs by 2008. In 2006 the firm revised that figure, targeting more than $1 billion.
The new target of up to $2 billion includes the already planned cost cuts plus $300 million from the labor contract signed with the United Steelworkers as well as increased savings in its four categories, including continuous improvement such as Six Sigma and lean manufacturing, reductions in Goodyear´s manufacturing footprint, selling, administrative and general expenses, and increased Asian sourcing.
Keegan said the tire maker plans "significant investments" in both its production of high-value-added tires and its low-cost manufacturing capacity, which will make up half of the firm´s total capacity within five years.
Goodyear said it plans to increase production capacity for value-added tires by 40 percent over the next five years. The firm also plans to increase its production in low-cost countries by one-third to support growth in emerging markets.