AKRON — Goodyear is moving ahead with plans to make major investments to spur future growth in North America, Europe and Asia.
Included in its investment plan are modernization projects at the company´s Fayetteville, N.C., and Gadsden, Ala., tire plants and the possible addition of two new tire factories in Eastern Europe and Asia. Goodyear didn´t provide details on potential plant additions.
The Fayetteville and Gadsden factories also will receive investment incentives from local and state governments, the company said.
Overall, the tire maker is planning capital improvements in a number of existing tire facilities to increase high-end tire capacity by 40-percent globally and low-cost production capability by 33 percent. Goodyear hopes to have half of its global capacity in low-cost countries by 2012.
The firm will use the almost $1.5 billion it netted from the recent sale of its Engineered Products business to the Carlyle Group, a private equity firm, along with its successful equity offering in May, to pay for the projects, a company spokesman said.
In addition, the spokesman said Goodyear repaid $300 million in debt Aug. 16, saving about $26 million in annual interest, of which about $10 million will be saved this year. The company expects to pay off $650 million in debt in the first quarter of 2008 that was due in 2011.
"The key to our investment plans was the sale of Engineered Products and the successful equity offering," the spokesman said. Now that the sale is complete, he said, the firm can move ahead with its growth plans.
The firm expects to make an early repayment in the first quarter of 2008 of about $650 million in secured notes that are due in 2011.
The company´s plans are consistent with what it has been telling investors, according to Chairman and CEO Robert Keegan. It will continue to use a disciplined approach in allocating capital to high-return investments, he said.
The early repayments coupled with Goodyear´s $315 million redemption of senior notes in June will save the company more than $125 million in annual interest, Keegan said.
The tire maker said it is making significant progress in its Four Point Savings Plan, unveiled 18 months ago and revised upward to between $1.8 billion and $2 billion in savings by the end of 2009. Goodyear said it has netted nearly $750 million in cost savings, with more than $500 million coming from continuous improvement initiatives.