FINDLAY, Ohio (Oct. 21, 2008) — Cooper Tire & Rubber Co. likely will close one of its four U.S. tire plants as a result of soft demand for tires, said Pat Brown, Cooper's vice president, global branding and communications.
The Findlay-based tire maker has begun conducting a 90-day capacity study to review and analyze each of its U.S. plants as a result of lost market share in the U.S. Cooper reported it has more capacity than necessary to meet consumer demand for its tires.
“While any reduction in manufacturing footprint is difficult, if a decision is made to close a U.S. plant, Cooper Tire will be a stronger competitor and a more stable company for future success,” Cooper said in a media briefing. Cooper operates non-union tire plants in Albany, Ga., and Tupelo, Miss., and unionized plants in Texarkana, Ark., and Findlay, employing 5,000. Combined daily capacity is listed as 110,000 units.
When Cooper initiated strategic planning in 2007, it predicted a growth rate in replacement tire demand of 3 percent per year. According to the company, new forecasts indicate that the replacement tire market will decline 1-2 percent per year during the next three years.
The capacity study will look at things such as cost savings opportunity, cost of implementation, individual plant performance, quality and competitiveness, level of plant automation, plant flexibility, operational impact on the network and community impact among a number of other factors.
“Economic conditions, including demand for replacement tires, are certainly more difficult than when we initially developed the plan, and this has resulted in surplus capacity in our U.S. facilities,” Cooper CEO Roy Armes said. “Unfortunately this type of action has become a necessity.”
Mr. Armes added that the company has developed a “transparent process and will communicate openly with those who may be affected in either manufacturing or administrative positions.” Cooper said results of the study will be communicated as soon as its board of directors approves a new strategic plan.
In June, Cooper announced plans to invest $31 million in minority ownership in a tire plant in Guadalajara, Mexico, which Ms. Brown said has helped reduce some of the company's manufacturing costs.
“At the time our strategic plan was developed it was anticipated that we would need sourcing from lower cost countries to supplement our U.S. production and provide a balanced portfolio of cost competitive products,” she said. “Competition for tire sales in the U.S. market is intense and getting more severe as demand declines due to the economic downturn. Our Mexico operation is helping provide cost-competitive products that our dealers need in the U.S. market.”