MIAMI BEACH (Feb. 4, 2009)—Goodyear is curtailing manufacturing at several of its international plants, broadening by more than 50 percent a series of production cutbacks in North America announced recently in response to weak demand.
The newly announced cutbacks, at as-yet undisclosed plants in Asia and Latin America, will raise to nearly 17 million units the amount of annual production cuts the company is scheduling this year, according to Darren Wells, executive vice president and chief financial officer.
“It is widely known that the economic slowdown is having a considerable impact on consumer demand and industry volume," Wells said. "Fourth quarter industry volumes were well below expected levels, prompting a significant increase to our production cuts that now extend across all business units."
Goodyear's plans for a series of partial shutdowns through March at its North American tire plants comprise about 11 million units of production, the firm said. The cuts will help the company reduce inventory levels.
Goodyear also continues to deal with high raw material costs, which Wells said were roughly 13 percent higher last year than in 2007 and should keep rising throughout the first quarter before peaking. Much of the increase came in the fourth quarter, which was up more than 25 percent.
Goodyear said North American consumer replacement shipments fell about 3.5 percent last year from 2007 with OE shipments down 22 percent. Commercial tire replacement and OE shipments were down 11 and 18.5 percent, respectively.