AKRON (April 7, 2009)—Goodyear plans to cut 5,000 from its work force and reduce its cost structure another $700 million by the end of 2009 with the implementation of several cost-cutting measures.
President and CEO Robert J. Keegan said at the company's 2009 annual shareholder meeting April 7 that the tire maker has raised its four-point cost savings plan to $2.5 billion. It has trimmed $1.8 billion from its cost structure since the plan was put in place in 2005.
Keegan said Goodyear will meet its target by cutting its work force by bringing total lay offs to 9,000 since mid-2008; implementing a global freeze on salaries; lowering its manufacturing costs through shortened work weeks, fewer manufacturing personnel and reduced third-party sourcing; increasing its lean manufacturing and Six Sigma processes; eliminating non-essential spending; and continuing to close underperforming retail stores.
To date, the company has cut more than 5 percent of its work force, or almost 4,000, he said.
In addition, he said, “we are aligning our manufacturing capacity with lower industry demand. We plan to reduce capacity by an additional 15 million to 25 million units over the next two years.”
Keegan also noted that Goodyear will continue to be aggressive as it focuses on managing for cash in 2009. “We are implementing targeted inventory reductions made possible by significant improvements in our supply chain,” he said. “We anticipate these reductions will reach more than $500 million, or approximately 14 percent of inventory.
“We also are adjusting our capital expenditure plan and now expect spending of between $700 million and $800 million in 2009.”