AKRON—Goodyear plans to ramp up production at its Danville, Va., plant, in the process bringing back laid-off employees and returning the operation to a continuous seven-day workweek.
The moves were spurred by improvement in the aviation and commercial truck tire markets, a company spokeswoman said.
The Danville plant had operated around the clock, seven days a week, but cut back production to a normal schedule of three shifts, five days a week in March 2009 because of the poor economy, she said.
Goodyear also trimmed the plant's work force by 400 around that time. Some employees were laid off while others took buyouts.
Many of those laid off are the ones being rehired, the spokeswoman said, although the total number has yet to be determined.
“We're calling them back as needed,” she said. “We're putting the plan together right now. It includes everything—the recall itself and the necessary training. Everything is currently in motion.”
The spokeswoman indicated it could take months to complete implementation of the plan.
Signs of improvement
Things have been on the upswing for Goodyear over the last several months, so much so that new President and CEO Richard Kramer said during a conference call with investors and analysts July 29 that the company plans to spend about $1 billion on capital improvements at its facilities during 2010.
“It was a more robust first-half recovery worldwide, particularly in North America and Europe,” he said.
Goodyear sees tire demand growing globally, and it will add production back, as it's doing in Danville, as needed during the year, he said.
Prior to Kramer's comments, the Akron-based tire manufacturer reported a second-quarter net profit of about $28 million compared with a $221 million loss in the like period last year, along with higher sales and increased tire volumes.
The firm's sales for the three-month period were $4.5 billion, up 15 percent from the 2009 quarter.
Goodyear had segment operating income of $219 million in the period, up from $24 million in the second quarter of 2009.
Compared to last year, second-quarter segment operating income reflects higher global demand, strong price and product mix performance, and various cost reductions, which for the year exceed $280 million.
A 10-percent increase in tire unit volume added $304 million in sales as a result of improved global demand, the company said.
Revenues also were positively affected by improved sales in other tire-related businesses, primarily third-party chemical sales in North America, and by improved price/mix, Goodyear said. Unfavorable foreign currency translation reduced sales by $37 million.
One key factor impacting second-quarter results was that volume growth was weighted more heavily toward original equipment tires, which reflects growing auto production that Goodyear contractually must supply, according to Darren Wells, Goodyear's executive vice president and chief financial officer.
“That hurt our chances to grow more in the replacement market,” he said.
North American Tire's second-quarter 2010 sales increased 21 percent from last year to $2 billion, reflecting a 13-percent increase in tire unit volume, improved price/mix and branded share gains in the consumer replacement business.
Europe, Middle East and Africa Tire's second-quarter sales rose 5 percent from last year to $1.5 billion while Latin American Tire's second-quarter sales increased 21 percent to $529 million.
Asia-Pacific Tire's second quarter sales increased 16 percent to $495 million because of a 9-percent jump in tire unit volume with strong replacement market volumes in China and India and favorable foreign currency translation.
For the first six months of 2010, Goodyear had a $19 million net loss, which was a major improvement over its $554 million loss in 2009's first half. Sales for the period were $8.8 billion, up 18 percent from a year earlier.
Kramer said raw material costs are a challenge and Goodyear continues to see an uncertain economy, but will remain focused on the “proven strategies that have enabled us to address these headwinds over time.”
The majority of raw material cost increases during the second quarter occurred in the Asia-Pacific and Latin America markets, which normally see price hikes first, Wells said.
North America and Europe likely will see higher raw material costs during the third quarter, he said.