AKRON (Aug. 6, 2012)—In line with lower sales volumes in the second quarter, Goodyear cut production worldwide by 5 million units and expects to cut output further in the second half, the company said in its second quarter 10-Q filing with the Securities and Exchange Commission.
As a result of these cuts, Goodyear expects earnings will be affected by about $150 million in net “under-absorbed fixed costs” in 2012, which will more than offset the $80 million in reduced costs the company expects to report from the closure of its Union City, Tenn., plant last August.
Goodyear said the cuts were made largely to plants supplying Europe, where demand fell the most. The company did not identify which plant or plants were affected.
In its second quarter earnings report, Goodyear said tire unit sales worldwide dropped 8.6 percent, or 3.7 million units, from the second quarter of 2011. Replacement unit volume dropped 14.2 percent, or 4.5 million units, a drop that was offset partially by a 6-percent increase in OE volume.
Consumer unit sales in the period fell 8 percent to 35.5 million, while commercial unit sales were off 13,5 percent to 3.2 million, Goodyear said. The drop was particularly acute in the European/Middle East business unit.
Unit sales in the first six months were down 8.4 percent, or 7.5 million units, with replacement volume off 13.3 percent and OE volume up 4.8 percent, particularly as a result of increased vehicle production in North America.