AKRON—Goodyear is planning to close its car and light truck tire plant in Philippsburg, Germany, by year-end 2017 as part of its global strategy to focus on premium, larger diameter tires.
The decision will affect about 890 workers at the 49-year-old Philippsburg plant, Goodyear said in an 8-K filing with the Securities and Exchange Commission. The plan is subject to consultation with relevant employee representative bodies.
“Our strategy is focused on increasing Goodyear's presence in high-value segments of the tire market that are growing at rates above the total industry where we can capture the value of our brand and help our customers grow profitably,” said Jean-Claude Kihn, president of Goodyear's Europe, Middle East and Africa region.
“Our customers want more of our premium tires with large rim diameters 17 inches and above. These tires are in high demand by our original equipment customers today and will be needed in the replacement market in the years ahead.”
Juergen Titz, group managing director, Goodyear Dunlop Tires Germany, Austria, Switzerland, added: “The proposal to close our plant in Philippsburg is a difficult choice and we are very conscious of our obligations towards our associates. We are committed to responsible and fair solutions for all affected employees and to provide appropriate support.”
The plant's capacity is rated at 18,000 units a day.
Goodyear recently told financial analysts that it is budgeting nearly $800 million through 2019 to boost production capacity for high-value-added tires—essentially those with rim diameters of 17 inches and greater—in a bid to stay ahead of the demand curve for such tires.
Included in that strategy were plans to add 3 million units of annual capacity for the larger rim tires at undisclosed plants in Europe in projects that are wrapping up in 2016.
Goodyear said it expects pre-tax costs associated with the closing to bit between $240 million and $280 million, but once completed the action will improve Europe, Middle East and Africa's segment operating income by approximately $20 million in 2018 and $30 million on an annualized basis thereafter.
Goodyear said it expects $165 million to $190 million of the closing costs to be cash charges primarily for associate-related and other exit costs and $75 million to $90 million to be non-cash charges related to accelerated depreciation and other asset-related charges.
The Philippsburg plant is one of six Goodyear factories operates in Germany, all of which have passenger tire capacity.
The others, operating as separate corporate entities, are:
- Gummiwerke Fulda G.m.b.H. in Fulda – passenger and light truck tires; 1,500 employees; 21,000 units/day capacity
- Dunlop G.m.b.H. in Hanau – passenger, light truck, medium truck and OTR tires; 1,300 employees; 21,000 units/day capacity; and Wittlich – passenger and medium truck tires; 900 employees; 6,700 units/day capacity.
- Pneumant Reifen & Gummi Werke G.m.b.H. in Furstenwalde – passenger and light truck tires; 305 employees; 10,000 units/day capacity; and Riesa – passenger tires; 550 employees; 16,000 units/day.