Goodyear announces job cuts, local effect unknown

February 18, 2009 8:17:51 PM PST
Goodyear Tire & Rubber Co., the biggest U.S. tire maker, said Wednesday it plans to cut 5,000 jobs this year after swinging to a fourth-quarter loss as sales sank 21 percent.The cuts equal almost 7 percent of the Akron, Ohio-based company's work force and follow the elimination of about 4,000 jobs in the second half of last year.

It was unclear early Wednesday how the cuts would affect Goodyear's operations in Fayetteville. Fayetteville's city council voted just last week to give the company $1 million for factory improvements.

The city's offer is part of a bigger incentive package that includes $30 million from the state and $7 million from Cumberland County over 10 years. The deal calls for Goodyear to invest $200 million to renovate its 40-year-old factory on Ramsey Street.

Under the agreement, the city will stop making $100,000 annual payments if employment drops below 2,000 jobs at the plant which currently employs around 3,000 people.

But it looks like the factory in Fayetteville will not lose any workers.

The president of the local union, USW Union Local #959, tells Eyewitness News they do not expect Fayetteville workers will be laid off.

"Ninety-nine percent of our ties are replacement market, President Darryl Jackson said. "The replacement market tire sales are down 3.5 percent where the original equipment tire sales are down 22 percent. So you guys are looking pretty good? And you have the new line of tires talk about that we have introduced several new lines we have introduced the Fuel Max and the Gallahad tire, and we hoping that will be productive for our plant."

Goodyear says the fuel max tire is being produced for GMs new electric car the Chevy Volt.

In its announcement Wednesday, Goodyear said it lost $330 million, $1.37 per share, in the fourth quarter, after a profit of $52 million, or 23 cents per share, a year earlier.

The company lost $1.18 per share, excluding one-time charges or gains, in the most recent quarter. Analysts surveyed by Thomson Reuters expected a loss of $1.03 cents per share on that basis.

Sales dipped to $4.1 billion from $5.2 billion a year earlier.

The company said the global economy depressed tire sales in the recent quarter by 19 percent.

As a strategy to boost sales, Goodyear said it will step up new product offerings. These include its Assurance Fuel Max tire, which was introduced earlier this month and will go on General Motors' new Chevrolet Volt electric vehicle.

Besides the job cuts, Goodyear is freezing salaries, putting restrictions on some spending and putting in place purchasing strategies aimed at lowering raw materials costs.

Goodyear also plans to reduce its global tire capacity by 15 million and 25 million tires over two years while seeking ways to improve cash flow this year. It is reducing capital expenditures, inventory levels and is looking to sell noncore assets.

Robert J. Keegan, Goodyear chairman and chief executive officer, said in a prepared statement the actions reflect new economic realities.

"We will remain flexible and are prepared to take additional actions if market conditions warrant. Our goal is to ensure Goodyear is positioned for success when tire markets recover," he said.


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