Goodyear Considers Restructuring Options
Goodyear Tire & Rubber is considering restructuring options, including the closure of North American plants, shifting work to “low-cost” countries and cutting an unspecified number of jobs, the Wall Street Journal has reported.
In the article, the Ohio based company pointed out that while it was cutting costs it is also investing more. The company says it plans to increase capital spending to $600 million this year, up from $ 500 million last year and $383 million in 2003, the newspaper reported. The company was also keen to stress that no decision has yet been about the breadth of any possible action adding that any sort of restructuring would just be one part of a larger strategy.
“If we’re going to survive in that segment, we’re going to have to dramatically reduce our cost there,” Jonathan Rich, president of North American tire operations was quoted as saying. “But I think it’s perfectly clear that we haven’t reached any conclusion about a plan for that going forward,” he added.
One thing that will affect how Goodyear chooses to resolve this dilemma is its union labour contract, which will remain current until July 2006. This agreement allows the company to shed up to 15 per cent of its employees at North American plants covered by the accord, but stops short of allowing any closures. Goodyear has 12 plants in this region; only nine are covered by the agreement.
The report went on to describe another option – the company could also cut or decrease its private label production business. In addition, Goodyear has reportedly enlisted consultants and been using computer modelling to monitor the costs savings that these options may provide.
The article also noted that Goodyear refinanced around $2.3 billion (£1.23 billion) last year. According to the report cash and credit available to the company totalled $2.4 billion in the first nine months of 2004, $1 billion more than a year earlier, according to the article.