Goodyear to shut UK tyre plant in cost-cut move
The Goodyear Tire & Rubber Co. on Wednesday said it plans to close an automobile tyre plant in the United Kingdom and a bicycle tyre plant in Poland (Debica) in order to achieve combined annual savings of up to $50 million. The largest U.S. tyre company, which is based in Akron, Ohio, said it has begun discussions with union employees as a step toward shutting its Goodyear Dunlop United Kingdom passenger tyre factory in Washington, northeast England. This action is expected to create annual savings of approximately $20 million and result in charges of between $75 million and $85 million ($55 million to $65 million after-tax). The cash portion of this charge is estimated to be $35 million to $40 million.
In addition, the company said it will discontinue production of bicycle tyres and inner tubes at its plant in Debica, Poland. The company estimated that overall the plant closures will lead to elimination of about 1,500 jobs, with the loss of 585 jobs in the factory near Sunderland. And it will create annual cost savings of between $40 million and $50 million, and result in a charge of between $105 million and $115 million. Of the total charge, approximately $55 million ($40 million after-tax) will be recognized in the first and second quarters of 2006. The cash portion of these charges is estimated to be between $60 million and $65 million.
Goodyear said it could no longer compete effectively with competitors in Eastern Europe and the Far East. Tyres have been produced at the Washington site since 1968, with Goodyear Dunlop taking control in 2004.
Richard Johnson, managing director of Goodyear Dunlop UK, told the BBC: “We have worked with our unions and associates to improve cost competitiveness at our Washington plant. Despite the efforts of all involved, we have been unable to manufacture tyres at a competitive cost level. The market for the type of tyres made in Washington is very competitive and is increasingly dominated by low-cost suppliers from Eastern Europe and the Far East.”
The Washington plant was built in 1968 for Avon Tyres. Since then it has also been operated by SP Tyres UK Limited.