Goodyear closing Gadsden, USA plant
The Goodyear Tire & Rubber Company intends to permanently end production at its Gadsden factory in Alabama, USA. The company says this closure comes as part of its strategy to “strengthen the competitiveness of its manufacturing footprint by curtailing production of tyres for declining, less profitable segments of the tyre market.”
Last year, Goodyear approved a plan to offer voluntary buy-outs to certain employees at the Gadsden plant. It accepted approximately 740 buy-out applications in the fourth quarter of 2019. The voluntary buy-out plan was substantially completed during the first quarter of this year. Cash payments under this plan total US$75 million.
A tentative bargaining agreement remains subject to approval by the membership of the local union.
Goodyear estimates the total pre-tax charges associated with the April 2020 plan to be approximately $280 million to $295 million, of which approximately $170 million to $180 million are expected to be cash charges, primarily for severance and other associate-related costs of approximately $55 million and $40 million, respectively, and other closure costs of approximately $75 million to $85 million. Non-cash charges, primarily related to asset write-offs and accelerated depreciation, are expected to be approximately $110 million to $115 million. The company expects to record approximately $170 million of these charges in the second quarter of 2020 and to make cash payments of approximately $45 million in 2020. The remaining charges will be recorded and the remaining cash payments will be made thereafter, primarily in 2021 and 2022. It anticipates substantially completing this rationalisation plan by the fourth quarter of 2021.
According to Goodyear, the combined impact of these rationalisation actions will likely result in approximately $130 million of annual savings in 2021 when compared with 2019.