Goodyear Tyre & Rubber Company plans to close its tyre plant in New Zealand as part of its strategy to reduce high-cost manufacturing capacity globally.
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The company’s South Pacific Tyres (SPT) business has begun talks with workers and union representatives regarding the proposal to close the plant in Upper Hutt, north of Wellington.
The plant, which has about 400 staff and produces about two million radial passenger car tyres a year.
Goodyear and SPT said they remain committed to the consumer and commercial tyre markets in New Zealand and would supply customers from other plants in the Asia Pacific region.
Manufacturing in New Zealand has experienced greater pressure than in many other markets due to high costs, competition from low-cost imports and the lack of domestic vehicle production, Goodyear noted.
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By GlobalDataThe plant, and others operated by rival tyre makers, was at one time a key supplier to automakers’ CKD local assembly operations in the country but these were forced to close in the late 1990s due to the liberalisation of used car imports and, ultimately, the elimination of tariffs on fully imported vehicles. Imports of new and used tyres were also liberalised and tariffs cut.
The proposed closure is expected to be completed within six to eight months and create annual cost savings of approximately $US15m in Goodyear’s Asia Pacific region. It would result in restructuring charges of approximately $35m ($35m after tax), of which approximately $20m is expected to be cash charges.
“A key component of our strategy is the elimination of high-cost tyre manufacturing capacity,” said Goodyear chairman and chief executive officer Robert Keegan.
“Our objective is to take actions over the next three years that will result in annual savings of between $100m and $150m.”
Formed in 1987 as a joint venture, SPT has been wholly owned by Goodyear since January 2006. The leading tyre maker and marketer in Australia and New Zealand, it has 4,000 workers and annual sales of more than $700m. Its results have been consolidated with those of Goodyear’s Asia Pacific region since January 2004.
