Goodyear Tyre & Rubber Company on Tuesday said it would stop consumer tyre production at a plant in Amiens, France, as part of its strategy to reduce high-cost manufacturing capacity globally.
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“This action is a result of the plant’s uncompetitive costs. Reaching a union agreement to modernise the operation proved impossible,” said Serge Lussier, the tyremaker’s manufacturing chief for Europe, Middle East & Africa.”Due to high costs and weak industry demand, the consumer tyres produced there are uncompetitive in the marketplace.”
Stopping consumer tyre output , which is expected to be complete by the third quarter of 2010, will eliminate about 820 of the 1,200 jobs at the plant, which also produces farm tyres.
Production at a second tyre plant in Amiens, employing about 1,000, would not be affected, Goodyear, which employs about 3,500 people in France, said.
Axing consumer tyre production at the Amiens plant would result in the reduction of approximately 6m units of production, which is part of Goodyear’s strategy to remove 15-25m units of capacity over the next two years.
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By GlobalDataThe estimated charges associated with the plan are US$55m (about $30m after taxes and minority interest), the majority of which will be booked in the second quarter of 2009. These charges primarily relate to cash severance payments that will be made in future.
Goodyear also said it would explore the divestiture of its farm tire businesses in EMEA and Latin America. Sales by the farm tyre businesses are not material to the company’s net sales.
But the company said its Asia Pacific farm tyre business was not included in this potential divestiture. It sold its North American farm tyre operation in 2005.
