Goodyear is to close its Australian tyre manufacturing factory at the end of the year as part of its strategy to reduce high-cost manufacturing capacity globally.
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“This action will eliminate approximately 3m units of high-cost capacity and provide Goodyear with annual cost savings of approximately US$35m,” the company said in a statement.
“This completes our commitment to reduce high-cost capacity by about 25m units and achieve annual cost savings of more than $150m,” said chairman and CEO Robert Keegan.
“Going forward, our efforts will be focused on increasing production of high-value-added tyres in low-cost operations to support growth in these segments in Asia-Pacific markets, including Australia and New Zealand.”
In June 2006, Goodyear announced plans to close its plant in neighbouring New Zealand, citing the end of local vehicle manufacturing and competition from cheap imports among reasons.
South Pacific Tyres (SPT), a joint venture formed in 1987 that Goodyear took full control of in Janaury 2006, will immediately start talks with 600 workers and unions representatives about the plan to close the Australian plant in Somerton, Victoria, by 31 December.
“Goodyear and South Pacific Tyres remain committed to their customers and a strong and ongoing product, retail and wholesale presence in Australia,” said SPT CEO Judith Swales.
Closure costs are estimated at about US$125m after tax, of which approximately $85m is for cash charges. Goodyear anticipates recording charges of approximately $75m after tax in the second quarter of 2008.
