The Goodyear Tyre & Rubber Company is to end tyre production at its facility in Valleyfield, Quebec in Canada.
The facility will become a materials mixing centre by the end of the second quarter.
The change will cost 800 jobs. Currently there are approximately 1,000 hourly and salaried employees at the facility but mixing will employ only about 200.
“The reduction in both capacity and labour in Valleyfield is related to the company’s ongoing global strategy to reduce excess high cost manufacturing capacity,” Goodyear said in a statement.
“The decision to discontinue tyre production at Valleyfield is one of those necessary steps to make Goodyear more competitive. This decision does not reflect on the commitment or performance of our Valleyfield associates, “said Jon Rich, president of Goodyear’s North American tyre business.
Most unionised Goodyear workers in the US and Canada have only just returned to work after a three-month dispute sparked by plant closures and retirement fund issues.
Goodyear said axing tyre production in Valleyfield will reduce its excess high cost tyre manufacturing capacity by an additional 7m units, bringing total reductions under its four-point cost savings plan to 21m units compared with original targets of 15 to 20m units by 2008.
The closure will cost the company between $US115m and $120m (between $165 and $170m after tax) for restructuring and accelerated depreciation, of which an expected $40-$45m is cash.
Between $70m and $75m ($120 million to $125m after-tax) will be booked in the fourth quarter of 2006 with the balance in 2007. When complete, the action is expected to generate annual cost savings of approximately $40m.
Goodyear’s cost savings plan goal is to reduce costs by $100m to $150m.
With the already announced closures of tyre plants in Washington, United Kingdom; Upper Hutt, New Zealand; and Tyler, Texas, the Valleyfield announcement yields a total of $125m in projected annual savings, Goodyear said.