Goodyear Tyre & Rubber Co.’s growing problems hit home on Thursday for about 350 white-collar workers in Akron and 150 elsewhere who were told to clean out their desks in a sweeping cost-cutting move, the Akron Beacon Journal reported.
Officials hope the reductions will be enough to help the company rebound after three disastrous years in which its stock has fallen sharply and competitors have challenged its dominance in North America, the newspaper said, adding that the Akron tyre maker also is cutting another 200 salaried jobs by not filling many positions that have been vacant since October, including 150 in Akron.
Separately, the company plans to cut 34 hourly positions in its Akron Technical Centre’s machine design division, which makes prototype machinery, the local newspaper reported.
According to the Akron paper, Goodyear is eliminating more than 500 jobs in its hometown, making this one of the tyre maker’s bloodiest cost-cutting eras in Akron for decades. The cutbacks rank alongside the closing of Akron’s Plant 1 in 1975, when 1,300 people lost their jobs, and the turbulent months following the attempted takeover of Goodyear by the late corporate raider Sir James Goldsmith in 1986, when hundreds lost their jobs or saw their divisions sold to other companies.
Of the new cuts, president and CEO Robert J. Keegan said in a statement: “These decisions were not made lightly.” He added: “While painful for our associates and the Akron community, they are necessary to accelerate Goodyear’s turnaround and help it achieve our goals for growth, market position and financial performance. We must focus on making Goodyear a strong employer both in the Akron area and worldwide for the thousands of associates who will continue to work for this company.”
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The company said it doesn’t plan to cut more jobs this year unless business conditions continue to deteriorate.
After the reductions, Goodyear will employ about 3,000 in Akron. The Akron Beacon Journal said that, although Goodyear remains one of the largest employers in the area, it has seen its ranks thin in recent years. Just five years ago, the company had about 4,600 workers in the region and was on a binge to hire hundreds of additional engineers and technical specialists.
But in recent years, the company has stumbled badly, and jobs have disappeared. Goodyear shut its Stow mould plant last year and transferred hundreds of jobs from the Green air springs plant out of the area.
The company said the new job cuts would save $US75 million this year and about $80 million a year thereafter. But in the short run, the cuts also will be costly for Goodyear, which already is awash in red ink and increasing debt. The company expects that layoff benefits and associated costs will result in a pretax charge of $US75 million this year, the Akron Beacon Journal said.
The newspaper noted that Goodyear lost $203 million in 2001, its first loss in nine years, and added that many analysts expect the company to post another loss when it reports on its 2002 earnings next month.