May 26 2009
The Goodyear Tire & Rubber Company today announced a plan that would discontinue consumer tire production at a plant in Amiens, France, as part of its strategy to reduce high-cost manufacturing capacity globally.
"This action is a result of the plant's uncompetitive costs. Reaching a union agreement to modernize the operation proved impossible," said Serge Lussier, Goodyear's Europe, Middle East & Africa (EMEA) vice president of manufacturing. "Due to high costs and weak industry demand, the consumer tires produced there are uncompetitive in the marketplace."
The action, which is expected to be complete by the third quarter of 2010, would result in a reduction of approximately 820 of the 1,200 total positions at the plant, which also produces farm tires.
Production at a second tire plant in Amiens, employing about 1,000 people, would not be impacted by this action. The company currently employs approximately 3,500 people in France.
The discontinuation of consumer tire production at the Amiens plant would result in the reduction of approximately 6 million units of production, which is part of Goodyear's strategy to remove 15 million to 25 million units of capacity over the next two years.
The estimated charges associated with the plan are $55 million (approximately $30 million after taxes and minority interest), the majority of which will be recorded in the second quarter of 2009. These charges primarily relate to cash severance payments that will be made as actions are taken in the future.
Goodyear also announced that it will explore the divestiture of its farm tire businesses in EMEA and Latin America. Sales by the farm tire businesses are not material to the company's net sales.
The company said its Asia Pacific farm tire business is not included in this potential divestiture. Goodyear sold its North American farm tire operation in 2005.