DOW JONES NEWSWIRES
Goodyear Tire & Rubber Co. (GT) said it will discontinue
consumer-tire production at a French plant as it cuts high-cost
manufacturing capacity globally, affecting about 820 jobs, or 68%
of the plant's work force.
North America's largest tire maker also said it is exploring the
divestiture of its farm-tire businesses excluding that in the
Asia-Pacific region. Such tire sales are not material to Goodyear,
which sold its North American farm-tire operation in 2005.
Tire makers have seen results squeezed by rising costs and
production cuts by auto makers, a situation that has been
exacerbated as consumers, who traditionally buffer the sector when
auto-maker demand weakens, delay replacement-tire purchases.
Three weeks ago, Fitch Ratings lowered its credit ratings on
Goodyear deeper into junk territory, saying the auto industry and
broader economic woes will hurt profitability at least throughout
2009.
The discontinuation of consumer-tire production at the plant in
Amiens, France, will lead Goodyear to book about $55 million in
charges, mainly in the second quarter and related to severance
payments. Goodyear employs about 3,500 people in France. The
discontinuation will reduce production by about six million tires -
part of Goodyear's strategy to cut global output by up to 25
million over the next two years.
Shares of Goodyear, which employs some 71,000 people, closed
Friday at $11.45 and were down 0.6% to $11.38 in premarket trading
Tuesday. The stock is up 92% this year.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com
