This is definitely not of the good
for northwest Tennessee. Im trying to get more information out right now as this develops. Goodyear is economically important to this region of the state. And then news out of Ohio is being monitored as well (link below.)
Goodyear to Exit Segments of Private Label Business
in North America
AKRON, Ohio, June 21, 2006 – The Goodyear Tire & Rubber Company announced today that it is withdrawing from certain segments of the private label tire business in North America.
Jonathan D. Rich, president of Goodyear’s North American Tire business, said, “Today’s announcement is part of our continuing strategy to focus selectively on the more profitable segments of the business. Our intention is to build upon the market strength we have established in our branded and retailer-specific product lines.”
The action affects approximately 10 private label brands that are currently manufactured by Goodyear and are sold by a small number of wholesale customers to tire retailers. In 2005, this segment of the private label business represented approximately $300 million in sales and about eight million units manufactured in five North American plants, or approximately
one-third of the company’s private label position overall.
Over the next 12 months, Rich said the company will work closely with affected customers to help them transition to alternative Goodyear products or other sources of supply. The decision will require a corresponding reduction in Goodyear’s tire manufacturing capacity in North America, he said.
“While our branded replacement business remains strong, the overall environment, including a very weak industry and continued raw material price escalation, likely will result in full year operating income for North America below 2005 levels,” Rich said.
Despite the earnings pressure this year in North American Tire, Goodyear Chairman and Chief Executive Officer Robert J. Keegan reaffirmed his confidence in the overall strategic direction of the business.
“We remain confident that the strategic actions we are taking in North America will allow us to achieve 5 percent operating margins, consistent with the three to five year next stage metrics announced to investors last September,” Keegan said. “These strategic actions include selectivity in the private label and original equipment businesses, expected margin improvements from new products and effective marketing, and cost improvements from expected capacity reductions, a new union contract, and reductions to selling, administrative and general expenses.”
Keegan said Goodyear’s operations outside of North American Tire continue to build on recent successes and that the company expects year-over-year improvement in total operating income in those businesses.
Certain information contained in this press release may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements. There are a variety of factors, many of which are beyond the company’s control, which affect its operations, performance, business strategy and results and could cause its actual results and experience to differ materially from the expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to, actions and initiatives taken by both current and potential competitors, increases in the prices paid for raw materials and energy, the company’s ability to realize anticipated savings and operational benefits from its
cost reduction initiatives, potential adverse consequences of litigation involving the company, pension plan funding obligations, the company’s collective bargaining negotiations with the United Steelworkers as well as the effects of more general factors such as changes in general market or economic conditions or in legislation, regulation or public policy. Additional factors are discussed in the company’s filings with the Securities and Exchange Commission, including the company’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.
Goodyear employees roughly 2500 employees in Weakley, Obion, and Dyer counties. Currently, there are contract negotiations going on but the thing is that the corporate offices are discussing closing a plant in a story from The Akron Beacon Journal
We are watching very carefully.