Goodyear Proposes Closure of New Zealand Tire Plant
AKRON, Ohio, June 29 -- The Goodyear Tire & Rubber Company today announced a proposal to close a tire plant in New Zealand as part of its strategy to reduce high-cost manufacturing capacity globally.
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"A key component of our strategy is the elimination of high-cost tire manufacturing capacity," said Goodyear Chairman and Chief Executive Officer Robert J. Keegan. "Our objective is to take actions over the next three years that will result in annual savings of between $100 million and $150 million."
The company's South Pacific Tyres (SPT) business has initiated consultation with associates and union representatives regarding the proposal to close the plant in Upper Hutt, New Zealand. The plant, which has about 400 associates, produces about two million radial passenger car tires per year.
Goodyear and SPT remain committed to the consumer and commercial tire markets in New Zealand and would supply customers with product produced in other countries in the Asia Pacific region, according to SPT Chief Executive Officer Joseph Copeland. Manufacturing in New Zealand has experienced greater pressure than in many other markets due to high costs, competition from low- cost imports and the lack of domestic auto production.
The proposed closure is expected to be completed within six to eight months and create annual cost savings of approximately $15 million in Goodyear's Asia Pacific region. It would result in restructuring charges of approximately $35 million ($35 million after tax), of which approximately $20 million is expected to be cash charges.
Formed in 1987 as a joint venture, SPT has been wholly owned by Goodyear since January 2006. The leading tire maker and marketer in Australia and New Zealand, it has 4,000 associates and annual sales of more than $700 million. Its results have been consolidated with those of Goodyear's Asia Pacific region since January 2004.
Goodyear is one of the world's leading tire companies. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries around the world. Goodyear employs about 80,000 people worldwide. For more information on Goodyear, go to http://www.goodyear.com/ .
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.
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