Goodyear Tire & Rubber Co. plans to upgrade and automate two of its tire manufacturing facilities in Germany to increase production of premium tires 17 inches and larger. But the modernization of the plants comes at a cost for workers — about 1,100 jobs will be eliminated.
The plan was approved by Goodyear on March 18, 2019, and involves Goodyear Dunlop Tires Germany GmbH’s locations in Hanau and Fulda, Germany. It’s part of Goodyear’s “strategy to strengthen the competitiveness of its manufacturing footprint and increase its production of premium, large-rim-diameter consumer tires.”
Jürgen Titz, CEO of Goodyear Dunlop Tires Germany, said, "We are constantly working to meet the rapidly changing needs of our customers."
Goodyear expects that changes to the layout of the plants and new more modern equipment will make them more efficient, and thus result in the need for fewer employees. “The plan remains subject to consultation with relevant employee representative bodies,” the company said in a statement.
The work is expected to be complete during 2022, and estimates pre-tax charges to be at least $135 million, of which approximately $125 million is expected to be cash charges primarily for associate-related costs, plus $10 million for non-cash charges related to asset write-offs and accelerated depreciation. Goodyear will record about $90 million of those charges in the first quarter of 2019, and make cash payments of $30 million in 2020 and $40 million in 2021.
“Once completed, these actions are expected to increase the productivity of both plants and the resulting conversion savings are expected to improve Europe, Middle East and Africa’s segment operating income by $60 million-$70 million on an annualized basis over a three-year period beginning in 2020.”