Goodyear Tire & Rubber Co. will close its Gadsden, Ala., tire factory, which has been producing tires since 1929.
In a filing with the U.S. Securities and Exchange Commission, Goodyear says it reached a tentative bargaining agreement on April 17 and subsequently plans to close the plant "as part of the company's strategy to strengthen the competitiveness of its manufacturing footprint by curtailing production of tires for declining, less profitable segments of the tire market."
The bargaining agremeent remains subject to approval by members of the local union.
The closing comes after the company offered voluntary buyouts to employees in late 2019. During the fourth quarter of last year Goodyear accepted 740 buy-out applications.
The buy-out plan was "substantially completed" during the first quarter of 2020, Goodyear says. Cash payments totaled $75 million.
In the first week of February, after another round of layoffs, local media in Alabama reported 411 employees remained at the plant, and that it continued to produce 2,000 tires a day.
According to Modern Tire Dealer data, that's far below the plant's capacity, which is 26,000 passenger and light truck tires a day.
The tiremaker estimates the total pre-tax charges associated with the April 2020 plan will be approximately $280 million to $295 million, of which approximately $170 million to $180 million are expected to be cash charges, primarily for severance and other associate-related costs of approximately $55 million and $40 million, respectively, and other closure costs of approximately $75 million to $85 million.
Non-cash charges, primarily related to asset write-offs and accelerated depreciation, are expected to be approximately $110 million to $115 million. The company expects to record approximately $170 million of these charges in the second quarter of 2020 and to make cash payments of approximately $45 million in 2020. The remaining charges will be recorded and the remaining cash payments will be made thereafter, primarily in 2021 and 2022. Goodyear expects to substantially complete this rationalization plan by the fourth quarter of 2021.
The Company expects the combined impact of these rationalization actions will result in approximately $130 million of annual savings in 2021 when compared with 2019.