Cooper Tire & Rubber Co.'s capacity study has been completed. Its Albany, Ga., plant will close.
The impact on net profit of this closure is estimated to be $150 million to $175 million in restructuring charges, between 50% and 60% of which will be non-cash charges. Annual savings after implementation are estimated at between $75 million and $80 million.
A portion of these savings will begin to materialize in 2009 as production from the plant is moved to Cooper's remaining domestic plants in Findlay, Ohio, Texarkana, Ark., and Tupelo, Miss. Customer demand will determine the mix of products.
"This was a difficult decision and we regret the impact it will have on
our employees in Albany and the surrounding community," says Cooper CEO Roy Armes. "The detailed
study we performed was fair, objective, and conclusive that we needed to consolidate
our capacity and close one of our U.S facilities.
"The government and community agencies were actively engaged and involved and offered a high level of support, but the final outcome was clear."
The Albany plant has the capacity to produce 26,300 passenger and light truck tires per day, according to Modern Tire Dealer's 2008 Facts Issue.
The facility was acquired by Cooper
in 1990 and employs approximately 1,400 people. The employees in Albany were notified of
the outcome and will be provided support as the facility winds down operations
in the next 12 months.
"We appreciate the hard work and efforts that our employees have always demonstrated and will assist them where possible through this transition," says Armes. "Unfortunately, this was a very necessary action to position Cooper to compete in a global market environment.
"The current state of the economy and demand for our products in the United States has caused us to rethink how we could best leverage our fixed costs.
"We will also continue with our existing ongoing lean, six sigma, and automation initiatives to improve our cost structure throughout our operations, in addition to this capacity rationalization effort. This capacity reduction, along with improvements at our other facilities, will allow Cooper to optimize our global footprint and capitalize on current and future market opportunities."
