Goodyear: Changes ahead in Europe
Goodyear Tire & Rubber Co. is closing a mixing and retreading facility in the United Kingdom and shifting the production of consumer tires out of its Wittlich, Germany, plant as part of a reorganization plan to strengthen its “global competitiveness.”
Details of the “rationalization plan” were published in a filing with the U.S. Securities and Exchange Commission. Goodyear will close its mixing and retreading plant in Wolverhampton, U.K. and transfer that production to existing facilities across its Europe, Middle East and Africa (EMEA) business unit. The consumer tire production from Wittlich, Germany also will shift to existing EMEA factories.
Goodyear says the vast majority of those tires are sold in Europe. Production includes both OE and replacement tires.
In terms of personnel, the closure of the mixing and retreading facility and the changes at the tire plant in Germany will result in a net reduction of 360-390 positions. The plan however still is “subject to consultation with relevant employee representative bodies,” Goodyear says in the document.
According to its corporate website, Goodyear manages 21 facilities in 11 countries within its EMEA division. While none of those other facilities is described as a mixing center, Goodyear has two other retread plants — in Riom, France and at the Wittlich, Germany facility that will lose its consumer tire production work. That German facility also houses a tire proving grounds as well as production for commercial and agricultural tires. Goodyear produces consumer tires at 11 other plants across EMEA.
Goodyear expects to be “substantially complete” with the rationalization by the end of 2016. It estimates total charges associated with the plan to be between $70 million and $80 million ($60 million to $70 million after taxes and minority interest.) The bulk of that money is expected to be cash payments primarily related to severance payments and contractual obligations ($55 million to $60 million) with approximately $15 million to $150 million for non-cash charges related to accelerated depreciation and other asset-related charges.
The company expects about half of those charges — about $40 million — to be charged in 2015, with $30 million of that coming in the second quarter of 2015.
Once complete, Goodyear says the changes are expected to improve EMEA segment operating income by approximately $30 million annually, beginning in 2017.