When Sumitomo Rubber Industries Ltd. (SRI) assumes ownership of the Goodyear Tire & Rubber Co.’s tire manufacturing facility in Buffalo, N.Y., Goodyear will lose the capacity to build approximately 1 million consumer and commercial tires each year.
Yet, the Akron, Ohio-based tire manufacturer says it expects to absorb that loss of capacity easily.
“Those volumes are significantly less than our other North America factories,” says Laura Thompson, executive vice president and chief financial officer for Goodyear. “This slight reduction in capacity is addressed in our long-term supply agreement with SRI, increased utilization of our existing footprint, and ultimately, our new Americas factory.”
Thompson says high-value added tires are made in Buffalo, but the capacity is “substantially less than any of the quantities coming out of our other factories.
“Our new Americas plant is 6 million, other plants at 8-10 million a year. That approximately 1 million consumer tires is covered for us and we feel really confident of no disruptions and no issues.”
Thompson says the dissolution agreement between Goodyear and SRI is grounded in both companies wanting to ensure a smooth transition for customers and consumers.
“A cornerstone of the agreement also provides that both Goodyear and SRI remain committed to a smooth and orderly transition that is seamless to customers and consumers. For example, Goodyear and SRI will continue to source products from each other through long-term agreements to ensure uninterrupted supply,” Thompson says.
The dissolution of the alliance between Goodyear and SRI gives SRI full ownership of the Buffalo plant, as well as ownership of Goodyear’s motorcycle business. The Buffalo plant was the “primary source” of Dunlop motorcycle tires sold in North America, Thompson says.
“Although the motorcycle business has been a contributor to North America’s performance and is well respected in the marketplace, the technology and products are sold in different channels than consumer and commercial channels,” Thompson says. “The overall growth rate of the North America motorcycle business has lagged that of our core consumer and commercial business over the last few years, and therefore we do not view it as a critical component of the execution of our strategy in North America.”
Read more of MTD's coverage of the Goodyear/Sumitomo split here:
