Retail

Goodyear will use its capacity to produce higher-end lines, Ludwig says

Order Reprints

"Goodyear Tire & Rubber Co. is closing plants at a rapid pace but is not opening any new ones," notes tire industry analyst Saul Ludwig in the April installment of the "Ludwig Report" in Modern Tire Dealer magazine.

"New Zealand; Morocco; England; Valleyfield, Quebec; and Tyler, Texas, have been targeted so far and I would not be surprised to see additional closings soon in Europe, Asia and possibly South Africa.

"Those closings will amount to about a 15% reduction in its global tire manufacturing capacity. To compensate, Goodyear is accelerating the pace at which it buys tires from non-owned low-cost manufacturers," says Ludwig.

"In 2006, they bought $200 million worth of tires from others and in 2007, purchases could more than double to over $400 million! Goodyear will use its capacity to produce higher-end lines. Not a bad strategy as I see it."

Ludwig is a managing director with KeyBanc Capital Markets, a division of McDonald Investments Inc. based in Cleveland, Ohio. Look for the full "Ludwig Report" in the April issue of Modern Tire Dealer magazine.

You must login or register in order to post a comment.