Goodyear Tire & Rubber Co. plans to close its Australian manufacturing facility by the end of the year.
The closing will eliminate close to 3 million units of high-cost capacity, and provide Goodyear with annual cost savings of approximately $35 million, according to the company.
The move is part of Goodyear's strategy to reduce high-cost manufacturing capacity globally and provide cost effective, high-value-added, in-demand products.
"This completes our commitment to reduce high-cost capacity by about 25 million units and achieve annual cost savings of more than $150 million," says Goodyear Chairman, CEO and President Robert Keegan.
"Going forward, our efforts will be focused on increasing production of high-value-added tires in low-cost operations to support growth in these segments in Asia-Pacific markets, including Australia and New Zealand."
South Pacific Tyres (SPT), a wholly owned Goodyear subsidiary, has initiated communications with its 600 associates and union representatives regarding the plan to close the plant in Somerton, Victoria, by Dec. 31, 2008.
"Goodyear and South Pacific Tyres remain committed to their customers and a strong and ongoing product, retail and wholesale presence in Australia," says SPT CEO Judith Swales.
Total after-tax restructuring and accelerated depreciation charges associated with the plant closing will total an estimated $125 million. Approximately $85 million of the total will be written off as cash charges.
Goodyear anticipates recording approximately $75 million after-tax charges in the second quarter of 2008.
