Goodyear Tire & Rubber Co. cut 17 million units during the fourth quarter in response to lower than expected demand, six million more than originally anticipated.
"We continue to adjust production to reduce inventory levels and to keep pace with the lower demand environment," says Goodyear Executive Vice President and CFO Darren Wells.
"It is widely known that the economic slowdown is having a considerable impact on consumer demand and industry volume. Fourth quarter industry volumes were well below expected levels, prompting a significant increase to our production cuts that now extend across all business units."
Full year shipments were down, too. Goodyear estimates that industry volumes in North America for consumer replacement shipments were down 3.5% for 2008 versus 2007 levels. On the OE side, consumer shipments were down 22%.
In the commercial tire segment, OE shipments were down 18.5%, while replacement shipments were down 11%, according to Goodyear estimates.
Shipments were down in Europe, as well, according to Goodyear officials, with a 4.5% decline in OE and a 6% decline at the replacement level. OE commercial tire shipments in Europe fell 2% while replacement commercial tire shipments dropped 13%, they add.
In addition to lower tire demand, Goodyear will continue to grapple with high raw material costs, according to Wells. "Goodyear's raw material costs were approximately 13% higher in 2008 than in 2007, with much of this increase coming in the fourth quarter, which was up more than just 25%."
Goodyear believes raw material costs will peak in the first quarter.
