Goodyear Tire & Rubber Co. has announced a proposal to close a tire plant in New Zealand as part of its strategy to reduce high-cost manufacturing capacity globally.
"Our objective is to take actions over the next three years that will result in annual savings of between $100 million and $150 million," says Chairman and CEO Robert Keegan.
The company's South Pacific Tyres (SPT) business has initiated consultation with associates and union representatives regarding the proposal to close the plant in Upper Hutt, New Zealand. The plant, which has about 400 associates, produces close to two million radial passenger car tires per year.
Goodyear says manufacturing in New Zealand has experienced greater pressure than in many other markets due to high costs, competition from low-cost imports and the lack of domestic auto production. SPT and Goodyear would supply its New Zealand customers with product produced in other countries in the Asia Pacific region, according to SPT Chief Executive Officer Joseph Copeland.
The proposed closure is expected to be completed within six to eight months and create annual cost savings of approximately $15 million in Goodyear's Asia Pacific region. It would result in restructuring charges of approximately $35 million after taxes, of which approximately $20 million is expected to be cash charges.
