Goodyear Positioned to Handle Economic Landscape, Says Wells
Inflation and other factors continued to affect Goodyear Tire & Rubber Co. at the outset of 2022.
Darren Wells, executive vice president and chief financial officer, Goodyear, spoke during last week's 2022 Global Auto, Auto Tech and Mobility Conference, which was hosted by Wolfe Research.
“When we get to the second half of the year, we will see some easier comparables because the second half (of) last year was already being affected by a lot of the factors that are causing the cost increases that we saw in Q4,” he said.
Wells cited three factors that started to hit Goodyear in the second half of 2021.
• Increased transportation costs from both ocean freight and inland freight. These are costs that “we really haven’t seen historically,” Wells said.
• Impact of absenteeism in factories around the world due to the pandemic. “That takes away from the efficiency of the factory and in some cases, reduces output,” Wells said.
• Hiring and training a lot of new people after “an elevated level” of retirements and additional turnover in the workforce. Wells pointed out that this is more of an issue in the United States.
Looking ahead, Wells identified two items that he believes will come into play in the second half of 2022.
Goodyear already has faced and factored in some cost increases from the third quarter of 2021. “That was already in the run rate,” Wells said. "So even if we got more of the same (this year), it wouldn't be a year-over-year deterioration."
And "operationally, as we get into second-quarter production (of 2022), we will see start to see some improvement. We will have gotten past some of the initial months of training for a lot of the new hires in the factories. So we are hoping we are going to start to see better productivity from the workforce and hopefully be able to get back to some of the cost-saving programs that traditionally have generated $40 million or so of savings for us every quarter, which is what allowed us to offset the more normal levels of inflation that we have seen historically."
Wells said Goodyear is looking at "being careful on costs, but also taking the actions we need to take on price."
Goodyear recently published its 2021 results.