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

April 19, 2007

"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.