High value? Low cost? Goodyear's production goals call for both

Feb. 14, 2008

Goodyear Tire & Rubber Co. wants to achieve two goals by 2012: increase its "high-value" tire production capacity by 40% and boost production capacity in low-cost countries by 37%.

"Unexpected robust demand for our premium products has resulted in supply constraints," Goodyear Chairman and CEO Bob Keegan told investors earlier today, Feb. 14, during a conference call.

Increasing production capacity for its premium-level tires is paramount for Goodyear, he said. "We are more focused on the premium segment of the market."

Keegan also mentioned that Goodyear is examining potential tire manufacturing plant sites in Eastern Europe and Asia.

The Akron, Ohio-based tiremaker closed two North American tire factories -- one in Valleyfield, Quebec, and another in Tyler, Texas -- during 2007, which will give the company annual cost savings of $90 million.

"We are pleased with our progress in cost savings," said Goodyear Executive Vice President and CFO Mark Schmitz.

Production in low-cost countries has generated $100 million in savings for Goodyear to date, Schmitz explained. He added that the company "continues to focus on identifying addition third party suppliers" in low-cost countries.

"Our manufacturing operation is undergoing tremendous change."