Goodyear Tire & Rubber Co. says it will slash 5% of its global staff "in response to a challenging industry environment and cost pressure driven by inflation."
The Akron, Ohio-based company says around 500 jobs will be eliminated during the first and second quarters.
“Our fourth quarter results fell short of our expectations given a significantly weaker industry backdrop, particularly in Europe,” says Rich Kramer, Goodyear's chairman, CEO and president.
“While our businesses have performed at a high level through the volatility of the past several years, the uncertain near-term macroeconomic outlook and continuing impacts of inflation make these difficult actions necessary to position our business for future success.”
According to Goodyear officials, "global replacement tire industry demand remained weak in the fourth quarter, led by a 12% decline in EMEA. When coupled with the impacts of inflation - including significant increases in energy costs - the company expects its EMEA business unit to report a fourth quarter segment operating loss of approximately $80 million. EMEA had reported positive segment operating income since the second quarter of 2020.
"While raw material and certain other input costs have declined recently, the company seeks to drive efficiencies to help off-set inflation in other areas like wages and benefits."
The actions that Goodyear is undertaking "are in addition to cost synergies related to the integration of Cooper Tire. The company expects to record pre-tax charges associated with these actions of approximately $55 million, primarily relating to cash severance payments that are expected to be substantially paid during the first half of 2023.
"The rationalization and reorganization will result in a quarterly run rate benefit of approximately $15 million beginning in the second quarter. Savings in the first quarter are expected to be $5 million."