Goodyear Tire & Rubber Co. expects to lose $110 million to $130 million due to the shutdown of its Tupelo, Miss., plant.
In an April 26 filing with the U.S. Securities and Exchange Commission, Goodyear said that "on April 1, 2023, a severe weather system in the U.S., which included multiple tornadoes, significantly damaged and caused the shut-down of our tire manufacturing facility and adjacent warehouse in Tupelo, Mississippi (“Tupelo”), as well as a leased distribution center in Whiteland, Indiana (“Whiteland”). The Whiteland distribution center and Tupelo warehouse were able to restart tire shipments on April 11, 2023 and April 18, 2023, respectively, while repairs to those facilities were ongoing.
"We currently expect to be able to restart and begin ramping up production at the Tupelo tire manufacturing facility by the beginning of June 2023, with full ramp-up not expected until the third quarter of 2023. Americas sales are expected to be negatively impacted by $110 million to $130 million in the second quarter of 2023, primarily due to the shut-down and subsequent ramp-up of the Tupelo tire manufacturing facility.
"The related lost sales margins, as well as unabsorbed fixed costs and other period expenses, including our intent to continue to pay our workforce, during the shut-down and subsequent ramp-up period are expected to negatively impact Americas operating income by $60 million to $80 million in the second quarter of 2023.
"We maintain third-party insurance with a $15 million per occurrence deductible that covers property damage, clean-up expenses and qualifying business interruption impacts. We will reach the deductible limit and expense $15 million in the second quarter of 2023 related to property damage and clean-up expenses. We expect that a significant portion of the business interruption impacts will be reimbursed by our insurance. However, due to uncertainty in determining the ultimate amount and timing of business interruption coverage that could be available to us, we did not reflect potential insurance reimbursement for business interruption in the above sales and operating income estimates for Americas nor have we recognized a business interruption insurance receivable at this time. Consistent with past practice, we will record a receivable related to business interruption insurance once the claim is substantially complete."
The Tupelo plant has been off-line since April 1.
Goodyear will announce its first quarter 2023 financial results on May 4.
