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Goodyear Announces Plan to Discontinue Consumer Tire Production at French Plant; Will Explore Divesting EMEA, Latin America Farm Tire Businesses

Posted on: Tuesday, 26 May 2009, 07:10 CDT

AKRON, Ohio, May 26 /PRNewswire-FirstCall/ -- The Goodyear Tire & Rubber Company (NYSE: GT) today announced a plan that would discontinue consumer tire production at a plant in Amiens, France, as part of its strategy to reduce high-cost manufacturing capacity globally.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050204/GTLOGO )

"This action is a result of the plant's uncompetitive costs. Reaching a union agreement to modernize the operation proved impossible," said Serge Lussier, Goodyear's Europe, Middle East & Africa (EMEA) vice president of manufacturing. "Due to high costs and weak industry demand, the consumer tires produced there are uncompetitive in the marketplace."

The action, which is expected to be complete by the third quarter of 2010, would result in a reduction of approximately 820 of the 1,200 total positions at the plant, which also produces farm tires.

Production at a second tire plant in Amiens, employing about 1,000 people, would not be impacted by this action. The company currently employs approximately 3,500 people in France.

The discontinuation of consumer tire production at the Amiens plant would result in the reduction of approximately 6 million units of production, which is part of Goodyear's strategy to remove 15 million to 25 million units of capacity over the next two years.

The estimated charges associated with the plan are $55 million (approximately $30 million after taxes and minority interest), the majority of which will be recorded in the second quarter of 2009. These charges primarily relate to cash severance payments that will be made as actions are taken in the future.

Goodyear also announced that it will explore the divestiture of its farm tire businesses in EMEA and Latin America. Sales by the farm tire businesses are not material to the company's net sales.

The company said its Asia Pacific farm tire business is not included in this potential divestiture. Goodyear sold its North American farm tire operation in 2005.

Goodyear is one of the world's largest tire companies. It employs approximately 71,000 people and manufactures its products in more than 60 facilities in 25 countries around the world. For more information about Goodyear, go to www.goodyear.com/corporate.

Certain information contained in this press release may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, which affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to: deteriorating economic conditions or an inability to access capital markets; our ability to realize anticipated savings and operational benefits from our cost reduction initiatives or to implement successfully other strategic initiatives; actions and initiatives taken by both current and potential competitors; pension plan funding obligations; increases in the prices paid for raw materials and energy; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; a labor strike, work stoppage or other similar event; our failure to comply with a material covenant in our debt obligations; the adequacy of our capital expenditures; potential adverse consequences of litigation involving the company; as well as the effects of more general factors such as changes in general market, economic or political conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

SOURCE The Goodyear Tire & Rubber Company

Source: PR Newswire

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