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Goodyear Shutting Union City Plant by Year-end

Goodyear has announced that it intends to close its tire plant in Union City, Tennessee by the end of 2011 as part of a program to cut manufacturing costs globally. The plant employs 1,900 workers and has about 12 million units/year of capacity. This closure is the last component of a restructuring program that Goodyear initiated in 2009 that was aimed at cutting 15 million to 25 million units of high cost capacity. This action is expected to provide annual cost savings of approximately $80 million.

Here is the pertinent section of Goodyear’s latest earnings report:

Tennessee Plant Closure Goodyear today announced plans to close its Union City, Tenn., tire manufacturing facility by the end of 2011 as part of its strategy to reduce high-cost manufacturing capacity globally and provide cost effective high-value-added products that the market is demanding while continuing to make high quality products for its customers. “While we are committed to manufacturing in North America, all of our plants must be cost competitive and be able to demonstrate sustainable world-class productivity. That is not the case with this plant, and as a result, the market has moved beyond what the factory is able to build,” said Kramer. This closure, when complete, will eliminate approximately 12 million units of available capacity and is the final action in plans announced in 2009 to eliminate 15 million to 25 million units of high-cost capacity globally. This action is expected to provide annual cost savings of approximately $80 million. The Union City plant currently employs approximately 1,900 associates. Goodyear’s fourth quarter 2010 after-tax restructuring charge related to this action was approximately $160 million. Total after-tax restructuring, accelerated depreciation and asset write-off charges for this action are estimated to be approximately $270 million, of which approximately $140 million will be cash charges.
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