The Goodyear Tire & Rubber Co. detailed actions to address market challenges in a much weaker economy, including further reductions in personnel levels by nearly 5,000.
Goodyear said its fourth-quarter 2008 sales were $4.1 billion, down from $5.2 billion in the 2007 quarter, despite increases in Goodyear-branded market share. The company’s net loss was $330 million compared with net income of $52 million.
“Given lower industry demand, we are taking aggressive action, reducing tire production, cutting costs and adjusting investments to better match market conditions,” said Robert J. Keegan, chairman and chief executive officer of the Akron, Ohio-based company. “The many positive actions we took and the results we achieved in 2008 provide a base from which we will address the market challenges we will inevitably face in 2009.”
Goodyear said it plans to further reduce costs by about $700 million in 2009 and has therefore raised its four-point cost savings plan target to $2.5 billion. Actions include:
· Further reducing personnel levels by nearly 5,000 in addition to almost 4,000 reductions in the second half of 2008 and freezing salaries;
· Implementing new cost-control policies to eliminate nonessential discretionary spending; and
· Purchasing actions to lower the cost of both raw materials and indirect materials.
In addition, Goodyear said it plans to eliminate between 15 million and 25 million units of additional manufacturing capacity worldwide over the next two years. The company also plans to implement a number of cash flow actions in 2009, including cutting capital expenditures to between $700 million and $800 million, reducing inventory levels by more than $500 million, and pursuing the sale of non-core assets.
“Collectively, these actions address the new economic realities,” said Keegan. “We will remain flexible and are prepared to take additional actions if market conditions warrant. Our goal is to ensure Goodyear is positioned for success when tire markets recover.”
