According to an article from CNNmoney.com off of the Dow Jones wire service, Goodyear Tire is set to stop consumer-tire production at a French plant to cut costs. This will affect 820 jobs in the plant or 68 percent of the plant’s overall workforce in Amiens, France.
The company is also looking to exclude its farm-tire business to the Asia-Pacific region. Sales of this type are not material to Goodyear. It sold its North American farm-tire operation in 2005.
All of this is because of rising costs and production cuts from auto-makers. This is also happening because customers are putting off getting new tires for their vehicle because it can be a costly expense. This is another consequence of an economic downturn. This along with the struggling auto industry is making for the Goodyear stock heading into junk territory.
This closure is all part of Goodyear’s plan to cut their global output. They plan to cut it by 25 million over the next two years. Goodyear still remains North America’s largest tire maker.
According to the article: “The discontinuation of consumer-tire production at the plant in Amiens, France, will lead Goodyear to book about $55 million in charges, mainly in the second quarter and related to severance payments.”
The hurting auto industry is also putting the hurt on tire companies. With more cars sitting in the lot and more people deciding to forgo new tires, the economic outlook for Goodyear and many other tire companies could be bleak.
This is just another example of how job loss and the economy are really affecting all sectors of business, and it truly is international. Goodyear employs about 70,000 people world-wide. This is just one way they are trying to save as many jobs as they can in their business globally.