Goodyear Tire Company to take cost-saving actions to improve quarter projections

TOPEKA, Kan. (WIBW) - UPDATE: No associates in Topeka were impacted by the announcement.

Goodyear Tire & Rubber Company announced Friday that due to several challenges the company has faced this past year, such as cost pressure fueled by inflation; the plant will be taking some measures to save the plant funds.

Goodyear has decided to reduce about 5% in salaried staff globally, equaling roughly 500 positions. According to Goodyear’s chairman, chief executive officer, and president, Richard J. Kramer, the fourth quarter of the company was “weak,”. He noted a 12% decline in the global replacement tire industry in Europe, the Middle East, and Africa (EMEA). Goodyear said in a release that the major factors affecting the industry include an increase in inflation and energy costs.

Goodyear projects that the company in the EMEA business unit will report an operating loss of approximately $80 million in the fourth quarter. This is a significant change since the EMEA sector has so far reported positive operating income since 2020′s second quarter, according to Goodyear’s data.

“Our fourth quarter results fell short of our expectations given a significantly weaker industry backdrop, particularly in Europe,” said Kramer. “While our businesses have performed at a high level through the volatility of the past several years, the uncertain near-term macroeconomic outlook and continuing impacts of inflation make these difficult actions necessary to position our business for future success.”

The company noted that as raw materials and other costs have been on the decline recently, Goodyear also hopes to “drive efficiencies” in other areas affected by inflation such as wages and benefits.

Goodyear said the plan to “rationalization and reorganization is expected to be finished during the first and second quarter.”

The tire replacement company is expecting to see pre-tax charges, followed by these actions to be approximately $55 million, primarily relating to cash severance payments that are expected to be paid during the first 6 months of 2023. The company also said it expects the plan to result in a quarterly run-rate benefit of $15 million at the start of the second quarter, along with an estimated amount of savings in the first quarter to be approximately $5 million.

Goodyear will release the full report for the fourth quarter and the full 2022 financial reports after the market closes on Wednesday, February 8.