Goodyear offering contract buyouts at US tire plant

Akron, Ohio — Goodyear has begun offering voluntary buyouts to certain employees at its Gadsden, Alabama, tire plant as part of the company's strategy to strengthen its US competitiveness.

Goodyear disclosed the plan in a 8K filing with the Securities and Exchange Commission, stating that the move aimed to curtail the production of tires for less profitable segments of the tire market.

The company, however, did not specify how many employees were expected to accept the buyout offer and therefore couldn't comment on its potential cost benefit.

Goodyear's filing comes a few days after US senator Sherrod Brown disclosed that Goodyear already had laid off 170 employees this year at the 90-year-old car and light truck tire factory, where hourly employment was listed as 1,600.

Workers there are represented by United Steelworkers Union Local 12.

Neither Goodyear nor Local 12 has commented publicly on the terms of the buyout offer.

In early August, Goodyear CFO Darren Wells said Goodyear was studying a plan to restructure its US operations — reducing "low-value, high-cost" capacity — in a bid to improve business competitiveness.

The plan, he said, was designed to bring about savings "at least as high as the actions in Germany," a reference to a reorganisation programme under way in Germany.

The German restructuring is expected to generate a segment operating earnings improvement of $60 million (€55 million) to $70 million by 2022, while cutting up to 1,100 jobs at two factories there.

In Gadsden, eligible associates must submit applications for buyouts by 1 Nov, Goodyear said in the 8K filing.

Goodyear reportedly is exercising a provision contained in the current five-year labour agreement, signed in mid-2017 by the USW and Goodyear, to effect the buyouts.

The layoff of 170 employees earlier was in connection with a change in the plant's work cycle to five days a week from seven days a week, according to union sources.

The layoffs at Gadsden are in contrast to the situation at Goodyear's plant in Fayetteville, North Carolina, where the company disclosed recently plans to invest up $180 million to expand capacity for larger rim-diameter passenger tires.

The Fayetteville plant is rated at 40,000 units a day with 2,900 employees, according to Tire Business' Global Tire Report. Goodyear has not commented on the expansion's potential effect on employment.

The Gadsden plant has a rated capacity of 25,000 units a day.