Goodyear accepts buyouts from over 700 US employees

Akron — Goodyear is moving ahead with plans to scale back production at its Gadsden, Alabama, tire factory after accepting buy-out applications from 740 employees.

The Gadsden buyout plan is part of Goodyear's strategy to strengthen the competitiveness of its manufacturing footprint by cutting production of tires for declining, less profitable segments of the tire market.

In an 8-K/A filing with the Securities and Exchange Commission, the company said the measure would yield improvements in operating income of $30 million (€27 million) in 2020 and approximately $40 million annually thereafter.

Neither Goodyear nor the United Steelworkers (USW) union — which represents workers at the Gadsden plant — commented on the specific terms of the buyout agreements.

In its SEC filing, however, Goodyear said it expected to book $75 million in cash charges primarily for associate-related costs.

Goodyear also expects to record approximately $10 million to $15 million in non-cash charges primarily related to asset writeoffs and accelerated depreciation. 

The rationalisation plan is expected to be "substantially complete" by the first quarter of 2020, Goodyear said.

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 that's expected to generate a segment operating earnings improvement of $60 million to $70 million by 2022, while cutting up to 1,100 jobs at two factories there.