Analyst: Strike´s impact on Goodyear increases with length

Akron, Ohio -- The impact to Goodyear from the United Steelworkers strike at 16 plants in the US and Canada -- in terms of both costs and customers -- will largely depend on the strike´s length, according to analyst Saul Ludwig.

Ludwig, of KeyBanc Capital Markets in Cleveland, estimates Goodyear will lose $2 million (€1.6 million) a day in profits.

"The longer the strike lasts the bigger that number becomes," he said.

He predicts that Goodyear has enough inventory and production to meet its needs initially, but afterwards revenue could be impacted.

Ludwig said it is unknown how much inventory Goodyear has on hand or, for that matter, how long the strike could last.

"This is something that both sides have a strong position on, and I don´t know what it´s going to take to bring about a compromise."

Though the tyre maker has instituted contingency plans to have salaried workers fill in for union employees, Ludwig estimates that salaried employees will only be able to replace a small piece of the production.

"If you've got 15 000 workers out, you can't replace 15 000 workers," he said.

Besides the question of how long the strike lasts, Ludwig said another major factor in Goodyear´s ability to deal with the strike is how much product it is able to bring from overseas operations and from the two plants continuing to operate in North America.

"They do have production coming out the door and I think they'll just focus that production on where their needs are the greatest," he said.

From Rubber & Plastics News (A Crain publication)