The biggest tire manufacturer in the U.S., Goodyear Tire & Rubber Co (NASDAQ:GT) has decided to close down production plants in the U.K. and relocate the manufacturing activity. As part of the cost-cutting measures, Good Year will move the U.K. tire production to manufacturing facilities in the Middle East, across Europe and Africa.
It will also move the tire production from Wittlich, Germany-based manufacturing plants to production facilities in the EMEA. The company will retrench more than 360 employees at the plants in Wolverhampton, England and Wittlich, Germany after consulting with the employees unions. According to filings with the regulatory authorities, Good Year has an employee count of 67,000 across the world as on December, 31.
The company aims to bolster the operating revenues by about $30 million annually in the EMEA region starting 2017. It is the second biggest market in terms of revenues for Good Year. It operates 17 manufacturing facilities in the EMEA region.
The stronger dollar has hurt the revenues of Good Year in the EMEA region. It is also facing fierce competition from rivals like PIRELLI & C SPA (OTCMKTS:PPAMF), Continental AG (ADR) (OTCMKTS:CTTAY) and MICHELIN CIE GEN DES (OTCMKTS:MGDDF).
The company will incur charges of around $80 million in the restricting process. Good Year will record charges of about $30 million in Q2, 2015.
Good Year has halted the production of farm tires in the EMEA region in 2014. It has also shut down the Amien, France-based manufacturing facilities last year. It has incurred charges of around $95 million on account of plant closures and employee retrenching in 2014. The restructuring process would be over towards the end of 2016.
The manufacturing plant in Wolverhampton is responsible for blending rubber compounds for the tires. According to Unite, the closure of Wolverhampton-based Good Year manufacturing plant would also hurt the local economy. It risks the jobs of hundreds of employees in the proposed reorganization across the Europe.