Goodyear to slash 5,000 jobs
Tire manufacturer blames 'lower industry demand' for adding 5,000 job cuts to last year's 4,000; including 400 potential cuts in Danville, Va.
NEW YORK (CNNMoney.com) -- Goodyear Tire & Rubber, blaming low demand for its products as car sales wane, said it would cut 5,000 jobs this year.
Goodyear (GT, Fortune 500) said the 5,000 job cuts slated for 2009 would be in addition to the 4,000 job cuts announced last year.
"These are truly extraordinary times that require extraordinary actions," Chief Executive Robert Keegan said in a corporate webcast, blaming a "rapid and intense" contraction in the worldwide economy.
Keegan said the cuts could include the potential reduction of 400 positions at a factory in Danville, Va., which makes tires for trucks and airplanes. He said this depends on the outcome of a union vote, scheduled for Thursday.
Keegan also announced a "global freeze on salaries," with no merit increases in 2009 and reduced work weeks for some employees.
Noting the recent closing of a Goodyear plant in Australia, Keegan said he plans to place 50% of the company's production in "low-cost countries" by 2012, compared to the current level of 43%.
Keegan said all these cost-cutting measures result from a simple but troubling problem for this company: Cash-strapped consumers are driving less, and buying fewer tires.
The company, based in Akron, Ohio, said its fourth-quarter sales fell to $4.1 billion, from $5.2 billion in the year-ago quarter.
The company also reported a worse-than-expected net loss of $330 million, or $1.37 per share. Analysts had expected a loss of $1.02 per share, according to a consensus of estimates compiled by Thomson Reuters.
"It's appropriate that management is moving aggressively to cut costs," given the weakness in demand, said Kirk Ludtke, analyst for CRT Capital Group.
"There's no question that tire demand will rebound [because] tire purchases can only be deferred for so long," he added. But it could take years, he said, noting that Goodyear didn't recover from a severe volume slump in 1978 until eight years later.
Goodyear's stock price dipped about 3% in morning trading.
Goodyear's woes are the latest fallout from the auto industry meltdown and sharp reduction in car and truck sales. On Tuesday, automakers General Motors (GM, Fortune 500) and Chrysler LLC appealed to the Treasury Department for an additional $21.6 billion in federal loans. 
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