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.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Aaron Smith, staff writer

NEW YORK ( -- 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.  To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.