Cooper Idles All Four US Plants

Following earlier reports that Cooper Tire & Rubber will idle its Texarkana, Arkansas production facility, the company now says it has decided to suspend production at all of its US plants for two weeks. Cooper Tire & Rubber Europe’s production facility at Melksham, UK, is not expected to have any shutdowns. However, sources within the company report that production here has also been cut back slightly. As the problem is due to oversupply, deliveries are not expected to be adversely affected. Cooper Tire & Rubber Europe sources all of its 4×4 lines from the US production plants.

The list of affected plants includes the facility at the company’ hometown of Findlay, Ohio, and plants in Texarkana, Arkansas; Albany, Georgia; and Tupelo, Mississippi. Production should restart around 8 July. Cooper said the temporary shutdowns are due to declining demand caused by national economic conditions and high gas prices.

Analysts have estimated that two weeks of downtime at Cooper’s plants could reduce inventories by two million units, but this could also impact pre-tax profitability by up to $17 million, “as a result of lower overhead absorption.” The impact of an inventory correction is not fully reflected in our estimates.

“They will be having some shutdown days in order to adjust inventory level. The current plans are to be shut down for most of the next two weeks, beginning on Monday 26 June,” Roger Hendriksen, director of investor relations and corporate communications for Cooper, told the Texarkana Gazette. “The replacement tyre market has been very slow throughout the industry, and the inventory has grown in excess of levels we had planned,” Hendriksen told the newspaper.