Goodyear to “Aggressively Capitilise” on Opportunities

Goodyear Tire & Rubber’s chairman has commented on company plans to further reduce costs by buying more of its equipment, raw materials and tyres from China. These remarks came at Goodyear’s annual shareholders meeting. Chairman and CEO Robert Keegan said the company is exploring additional ways in which it may eliminate production it considers high cost: “This initiative will accelerate over the next two years,” he said.

Goodyear Spokesman Keith Price added that the company saved about US$35 million last year by buying equipment, raw materials and low-end tyres from third parties in China. The company’s plans do not include expanded tyre production in China or additional plants to its facility in Dalian.

Despite Goodyear’s global initiative to cut costs in the face of increased raw material prices and prior closures in the US, Canada, England, New Zealand and Morocco, Mr. Keegan’s latest comments were not accompanied by any specific plans to cut jobs or close production facilities. However he did say that Goodyear would continue to review opportunities to further reduce high-cost capacity, and that “this initiative will accelerate over the next two years.”

However despite the belt tightening measures, Mr. Keegan’s statements at the meeting indicate that Goodyear is in a strong position in 2007. “When you combine our core business focus with strong top line growth, a better cost structure and a stronger balance sheet, you have an organisation that is capable of moving forward at a much quicker pace than anything you have seen from Goodyear to date,” he said. “The market is presenting Goodyear with significant opportunities in 2007 and beyond. We plan to aggressively capitalise on those opportunities.”

The chairman outlined what he believed was Goodyear’s greatest achievements in the past year, including strong product leadership, improved revenue per tyre, and lower cost structures, adding that “While there are still plenty of challenges ahead, we now have a proven track record and much stronger business platforms than when our journey began four years ago.”