Goodyear to cut 5% of salaried staff globally, $80 million 4Q loss expected in EMEA

Goodyear Tire & Rubber Company is planning “rationalization and workforce reorganization” actions that would result in a 5 per cent reduction in salaried staff globally, or about 500 positions. According to executives, the move has been prompted by the “challenging industry environment and cost pressure driven by inflation.” However, it is also attributed to weaker-than-expected fourth-quarter results:

“Our fourth quarter results fell short of our expectations given a significantly weaker industry backdrop, particularly in Europe,” said Richard J. Kramer, chairman, chief executive officer and president. “While our businesses have performed at a high level through the volatility of the past several years, the uncertain near-term macroeconomic outlook and continuing impacts of inflation make these difficult actions necessary to position our business for future success.”

According to Goodyear, global replacement tyre industry demand “remained weak in the fourth quarter”. And the EMEA region was particularly bad, with a 12 per cent drop recorded there. Indeed, Goodyear expects its EMEA business unit to report a fourth-quarter segment operating loss of approximately $80 million. EMEA had reported positive segment operating income since the second quarter of 2020.

The rationalization efforts are expected to be completed during the first and second quarters with a portion in international businesses subject to required consultation with relevant stakeholders. These actions are in addition to cost synergies related to the integration of Cooper Tire.

The company expects to record pre-tax charges associated with these actions of approximately $55 million, primarily relating to cash severance payments that are expected to be substantially paid during the first half of 2023. The rationalization and reorganization will result in a quarterly run-rate benefit of approximately $15 million beginning in the second quarter. Savings in the first quarter are expected to be $5 million.

The latest moves follow plans to close its Melksham, United Kingdom, manufacturing facility and exit its TrenTyre retail operations in South Africa to “support EMEA’s overall competitiveness”.