Goodyear extended EMEA tyre production shutdown into 2023

Goodyear reported that fourth-quarter 2022 tyre production levels were 3.5 million units below 2021 when executives published the firm’s full-year 2022 figures in February. That move was enacted in order to “control working capital given the weaker volume environment.” Now officials have confirmed that they decided to extend the pre-planned winter production shutdown into the first quarter of 2023 in the Europe Middle East and Africa (EMEA) region in order to rebalance inventories.

“…due to the current economic downturn across EMEA and consequent softening of the market, Goodyear made the decision to prolong its pre-planned winter production shutdown in EMEA. This enables us to have an inventory level representative of market demand and offset costs”, Goodyear executives said in an official statement.

Goodyear officials didn’t offer further details, but the tyremaker’s fourth-quarter 2022 investor letter specifies that “lower production in the fourth quarter totalling 3.5 million units (3.2 million consumer, 0.3 million commercial) will impact first quarter unabsorbed overhead.”

What we do know about current output is that “lower production in the first quarter 2023” followed “a similar unit reduction to the fourth quarter” and that it will “impact second quarter unabsorbed overhead.”

In answer to T&A’s questions, Goodyear representatives explained their rationale for the production reduction:

“2022 presented a very challenging operating environment for the tyre industry, however Goodyear has robust business continuity and supply chain planning processes in place which helped us to successfully mitigate the ongoing external challenges throughout the year, with no disruptions to our production or supply to customers.”

Nevertheless, an official statement warned that ”Goodyear customers [should] forecast their requirements adequately so that we can ensure they will be supplied according to their needs.”