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Goodyear announced today that it sustained fourth quarter losses of $1.22 per share, 19 cents more than analyst estimates suggested (-$1.03 per share) for the period. The company announced that net revenues have also fallen 19.9 per cent year-on-year to $4.1 billion, $300 million less than was anticipated.
More to follow…
The ripple effect from the downturn in North America’s construction industry is being felt by Bridgestone Americas Tire Operations (BATO). In response to a decline in demand for construction equipment, BATO is decreasing production of its small and medium off road tyres, and as of March 1 will lay off 67 hourly workers at its Bloomington, Illinois facility.
According to Bridgestone, production must be reduced in order to better align this inventory with demand. “The dramatic downturn in the economy continues to plague every industry, including ours,” said Shawn Rasey, president, Off the Road Tire, U.S. & Canada, Commercial Tire Sales division, BATO.
The downturn in the automotive industry has seen Apollo Tyre’s OEM demand drop 43 percent in terms of value during the last financial quarter, and according to company chairman and managing director Onkar S Kanwar, “car sales have plummeted [and] tyre sales have also gone down proportionally.” During the last quarter commercial vehicle tyre sales have also experienced “a serious drop”, he added. In light of this decreased demand for the company’s products, the Hindu Business Line reports that Apollo is considering laying off 1,500 workers.
Pirelli Tyre has reported that its sales revenues fell marginally down 1.5 per cent from 4.162 billion euros in 2007 to 4.1 billion in 2008. However, pre-tax profits fell considerable due to the difficult economic environment and raw material costs. EBITDA stood at 443 million euros, down 19 per cent compared with 548.6 million euros in 2007. And EBIT came in at 250 million euros, 30 per cent down on 2007’s 358 million. As a result, the company reports that it “undertook restructuring actions, accelerated in the fourth quarter against further deterioration of the market, in order to strengthen the competitiveness of the industrial organization in Europe and reduce costs of central structures.”
The company registered revenues of 870 million euros, down 5 per cent on a like-for-like basis, in the fourth quarter of 2008. EBIT of 18 million euros before restructuring charges (which in the fourth quarter alone amounted to 68 million euros) compared with 71.9 million euros the year before.
Following the release of Toyo’s latest financial results, the company has announced a host of measures to stem its financial haemorrhaging. The company reports being in the midst of business conditions that it expects will grow ‘more stringent’ and be reflected in further deteriorating earnings for the 2008 financial year. The sources of these woes, the company adds, are the global economic slowdown and the yen’s appreciation.
Toyo reports a review of its Japanese and international manufacturing systems is underway, and on the back of this it will reduce the number of employees at manufacturing operations to match current production levels. As part of its reorganisation, Toyo says it plans to transfer employees from administrative departments to manufacturing departments.
One Goodyear tyre plant is getting financial assistance, while another may see sharp reductions, according to various news reports. The Fayetteville Observer reported that Goodyear will receive $1 million over the next decade from the city of Fayetteville, the money intended to help retain jobs at the plant. Meanwhile, Goodyear plans to announce a restructuring and cost-cutting plan on 18 February, when company executives and union leaders meet later this week to discuss the future of the company’s Danville, Virginia plant.
Goodyear executives and union officials have this week held a series of meetings concerning the future of the tyre maker’s Danville, Virginia truck tyre plant. The Danville Register & Bee reported that company executives arrived Monday and are expected to be in Danville through Wednesday.
Business owners and senior managers from nearly 70 Michelin accredited independent truck tyre distributors across the UK and Republic of Ireland gathered in Paris on 30 January for the third annual Michelin Business Advantage (MBA) dealer conference. What the representatives from the MBA network heard during their time in France was music to the ears in these difficult times for the automotive sector.
“The latest figures from Europool highlight that whilst the replacement market for new truck tyres dropped by 10 per cent in the UK in 2008, Michelin continued to gain market share and is still the number one selling brand,” said Phil Baldock, MBA manager at Michelin. “We also bucked the trend in the market for retread tyres, with our penetration increasing in a marketplace which also fell by 10 per cent.
Schaeffler Group is reportedly fighting against the possibility of a company breakup, as the automotive supplier struggles under the weight of 11 billion euros of debt it acquired when buying Continental AG. Over the weekend the owners of the Schaeffler Group, Maria-Elisabeth Schaeffler and her son Georg Schaeffler, commented on the situation in a public statement which saw them deny the company gambled on the purchase of Continental AG and appeal for outside support.
“…Schaeffler Group requires support for a limited period of time. Our talks with politicians are about securing interim financial aid in a special exceptional situation for a company that is sound at the core,” the statement read, adding: “The Schaeffler Group will present a viable concept to the federal government and the states. We are well aware that the viability of this concept will be scrutinized by the responsible public authorities to ensure that an interim financial aid package will not burden the taxpayers, and we realize that the Schaeffler Group must pay the statutory interest and fees incurred due to the bridgeover.”
Bridgestone Australia Ltd has announced a temporary pause in production at its Salisbury manufacturing facility in South Australia. Shawn Hara, group chairman and managing director of the Australian Bridgestone operation, said the plant, which employs around 600 people, would be taken offline from April 14 to 27 2009 inclusive to reduce inventory holdings in line with consumer demand. No jobs will be affected by the closedown, notes the manufacturer, and employees will have access to leave entitlements. Hara also stated that no further shutdowns were planned for 2009.
“The economic slowdown is having an impact on consumer demand around the world and Australia is no different,” Hara said. “This step is a reflection of Bridgestone Australia’s ability to react quickly and prudently to the current situation to ensure we protect the long-term viability of our manufacturing business and the jobs of our valued employees.”
Figures for January UK car sales, released by the SMMT, make gloomy reading; new registrations were 30.9 per cent down to 112,087 units. And the outlook is equally bleak, with the SMMT predicting a decline in 2009 of over 19 per cent to 1.72 million units. This is 410,000 fewer than 2008 and 685,000 units less than 2007.
SMMT chief executive called on the Government to take steps to stimulate demand, saying: “A number of EU member states have launched scrappage incentive schemes, which have the benefit of boosting consumer confidence and delivering significant environmental improvements. The UK motor industry is urging UK Government to introduce a similar scheme and help sustain jobs and businesses throughout the sector.”
Some 18 months after opening, the TyreGenics recycling joint venture in Baglan, South Wales, has been placed into administration. The £4 million, 80 tonne per day capacity facility was developed by major shareholder Credential Environmental along with BOC, FieldTurf Tarkett and RTI Cryogenics, and began operation in July 2007. From the outset it was announced that FieldTurf had committed to purchasing 70 per cent of output for the first three years, yet in spite of this assured market the facility has been affected by dwindling demand.
During the last week of January, US based fibre producer Performance Fibers announced it had laid off a fifth of the workforce at its Salisbury, North Carolina facility. The plant, which includes HMSL tyre yarn in its production portfolio, is one of the local area’s ten largest employers – although the precise number of employees affected by the layoffs is not known as Performance Fibers holds the size of its workforce at Salisbury confidential for competitive reasons.
“This reduction in the workforce is part of a year-long effort at Performance Fibers to right-size our manufacturing footprint to better align with the needs of our customers’ demands for our products,” said company spokesman Jay Pomeroy. “While some of these reductions were due to the economy, they are more tied to the long-term strategy of serving our customers and keeping our business profitable.”
German news sources are reporting that Schaeffler Group is planning seems for most of its 25 German locations to work on short-time schedules for half a year. According to Tyres & Accessories’ German sister publication, Neue ReifenZeitung, the reports were confirmed by Schaeffler spokesman Detlef Sieverdingbeck on 2 February. The specific terms reportedly differ depending on location. The news mainly affects employees in the Automotive division, according to the Financial Times.
Meanwhile, at the end of last week Chancellor Angela Merkel reportedly turned down Schaeffler Group’s application for federal loan support. Schaeffler, the majority shareholder of Continental AG, is currently carrying around 22 billion euros of debt after taking over Conti. In an interview with Germany’s Bild newspaper, Merkel said: “We won’t pay the bill for risky company decisions.” For his part, Christian Wulff, prime minister of Lower Saxony, said the Schaeffler family and banks need to act before the government does anything. So while the chances of federal loan support are slim, the possibility of the regional government guaranteeing the 3 to 5 billion euros of new capital the company is said to be asking for, is not completely out of the question.
Tyre recycling firm PYReco plans to build a pioneering £80 million tyre recycling plant in North East England, the first of its kind in Europe. The scheme is underway thanks, in part, to the support of Renew, an organisation tasked with driving a low carbon and sustainability agenda with industry in the region.
The plant will be built at the South Tees Eco Park (STEP) in Tees Valley by 2010. It will use the relatively novel process of pyrolysis, a method of degrading material through heat, to recycle 60,000 tonnes of used tyres a year, the equivalent of 7.5 million tyres, without waste or harmful emissions. It is estimated that plant will create 90 jobs for the region.
Traditionally the uncompromising properties of the material have meant that tyres have been difficult to re-cycle, most often burnt in cement kilns. PYReco’s plant will provide a closed loop recycling route, breaking down used tyres into their component parts capable of being used in the production of brand new units.
Norwegian manufacturer Fundo Wheels, original equipment tyre rim supplier to European vehicle producers, has been declared bankrupt. It is thought that the company’s 350 employees will lose their jobs.
The company’s poor performance is said to be strongly linked to the global automotive industry slump. The company’s owners are still seeking fresh capital, and a bank has secured operations for a further month to enable the company to complete orders for Volvo and Audi.
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