Jobs
The Michelin plant in Trier where the Group produces wire and bead core has come under the microscope. The management is guaranteeing 300 jobs out of the present 330 for this year only and is raising the question whether or not production of wire etc. is still a core business.
Michelin North America has announced that it will cut 2,000 of its 26,500 workforce. The cuts will target the whole company, not just specific job classifications, and will be spread across not just the 23 plants but the whole company. Most will be achieved through normal losses and voluntary redundancies. Michelin wants to trim $75m in annual costs beyond the already announced $125m, and does not want to wait until the weak North American market begins to improve but rather to develop lean structures and create the ability to react to the market independently, whether the market improves or not.
Goodyear has released details of its financial performance for the last quarter of 2000 and for the year as a whole. Sales for 2000 were a record $14.4 bn (1999: $13.4 bn), of which Dunlop contributed $2.3 bn. Goodyear estimates that currency factors reduced sales by $450 m. Net income was sharply down to $40.3 m (1999: $243.2 m). The number of tyres produced in 2000 rose by 22.8 million units to 223.3 m tyres, of which Dunlop shipped 37.3 m units. Samir Gibara, chairman and chief executive officer, described the results as “disappointing”, adding: “We have solid improvement plans in place for 2001.” Gibara went on to say that global rationalisation initiatives will reduce group employment worldwide by 7,200 and save $150 m this year, and $250 m annually thereafter.
Alloy wheel manufacturer American Racing Equipment is to close down its factory in Warsaw, Kentucky, by the end of the year. Production will be transferred to other plants in California and Mexico and just over 200 workers will lose their jobs. The downturn in the US auto industry was blamed for the closure, particularly cutbacks at DaimlerChrysler. The Warsaw plant supplied wheels for the Chrysler Grand Cherokee, but cutbacks mean that the factory has been running at less than one quarter capacity recently.
A 64-day strike at Goodyear’s chemical plant in Houston ended when union members signed an agreement. Under the agreement, some jobs will be consolidated or outsourced and wages reduced for some non-core positions. On the benefits side is an improved pension scheme, a lump sum first year wage increase and later increases linked to plant earnings. The Houston plant employs 600 and makes synthetic rubber used in the manufacture of tyres and several other products.
Continental is considering whether to discontinue truck tyre manufacturing at its plant at Herstal, Belgium. The factory employs 777 and, should truck tyre manufacturing cease, the company says other activities would be expanded, especially car tyre production using the MMP (Modular Manufacturing Process). Analysts estimate that such a move would reduce Conti’s truck tyre capacity by 600,000 tyres, or 15 per cent of output.
Goodyear Tire & Rubber has announced worldwide sales in the 3rd quarter of $3.7 bn (Q3 2000 = $3.6 bn). Net income for the same period was $9.3 million, compared to $17 m for Q3 last year. For the first nine months of the year, the company posted a net loss of $29.6 m, compared to net income of $142.3 m for the equivalent period in 2000. Sam Gibara spoke of “a general economic slowdown” and “tough market conditions in many regions.” However, one plus point for the company was a market share gain of 3 per cent in the US replacement tyre market.
Until today, the German Berliner Reifenwerke GmbH has been an example of the incompetence of authorities, banks and others. NEUE REIFENZEITUNG has already reported developments in detail, up to the appointment of the official receiver. Part of around 80 million Deutschmarks, which were originally supposed to build up Berliner Reifenwerke, have either been thrown away or squandered in order to support the lifestyles of some company leaders, and of which the creditors are unlikely to see a penny again. But things are not so bad, because the investment bank “Berliner Investitionsbank” has already managed other flops. The truly sad thing is that loyal employees of many years’ standing have been dismissed, and they are now without jobs or prospects. The fact that Berliner Reifenwerke – today called Berliner Runderneuerungswerke –, is still alive, can be attributed to both the official receiver and the RuLa shareholders’ delegates. Berliner Runderneuerungs GmbH was founded by RuLa and, because time is short, the plant is being leased from the official receiver, but for the moment this factory will stay in mothballs. Although the huge pressure of time has been relieved, conclusive decisions are needed for the medium-term, as the whole plant cannot be leased for a long term if the contractual partner is an official receiver. Soon, investors will run off.
Smithers Scientific Services, the research and consulting firm, has announced that it will close its tyre and automotive testing complex at Pecos, Texas, due to lack of demand. 31 staff are affected and will be offered equivalent jobs at other facilities. The closure comes despite attempts to broaden the client base. The 5,800 acre facility, which Smithers bought from Uniroyal-Goodrich Tire in 1987, will be put up for sale.
Union officials at Goodyear’s Wolverhampton truck tyre plant are seeking discussions with management over rumoured plans to cut a further 450 jobs. Transport and General Workers’ Union representative, Peter Booth said that they wished to impress upon Goodyear, the world-class quality of the workforce.
In common with other manufacturers in the UK, Goodyear has been suffering cost and productivity problems at its plant, which is not competitive in global markets. In October last year, Goodyear Wolverhampton took the step of issuing an HR1 notice to the Department of Trade & Industry, which in effect gave the workforce a number of possible solutions to the problem and a 90-day deadline to arrive at an answer. Since the issuing of the notice, discussions have been on-going between management and unions to try to thrash out a mutually-acceptable solution. Eventually, such a solution was agreed, which involved workers moving from a four-shift to a five-shift system, and which was recommended to the workforce by the unions. However, this recommendation was ignored and, in a ballot of the Wolverhampton workforce, the proposal was rejected. The reaction of Goodyear’s management to this was immediately to announce that it had “no other option other than to instigate actions that will make some 500 associates redundant from the Wolverhampton plant. Later it was announced that “only” 240 jobs are to be lost at Goodyear’s Wolverhampton factory. This is on top of 215 redundancies earlier in January, but the total figure of 455 is less than was originally expected after cost-cutting proposals from management were rejected by the workforce, despite being recommended by the unions. A Goodyear spokesman is reported as saying that the job losses could save the plant from closure.
MAN Nutzfahrzeuge, the commercial vehicle unit if MAN AG, expects to see a flat 2001 and is cutting 1,200 jobs in Germany and Austria. The vehicle manufacturer expects to see a 5-8% cut in the European truck and bus market in 2001 but intends combating this by increasing its own market share.
Michelin has announced the closure of its truck tyre plant at Burnley and an end of the production of steel cord at Stoke on Trent, with the loss of a total of 732 jobs. The closures are said to be due to the downturn in the US truck market. Burnley is to close in March 2002, steel cord production in September.
Back in October, Tenneco Automotive announced that 285 jobs were to be cut in the USA, as part of a plan to reduce salaried staff by 700 by the end of this year. The company has announced another 405 salaried job losses worldwide, blamed on the state of the global automotive aftermarket and reduced vehicle production in the USA.
The group’s turnover fell from US$ 3.66 bn (1st quarter 2000) to US$ 3.41 bn for Q1 this year. Last year the group achieved earnings before taxes of US$ 80.3 million; this has turned into a loss of US$ 48.2 million. Earnings after tax fell to a loss of US$ 46.7 million. Despite these poor figures, analysts – especially from Deutsche Bank – have confidence in Goodyear, which is based on the hope that the effect of the disastrous Firestone recall will create a big advantage for first brands, and is also based on the assumption that price increases will stick. Last but not least, Goodyear has said that its on-going restructuring programme will lead to further significant cost reductions.
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