Goodyear Lays Off 1,900 Tennessee Workers
AKRON, Ohio (AP) — Goodyear Tire & Rubber Co. reported Thursday its revenue rose 14 percent in the fourth quarter but it lost $177 million as it absorbed costs for its planned closure of a plant in Union City, Tenn.
Its adjusted earnings and revenue beat Wall Street expectations, and shares surged $1.79, or 14.3 percent, to $14.30 in trading Thursday.
The Akron-based company, the biggest U.S. tire maker, said its loss amounted to 73 cents per share for the last three months of 2010, compared with net income of $107 million, or 44 cents a share, a year ago. Revenue rose to $5.07 billion from $4.44 billion a year ago.
Despite the loss, Goodyear reported improved results for all its businesses, with revenue per tire, excluding foreign currency issues, increasing 12 percent in the quarter.
By region, sales increased 17 percent in the fourth quarter in North America, 11 percent in Europe-Middle East-Africa, 15 percent in Latin America and 16 percent in Asia-Pacific.
Goodyear executives added a cautionary note on raw materials, expecting those costs to increase 25 percent to 30 percent in the first three months of this year compared with a year earlier.
The company took a $160 million charge tied to its plans to close the 1,900-employee plant in Union City which was left unprotected in the latest labor contract.
"While we are committed to manufacturing in North America, all of our plants must be cost competitive and be able to demonstrate sustainable world-class productivity," said Richard Kramer, chairman and CEO.
"That is not the case with this plant, and as a result, the market has moved beyond what the factory is able to build."
Kramer told analysts in a conference call that the shutdown would improve profitability in Goodyear's core North American market.
"While a difficult action, the closure represents a significant and necessary step forward for competitiveness and profitability in North America," Kramer said.
In Tennessee, Obion County Mayor Benny McGuire called the move drastic.
"What is really sad is so many people who live in this area are going to be out of work. There are no jobs here. They are going to have to move," said McGuire, a Goodyear plant retiree.
Union City Mayor Terry Hailey said the shutdown was unexpected, even given the plant's unprotected contract status.
"There is no question it will be a severe blow to the community," he said.
Excluding charges, the company would have earned 7 cents a share. Analysts surveyed by FactSet expected a loss of 5 cents per share on revenue of $4.8 billion.
For the year, Goodyear lost $216 million, or 89 cents per share, compared with a 2009 loss of $375 million, or $1.55 per share. Revenue rose to $18.83 billion from $16.3 billion in 2009.