Thu
Feb 10 2011
11:16 am

Official Goodyear statement:

Goodyear today announced plans to close its Union City, Tenn., tire manufacturing facility by the end of 2011 as part of its strategy to reduce high-cost manufacturing capacity globally and provide cost effective high-value-added products that the market is demanding while continuing to make high quality products for its customers.

"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. That is not the case with this plant, and as a result, the market has moved beyond what the factory is able to build," said [Richard J. Kramer, chairman and chief executive officer].

This closure, when complete, will eliminate approximately 12 million units of available capacity and is the final action in plans announced in 2009 to eliminate 15 million to 25 million units of high-cost capacity globally. This action is expected to provide annual cost savings of approximately $80 million. The Union City plant currently employs approximately 1,900 associates.

The announcement came in Goodyear's 4th quarter 2010 earnings report, which stated a net loss of $177 million on revenues of $5.1 billion. The company reported a net loss of $216 million on sales of $18.8 billion for the year. According to the report, the total after-tax restructuring, accelerated depreciation and asset write-off charges for closure will be approx. $270 million, which includes approx. $140 million in cash charges.

Goodyear's other U.S. manufacturing facilities are located at Akron OH, Gadsden AL, Buffalo NY, Topeka KS, Danville VA and Fayetteville NC.

Union City is a small town in Northwest Tennessee with a population of about 11,000. The largest employer is Goodyear, which opened there in 1969.

UPDATE: Newscoma with some personal thoughts...

143
like
R. Neal's picture

United Steelworkers said in

United Steelworkers said in Sept. 2009 that their most recent contract did not protect the Union City plant from closing because it had been "severely impacted by the deluge of cheap tires from China." They also said they had previously negotiated buyouts for 600 workers there.

Source...

bizgrrl's picture

This is big. From an aticle

This is big.

From an article dated 9/2009:

Union City is Goodyear's second largest plant in North America from a capacity standpoint. At full throttle, it can produce 48,000 consumer tires ... per day.

In Nov. 2010, TN State Rep. Judy Barker and the Tennessee Department of Community and Economic Development offered Goodyear $2 million.

R. Neal's picture

All but two of their plants

All but two of their plants (OH and NY) are in "right to work" states.

R. Neal's picture

Goodyear shares are up 7.75%

Goodyear shares are up 7.75% for the day on the news...

(link...)

Andy Axel's picture

Well, what's a community when

Well, what's a community when there are earnings at stake?

metulj's picture

I only run Cooper Tires and

I only run Cooper Tires and have for years. They push them at Sears as a US made brand.

Uncle Bob's picture

Hate it for that community, feel sorry for the workers who paid

their union dues only to be left out of the union contract and unprotected with the potential for plant closure.

A tire company will build and locate next to the VW assmebly facility in Chattanooga, perhaps there will be opportunities there.

As the costs of producing goods in the United States continues to escalate, we'd be well served in understanding what costs can be contained and what costs can be eliminated. I'm sure the Union City plant was old, possibly outdated, but it was not obsolete with the capacity that it could produce, the company simply looked at what it costs to operate that plant compared to the other plants and the most expensive (and perhaps the largest) plant in North America got shuttered.

We will see more of these types of closures, hopefully no more in Tennessee, however the costs of making stuff in America has gotten completely out of control to the point it can now be made overseas, packaged and shipped back to America, cheaper than it can be made here.

Andy Axel's picture

Costs indeed.

As the costs of producing goods in the United States continues to escalate, we'd be well served in understanding what costs can be contained and what costs can be eliminated.

Indeed.

metulj's picture

I wonder what his marginal

I wonder what his marginal physical output is compared to, say, the guy who runs the vulcanizer.

Andy Axel's picture

This move should improve his standing at the yacht club.

Run the vulcanizer? But what about his manicure?

We should pity him at his paltry $300,000 a week (plus whatever unrealized gains that he shows when the share price goes up 8% in a matter of hours), and goddamn the unions.

JHayes's picture

Sad but true

Unions, as we all know, are controversial in the US. Whether you are for them (like me) or against them.

I was a part of two during my working life. One absolutely destroyed a company and the other worked well with management.

At one, we manufacturing automotive parts and many people were making 18-25 an hour plus overtime when they should have been making 11-15 or so.

Opinari's picture

Cost of Poor Quality

(T)he costs of making stuff in America has gotten completely out of control to the point it can now be made overseas, packaged and shipped back to America, cheaper than it can be made here.

In my own business, we are in the process of shutting down a medium sized assembly location and sending the work to Mexico. Thus far, the transition has been a mixed bag. Only the most basic components can be accommodated there, as special orders require more advanced installation and configuration techniques. The MRP system there is antiquated, and must be rebuilt from the ground up. The engineering knowledge is almost exclusively based in the US, so changes to the assembly lines, BOM, etc. cannot be made quickly. Tooling changes require know-how that the Mexico site does not have. Most visibly to the customer, the quality of the components have suffered because the expertise at the end of the line required to troubleshoot problems simply isn't there.

The short term problem is that this isn't being addressed by upper management. However, once they see the poor builds coming from our southern neighbors, and once the shareholders balk at the reduction in sales related to poor quality, I believe companies will change course and begin "onshoring" these types of operations. The question is though will the damage be too much to overcome not only for the corporations, but for the US economy as a whole.

fischbobber's picture

Levi's

You are describing the Levi's model. Destroy your brand and pretend you're still relevant.

Anonymous 38261's picture

The union caused this at our

The union caused this at our plant. Lets see what they can do for us now. Dont build anymore tires cause they need them at the moment and someone please put a stop to sending our jobs to china

MemphisSlim's picture

The union wage scale is one thing, a peasant wage scale in China

is another . . . . . . . . and there is a line of thinking that the only way America will ever be competitive on the world wide manufacturing stage will be when our workers standards of living and wage scale deteriorate to the levels found in China, Malaysia, and in certain segments of Mexico, such that American products can be priced competively with those made in other countries that do not have unions, collective bargaining agreements, wage and hour laws, and an abundace of local, state, and federal regulation/taxes (look at the myriad of fees and taxes collected on your cell phone bill or Comcast/Charter bill).

A right to work state is one thing, a right to work country with 250 million workers is quite another and I'd love to see the AFL-CIO try and organize a factory in China.

metulj's picture

There is actually quite a bit

There is actually quite a bit of labor unrest in China currently with particularly labor cost sensitive industries (see textiles) fleeing/being pushed to such lovely places as Mozambique, Uganda, Angola, etc). China has no problem with increasing wages as it will merely retool, because it is flexible enough to do that given its particular political economy, and start into industries where they can merely recast the margins rather than drive down the bottom line.

The whole "union labor rates caused jobs to go overseas" thesis concerning developed world economies falls apart when one merely looks at Germany, the second largest exporting economy in the world, and its highly unionized, highly compensated workforce in a diverse range of industries. Notice that the Frankfurt exchange has bid for the NYSE. We are in the pickle we are in because we allowed corporations to shift us from this sort of diverse economic landscape to one where a single, lightly-regulated, particularly mendacious, and almost completely disinterested in the welfare of the US as a nation-state industry, financial services, which now comprises 1/5 of our GDP in term of purchasing price parity per capita. With that deal going through, not even the fees collected by the bourse will stay here.

But that's capitalism: Love America, then leave it.

Min's picture

Great line.

I'm going to quote it frequently.

Elrod's picture

Heavy manufacturing is dead in the US

The writing has been on the wall for decades: heavy manufacturing in the United States is dead. Future manufacturing will be high-tech, high-skilled and targeted. Companies that move their plants to cheap labor Southern states will simply pick up shop in 20 more years and head to Central America or elsewhere. That's why luring foreign auto makers - without getting real investments back into education to prepare American workers for a high-tech economy - is so disastrous. Southern states have a window of opportunity now. Either channel the tax revenues from those foreign manufacturers into education to build a local highly educated work force, or prepare as the neo-colonial South loses out to even cheaper places abroad.

bizgrrl's picture

Goodyear closes the plant

Goodyear closes the plant early.

Goodyear Tire & Rubber Co. said Monday that it has stopped production at its tire manufacturing facility in Union City, Tenn.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Lines and paragraphs break automatically.
  • Web page addresses and e-mail addresses turn into links automatically.

More information about formatting options

CAPTCHA
This question is used to make sure you are a human visitor and to prevent spam submissions.
Image CAPTCHA
Enter the characters shown in the image.

Lost Medicaid Funding

To date, the failure to expand Medicaid/TennCare has cost the State of Tennessee ? in lost federal funding.

TN Progressive

TN Politics

Local Media Blogs

Shopper Columns

Local News

News Sentinel

State News

Wire Reports

Site Statistics

Last 7 days:
  • Posts: 27
  • Comments: 530
  • Visits: 15,497
  • Pageviews: 41,916
Last 30 days:
  • Posts: 102
  • Comments: 1495
  • Visits: 45,837
  • Pageviews: 116,643

TN Progressive

Nearby:

Beyond:

At large: