Tyre manufacturer news - Goodyear Looks to China to
Reduce Costs
11 Apr 07
By Emily Henry
Contributing Writer
In a bid to reduce costs, Goodyear Tyre and Rubber’s
Chairman has announced the company’s plans to begin
buying more of its equipment, tyres and raw materials
from China. At the annual Goodyear shareholder’s meeting
the increasing prices of raw materials was hot on the
agenda, and executives pitched ideas on how to relieve
the pressure of inflation within the market. Robert
Keegan, the Chairman and CEO for Goodyear, emphasised
that the company is exploring different ways to quell
the rising production costs, claiming that the
“initiative will accelerate over the next two years”.
Responding to Keegan’s determined aim, Goodyear
Spokesman Keith Price referred to the $35 million that
Goodyear saved in 2006 by buying its equipment, raw
material and low-end tyres from third parties in China.
The company decided that this money-saving initiative
was to be continued and increased, while other proposals
such as expanded tyre production in China or additional
plants in the Dalian facility were not added to
Goodyear’s immediate plans.
Goodyear is one of the first companies to announce plans
in response to the recent rise of raw material costs
which has affected the majority of major-brand tyre
manufacturers. Adding to the companies defensive
manoeuvre is the effect of recent closures in the US,
Canada, England, New Zealand and Morocco which, along
with increased raw material prices, has led Goodyear to
the resolution that a global initiative to cut costs is
necessary. The announcements at the shareholder’s
meeting did not include any plans to reduce employment
or close production facilities, although Mr Keegan was
eager to assert that Goodyear would continue to review
cost-reducing opportunities within the next two years.
Despite the import given to reducing costs for the
company, the initiatives announced at the shareholder’s
meeting do not suggest that Goodyear is in a
compromising situation. In fact, Mr Keegan underlined
the company’s plans as pre-emptory and ongoing rather
than reactive and immediate. He suggested that Goodyear
is in a strong position in 2007, stating: "When you
combine our core business focus with strong top line
growth, a better cost structure and a stronger balance
sheet, you have an organisation that is capable of
moving forward at a much quicker pace than anything you
have seen from Goodyear to date." Mr Keegan added that
“the market is presenting Goodyear with significant
opportunities in 2007” and that the company plans “to
aggressively capitalise on those opportunities."
The Chairman summarised Goodyear’s achievements in the
last year, referring to the company’s strong product
leadership, the improved revenue per tyre and the lower
cost structures that have helped Goodyear to excel. Mr
Keegan had a positive message for shareholders
concerning the company’s increasing strength, stating
that: "While there are still plenty of challenges ahead,
we now have a proven track record and much stronger
business platforms than when our journey began four
years ago."
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