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Goodyear cutting jobs
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February 3, 1999: 12:02 p.m. ET
Tire maker to slash 2,800 workers, close plant; 4Q profit meets estimates
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NEW YORK (CNNfn) - As it announced its alliance with Japan's Sumitomo Rubber, Goodyear Tire & Rubber Co. also said it will cut up to 2,800 jobs and halt tire-making at one of its oldest plants.
The moves come as Goodyear, currently the world's No. 3 tire maker, is battling stiff competition from rivals Michelin of France and Japan's Bridgestone, and struggling to invigorate sluggish sales and earnings.
The company, which will jump back to the No. 1 spot among tire makers after the Sumitomo deal, also reported fourth-quarter earnings in line with Wall Street forecasts.
Under the alliance with Sumitomo, the companies will establish ventures in North America, Europe and Japan, and Goodyear will pay Sumitomo $936 million. The parent companies also will buy small stakes in each other.
Wall Street welcomed the announcements, and Goodyear stock rose 1-13/16 to 52-3/16 at midday on the New York Stock Exchange.
Goodyear said the job cuts are meant to address weakness in Latin America and Asia as well as inefficiency in North America. The cuts equal 3 percent of its global work force of 95,000.
Under the restructuring, the Gadsden, Ala., plant will cease tire-making by year-end but will continue to mix rubber for other plants, Goodyear said. The plant, opened in 1929, is one of Goodyear's oldest and least efficient.
"We have not taken this decision lightly," said John Orr, vice president of tire-making in North America.
Several plants in Latin America and Asia also will be streamlined, Goodyear said, adding it expects $100 million to $150 million in one-time costs from the moves, but annual savings equal to that thereafter.
In its earnings report, the Akron, Ohio-based company said it earned $121.5 million, or 78 cents a share, in the fourth quarter, including a gain on asset sales equal to 4 cents a share.
Wall Street was looking for earnings of 74 cents a share from ongoing operations, according to First Call, which tracks analysts' estimates.
A year earlier, Goodyear had net earnings of $2 million, or 1 cent a share, which included a one-time charge of $176 million, or $1.12 a share, from restructuring.
Sales edged down to $3.2 billion from $3.3 billion in the quarter. Goodyear actually sold more tires -- unit sales rose 1.8 percent in the quarter -- but producers have been cutting prices. 
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Goodyear
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